Reviewing MLBPA’s second offer to the owners

The MLB Players Association has made its second formal proposal to the league, and the word is there wasn’t much movement from the first. That’s not too shocking. The in-between stage talks aren’t very conducive to compromise. Both sides won’t budge much at all until the other does. As was reported in the same article, negotiations will probably begin to move in extremely late stages (last 72 hours). That doesn’t really help either side, but nobody wants to be the one to budge first because there is no reward for doing so.

Since we didn’t cover the first proposal from the union in depth the first time around, it’s worth a quick dive into the second one and why some of the proposed tenets are favorable to the union. Here are some of the main aspects of the proposal:

· Arbitration changes:

• Players become eligible for arbitration after two years of service time
• In certain circumstances, some players can be free agents before six seasons

· Pre-arb player changes

• Increases in minimum salary
• Potential bonuses

· Major market changes:

• Increase in competitive balance (CBT) threshold
• Changes in revenue sharing between clubs
• Changes in draft order

Of course, there are additional aspects of the proposal from the union, but these hit on the economics side of things. As we know, the economics side trumps all other facets of negotiations in baseball. If you read my other piece covering the owners’ proposal, then you know that one of their main focuses was decreasing the distribution of salaries amongst players by decreasing the ceiling of the highest paid arb-eligible players and decreasing competition in free agency through a lower CBT threshold and fewer young, superstar free agents. These ideas would mainly be executed through changing service time rules.

The union’s second proposal makes it clear that they are aware of the negative consequences that would come from the proposed tenets. Their response directly addresses these issues. To start, by entering arbitration earlier, players would be rewarded for their outstanding play. Right now, it is nearly impossible for elite players on their rookie deals to not be massively exploited for their production. Secondly, there will be circumstances where players can reach free agency before six seasons. There aren’t many details on this, but it’s obvious that the union’s goal is to increase the number of buyers of a player’s labor earlier in their careers.

On a related note, adding potential bonuses to players who massively outperform their contracts would be a big win, but I’m skeptical of its likelihood. The owners would probably not favor this combination of outcomes, but there is an economic idea here that they must consider.

With tensions rising between players and owners in recent seasons, it could be mutually beneficial for the owners to show players loyalty before they even deliver a great product. While it is natural for professional athletes to be competitive and do everything they can to achieve great rewards, there is an idea in competitive labor markets that employers who reward their workers with salaries and/or raises before receiving the production can often see greater production from their workers after the fact! It can be a great motivation to your workers by showing you trust them and the work they have put in. It’s also the type of practice that attracts the most skilled workers.

The immediate response to this will probably be, “Well it’s a business!” and to that I say, these theories have empirical validation in labor markets. Players want to play where they are wanted and will do the most to make sure they return the favor! What better way to show trust than taking out the checkbook immediately and not playing any financial games? Obviously, this would be a big turn of events and is unlikely, but eventually, a team or two will realize the benefits of treating players like humans in one form or another.

Lastly, as was previously stated, the owners’ proposal would almost inevitably lead to less competition for free agents. By decreasing the CBT threshold, more teams would be less inclined to go over this arbitrary line of spending. It has essentially functioned as a salary cap in recent years and is a big reason why the players countered with a significantly raised CBT threshold. The ultimate goal for a free agent is to have as many suitors as possible. With an increased CBT, more teams would be okay with committing higher AAVs for longer periods of time. That could lead to some sort of bidding war for the most coveted players. Given how the owners have operated in recent years, I imagine that the union won’t allow the CBT to be raised at all.

These talks are certainly fluid and with only a few weeks left (hopefully) to negotiate until a possible freeze on December 1st, there’s a chance that we see massive flips on some terms from either side. But there are a few tenets for both sides that will never be accepted — the increased CBT being one of them on the union side. I guess we can’t know for sure until it’s all said and done, but it is certain that the union won’t accept anything that would set them back for years and they have made that crystal clear thus far.