Mar 3, 2022 - Sports

What to know about the MLB lockout

Illustration of baseball on top of a pile of money

Illustration: Eniola Odetunde/Axios

For the first time in 27 years, MLB has canceled regular-season games because of a labor fight, as the longest lockout in its history rolls on.

State of play: For months, MLB and its players' union have accused each other of not wanting to strike a deal — a "deeply cynical premise" that illustrates the disconnect between them, as ESPN's Jeff Passan puts it.

  • Every day there isn't a game, players lose $20.5 million in salary, and teams move closer to having to provide rebates to regional sports networks (starts around ~25 games missed).
  • Public support is seemingly with the players, but time is on the owners' side. Because of the rebate threshold and low April attendance, they may be perfectly fine missing the first month.
  • The optics couldn't be worse, as this labor dispute — hardly a matter of life and death — plays out against the backdrop of war.

What they're saying: MLB commissioner Rob Manfred announced Tuesday that the first two series have been canceled and will not be made up. So the earliest the season could begin is April 7.

  • "A lockout is the ultimate economic weapon," said MLBPA executive director Tony Clark. "But [we] won't be intimidated."
  • "The unfortunate thing is the agreement we offered players had huge benefits to fans and players," said Manfred.

Between the lines: The owners are largely viewed as having "won" the past two CBA agreements, so the union is playing catch up in a sense, needing bigger wins than they would have needed if these negotiations were happening in a vacuum.

  • "In truth, this day was five years in the making, ever since the players whiffed on the last CBA," writes SI's Tom Verducci.

The big picture: The irony of these negotiations — as important as they are to MLB's future — is that they mostly address economic concerns rather than baseball's biggest problem: the on-field product.

  • Games are too slow and stagnant, causing fans to lose interest. Data-driven front offices run teams like Fortune 500 companies, often prioritizing efficiency over entertainment.
  • This sense of unease about how baseball is played has bled into negotiations about how money is distributed, with the union and ownership bringing a certain level of anger to the table.

What's next: After eight consecutive days of bargaining, both sides will take some time to regroup. It's unclear when they'll meet again, but sources indicate it will likely be within the next week.

Core issue: Competitive Balance Tax

Years exceeding competitive balance tax threshold
Data: theScore; Chart: Thomas Oide/Axios

The Competitive Balance Tax (CBT) as we know it came about in 2003. The problem? It hasn't helped achieve competitive balance.

How it works: The CBA dictates a dollar amount that teams can pay in annual player salaries. Teams who exceed that threshold are taxed on the overage, and the tax rates get worse the further they exceed it.

  • The Dodgers and Padres were the only teams to exceed last season's threshold, which was $210 million. They paid penalties of $32.7 million and $1.3 million, respectively.
  • Just nine teams have ever exceeded the threshold, and just three have done so more than twice: Yankees (15), Red Sox (10) and Dodgers (5).

State of play: Players want to increase that threshold to encourage spending. The owners are willing to raise it, but not as much as the players would like. The result is a fairly large gap in their five-year proposals.

  • 2022: $238M (MLBPA) vs. $220M (MLB)
  • 2023: $244M vs. $220M
  • 2024: $250M vs. $220M
  • 2025: $256M vs. $224M
  • 2026: $263M vs. $230M

The big picture: The goal of the CBT was to achieve competitive balance by disincentivizing big market behemoths from vastly outspending their smaller-market peers. But players think it has failed, and has instead become a de facto salary cap that impedes spending.

  • They have a point: In the 19 seasons since CBT was implemented, fewer teams have played in (19) and won the World Series (13) than in the 19 seasons prior (20 and 14). And since 2012, the CBT threshold has increased just 18% while MLB revenues have increased 40%.
  • Owners disagree with the notion that the CBT has become a salary cap, and they believe increasing the amount of money teams can spend pre-tax will give the richest teams a greater advantage.

Core issue: Minimum salaries

Minimum player salary, by league
Data: TheScore; Table: Thomas Oide/Axios

"Millionaires vs. billionaires" is a catchy line, but it overestimates how much money most MLB players make.

By the numbers: MLB's minimum salary ($570,500) is by far the lowest among the Big Four (NFL, $660,000; NHL, $750,000; NBA, $925,258). And unlike those other leagues, a majority of MLB players make the minimum.

  • 63.2% of players in 2019 had less than three years of service time, per TheScore, and were thus making the minimum or close to it.
  • By comparison, just 3% of NBA players last year made within 10% of the minimum.

State of play: The union wants to increase the minimum salary, and the two sides are actually not that far off.

  • The union wants it raised to $725,000 this year, $765,000 by 2024 and further increases in 2025-26 based on the consumer price index for urban wage earners.
  • The owners' final offer began at $700,000 this year, followed by annual increases of $10,000. So we're talking about a difference of a few thousand dollars.

The bottom line: If the MLBPA caved and accepted MLB's offer, it's already a pretty big win ($570,500 to $700,000). But the union is going to push for every dollar, as it should, given that minimum salaries impact the majority of its members.

Core issue: Paying young players sooner

Number of MLB position players with 1+ WAR,<br> by age
Data: Stathead; Chart: Thomas Oide/Axios

MLB's economic system is set up in such a way that the most productive players make the least amount of money. Fixing that system is at the heart of these negotiations.

The backdrop: Between time spent in the minors and the six years of service time required before hitting free agency, most players are past their prime by the time they can freely negotiate their salary.

  • In the past, there was a pot of gold at the end of the rainbow as teams often overpaid veterans for past performance (see: Albert Pujols and Miguel Cabrera).
  • But that's gone away in recent years, with analytics-savvy teams realizing they can stock their roster with cheaper, younger players.

By the numbers: Players in their age-29 season or younger last season generated 63% of all wins above replacement, but earned just 38% of MLB's total salaries, per FiveThirtyEight.

Between the lines: The gap between pay and performance for younger players has been a central focus for the MLBPA, and the league has shown a willingness to address some of the union's concerns.

  • Service time manipulation: The best young players are often held back in the minors to keep them from accruing a full year of service time. MLB has agreed to an incentive system to encourage clubs to promote those players, which is promising.
  • Pre-arbitration bonus pool: The union proposed an $85 million bonus pool (with $5 million annual increases) to reward the best players who have fewer than three years of service time. The league has upped its offer to $30 million, but it still pales in comparison.
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