It’s been a great year of baseball. After a weird, shortened 2020 season, the game rebounded well with fascinating seasons from players like Shohei Ohtani, Bryce Harper, Vladimir Guerrero Jr., and many more. After losing significant revenues on both sides in 2020, a season with iconic breakout stars was well-needed, if not only for financial reasons. The league is gaining real momentum and could begin its ascension back to the top of American sports in the coming years as it continues to grow nationally and globally. That all sounds great, doesn’t it?
Well, there is a key issue which stands in the way of the league’s growth, the collective bargaining agreement. It’s set to expire this winter and as fans know, the owners and MLB Players Association have not seen eye-to-eye in the last year and a half. While negotiating to begin the 2020 season, tensions rose to absurd levels and delayed the start to the season further than it should have, coronavirus concerns aside. If we’re being real, we know that those were not the real reason for the delay. Instead of streamlining the negotiations to start the season quickly, the discussions basically turned into early CBA negotiations.
To be frank, that delay was due to the owners. They continue to offer the MLBPA non-starters over and over again. Over the years, their share of the league’s revenue has grown. They have ensured that fact through several calculated financial strategies. Even so, they continue to want more. Dozens of articles can be written about it, but this one will focus on a relatively recent rumor of a big piece of the puzzle, service time amendments.
MLB service time rules are broken. Owners have perfected the craft of manipulating them and even when it is obvious teams are doing so, like in the case of Kris Bryant, they still do not face consequences. Negotiations around changing service time rules are bound to be a key pillar of the talks. Both sides know it. That’s why discussions around them have been ongoing for months.
In early September, it was reported that the league offered a change to service time rules and the arbitration system, which is tied to service time. The key tenants of the proposal go like this:
· All players become free agents at 29 1/2 years of age, no matter the years of service
· All players under team control who are eligible for arbitration will share a pool of $1 billion
· Earnings/shares of that pool will be determined by a formula (details are not clear on formula)
Before getting into it, I want to point out the traditional economic definition of exploitation. In a dynamic like the one that exists in MLB in which there is an owners’ class and workers’ class, exploitation comes about when workers do not receive the payback for the value of their production. Obviously that value can be extremely ambiguous. However, in baseball, we know that we have a pretty accurate idea of how to value that production.
With production statistics as accurate as WAR, be it public versions or teams’ internal metrics, it becomes relatively simple to calculate how much a player was worth in a season. The same goes for what they might be worth in the future. So when we have a class of arbitration-eligible players — including some of the most valuable players in the game — there are significant potential earnings to be had. If they don’t get the total earnings they deserve, then they’re being exploited. Pretty simple. Now back to the proposal.
With the league getting younger and players performing while peaking earlier in their careers, negotiating a fixed pool of money would be absurd for the union. It basically enforces a price ceiling for some of the most talented players in the league who are already hurt by the arbitration system. It’s in the best interest of the players for the union to negotiate a system that rewards said players earlier in their careers. The owners know very well that this offer is a waste of time.
In addition, the $1 billion pool is likely to decrease the distribution of earnings for a significant chunk of players in the league. That can be problematic in baseball’s particular owner-worker structure. Since these players are under team control and cannot leave unless the team trades or releases them, each team is functioning as the single buyer of labor. This is called a monopsony.
The lack of competition for buyers of the players’ labor has several negative consequences. They range from decreased pay (as was previously said) and/or decreased labor time. In a traditional labor market, this would likely decrease employment. In MLB, that is likely to manifest through players playing less (which we’ve seen for starting pitchers) and more players participating in the arb-eligible pool, which would shrink the earnings for each player.
On top of that, elite players who would become free agents before the age of 29, like in the current system, would be hurt the most. They would lose out on the opportunity to receive bids from multiple teams! The lack of buyer competition is a key reason why the system hasn’t worked for the players in recent years, and owners have been less enthusiastic to go over players over 30 in year one anyway.
It’s crazy really. You don’t need to delve deep into the economics of it all to understand all the ways that this tenant of the proposal isn’t remotely close to what the end result might look like. It makes it clear that the owners are negotiating in bad faith. There is nothing about this that is good for players. Barring any miraculous changes in the intentions of the owners, a work stoppage seems like the most likely outcome. It’s a waste of time to even make offers like this. I know it’s impossible to know all the details and whether this proposal is even true or not, but recent history tells us all we need to know.