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The baseball lockout: a summary

On Behalf of | Dec 3, 2021 | Firm News |

Midnight on December 2 was the deadline for the end of the collective bargaining agreement (CBA) between Major League Baseball players and owners. The CBA basically governs all parts of the working relationship between the two parties. While negotiations are ongoing and intense, there was not enough time to get the details hammered out before a lockout at midnight. It follows lockouts by the owners in 1973, 1976 and 1990. There has not been a players’ strike since 1994-95.

What do the players want?

The short answer to this question is a more significant piece of the revenue pie. Owners are paying some players unprecedented amounts in this off-season (most notable is Max Scherzer’s record three-year, $130 million contract, but there are plenty of other examples). Reflecting trends in other industries, baseball’s revenue stream is larger and more diverse than ever. However, the players or workers are receiving less and less a cut of that income, leaving more for the owners or shareholders. The players want to see the following changes:

Better free agency deals

Recent years have seen most teams avoiding costly long-term free agents in favor of relatively cheap players who are not eligible for salary arbitration (eligibility starts after three full years in the majors) or free agency (eligibility starts after six years). Setting aside the blockbuster deals, the average pay for a free agent deal has gone down modestly even as inflation continues.

Players are looking to cut that eligibility to five years. They also want to reduce the number of service days that count as a year – it is common practice for clubs to keep young players ready for the majors down in the minors for a few weeks to avoid a year’s credit toward free agency. This amounts to paying pennies on the dollar (minimum wage is $570,500) for young players coming into their prime and perhaps establishing themselves as top players in the league.

The players have an argument, with MLB’s minimum wage trailing the NBA, NFL and NHL. A significant bump in the minimum would also provide more financial security to the many players who never make it to arbitration or free agency.

Eliminate tanking

We’ve discussed this concept here. The players would like to see owners strive to remain competitive rather than replacing pricey but underperforming opening-day rosters with cheap labor less likely to win, which in turn gives the club better draft options for more cheap labor. Players feel that owners are not as motivated to win as they are.

The revenue pie

In the old days, there was revenue from attendance and the purchase of beer, a box of popcorn or a candy bar at the park. Later, it was local television deals. Now it includes media empires, national television deals, publicly funded ballparks worth billions, revenue sharing with other teams, parking fees, gambling revenues, and concessions (the parks now include premium products like private boxes and high-end products).

Everything but negotiations stops

Unlike a strike, which means that labor refuses to work, a lockout means the owners refuse to allow work to be done. A lockout means no trades, players are denied access to team facilities, and other official off-field activities stop. Spring training would be imperiled if the stoppage goes into January, and it could delay opening day.

The good news is that the two sides are talking, and the rhetoric is currently mild, which leads to optimism that this will not drag on or affect the 2022 season.