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Reviewing the introduction of WAR into MLB collective bargaining talks

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Negotiations seem to be headed in the wrong direction as the CBA inches toward expiry.

World Baseball Classic - Championship Round - Game 3 - USA v Puerto Rico

With just two weeks until expiration of the current CBA, talks between the league and the MLBPA seem tense. After a couple of formal proposals from both parties, not much progress was made. In their most recent offer, the owners gave a bit more detail on their idea of a fixed pool of arbitration, and it doesn’t look great.

If you’ve followed baseball closely at all in the past decade, you’ll have heard of WAR, or Wins Above Replacement, that is. It turns out the owners appreciate it too, albeit for their own particular reasons. It was recently reported, that the league proposed using WAR, citing FanGraphs’ fWAR as a possible algorithm, to calculate the salaries of arbitration eligible players.

I suggested the possibility of this when we first started covering the CBA discussions at PSA, but from a different angle. I thought that the union could use value statistics like WAR as a way to demonstrate the fact that elite, arb-eligible players were exploited. The owners thought the opposite. Like other aspects of the proposal, it seeks to remove all uncertainty for owners. The owners proposed a fixed pool of money that’s doled out based on a well-defined scale of increasing salaries as performance increases. This is an optimal outcome if you’re looking to forecast your finances.

The owners appear to be acting like a hedge fund more and more. Think about it like this; in that type of financialized environment, you have shareholders that want to know what their books look like ex-ante. They want to estimate their future outcomes as precisely as possible. In the current arbitration process, teams can do so reasonably well. But by fixing the pool of money and how much your best-performing players can earn, the level of certainty in your forecast improves even further.

As you’d expect, that’s not super player friendly. Taking away the possibility negotiation removes agency from the player and their representation. The job of an agent loses almost all its value for players under team control.

On top of that, the owners have been redundant in their proposals, despite the union being clear in its intentions on the arbitration process. Eugene Freedman sums it perfectly here:

The expectation in negotiation is to have a productive back and forth, giving and taking while making proposals in good faith. The owners have proposed throwing out the entire arbitration system (a significant part of Marvin Miller’s legacy), relying on an algorithm, and forcing all players to wait until age 29.5 to hit free agency.

The owners’ new proposal also introduces strange $/WAR figures. First-year arb-eligible players would receive about half a million dollars per career WAR. Second-year eligible players would receive a bit more, while third-year eligible players would receive $910,000 per career WAR. While that would allow for third-year eligible stars to earn high salaries, on the whole, it would pay out far less than what a WAR is typically estimated to be worth.

The point isn’t just about the inclusion of WAR. The issue is coming up with these arbitrary values for a single WAR. Teams have their own valuation systems for WAR, of course, and they know how much a win is actually worth to them. This system will simply result in a new, more concrete way of ensuring players under team control are underpaid.

As Travis Sawchik pointed out, the group of players least paid for their production are those in the age 26 bracket. They are the best performing and don’t receive the compensation for their production. The goal of the union should not be to achieve the same outcome as the current system just by taking a different path, and they know this. They’ve made it clear their goal is to give players the opportunity to be bid on by multiple teams earlier in their careers.

Realistically, it’s not feasible for players under team control to get what they’re worth on the market (that’s why it’s called team control!), but if you can move the free agency timeline up, players will get a chance for their big pay day before their time in the league is up. The middle-class players will benefit from that type of system. Even in recent years, the players at the top of the market have made out fine. If the union can better protect the two-to-three-win mid-career player, then they’ll be doing their job well.

The gist is the same from previous reporting and proposals. The league wants to cap earnings on the best players, and lock in the distribution of earnings among underpaid, arbitration-eligible players. It forces one to brace for a long work stoppage. Negotiations don’t seem productive, and with each report, we don’t seem to be gaining any ground.