Baseball’s labor battle: Here are the battleground issues

Luxury tax, service time/free agency, and gambling revenue among issues dividing players and owners

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Rob Manfred will lead a cabal of greedy owners to the table, as MLB gets set to negotiate a new CBA.
Rob Manfred will lead a cabal of greedy owners to the table, as MLB gets set to negotiate a new CBA.
Image: Getty Images

So when will we have baseball again?

Whenever the players break.

That’s the glib answer, of course. But owners don’t lose lockouts. At least it’s impossible to think of one. That’s kind of the point of them. Certainly, the owners, billionaires all with other businesses and even side-hustles right next to their stadiums, can last longer without games. While most baseball players are millionaires, they’ll miss the checks a lot more quickly.

Still, you can’t ever truly estimate the cabal of 30 owners’ insatiable need to be making as much money as possible as soon as possible. That need to grab the one dollar in front of them has probably already cost them the five down the road, as they’ve ignored any long-term strategy in marketing or building the game in a way to ensure its fandom will grow and endure in a changing society. The players must be counting on their money-withdrawal becoming too much to bear.

So what are the problems? There are many, but they all boil down to this: The past five years, the average MLB salary has flatlined around $4.3 million, and actually shrunk this year to $4.1 million. This year is due to pandemic problems from last year, at least that’s what the owners will have you believe. Still, the four years of stagnation is its own evidence. Meanwhile, MLB’s revenues have grown some 14 percent in that time, from $9.03 billion to $10.37 billion. You can see the problem.


The pandemic will throw a wrench in all of this, as owners will claim greater damage from it than is actually real. And they’ll also ignore that things will basically be back to normal come 2022, there are fresh TV contracts, and also no CBA has accounted for legalized gambling (we’ll circle back to this).

That’s the main discussion. Owners have greatly increased their revenue while not seeing it filter (or trickle, to use a term that every financial asshole still worships) down to the players. That manifests itself in a few ways.


The Luxury Tax

One, the luxury tax. It has become a de facto salary cap for everyone but the Dodgers. The players will want either to do away with it completely or raise it aggressively. The former is going to be a non-starter. So the latter is just about their only path.


But how to calculate that? Using the NBA’s or NHL’s model of a 50-50 split would actually harm the players’ cause, and that’s even if the two sides could agree on what qualifies as baseball-related revenue. If we use that $10.37 billion figure from 2019 as a base, and divide it in half, and then divide it among the 30 teams, that’s a $172 million per team threshold. That’s way below what it was this year at $220 million. So that won’t work.

What the players might take aim at are the penalties for going over the tax, more than the tax itself. Right now, teams are loath to be over it for three straight seasons, when the penalties get quite heavy with a 50 percent tax. A restructuring and lowering of these is a must for the players.


The tax itself isn’t the main problem. The main problem is how willing so many teams are to go nowhere near it. Teams are only too happy to “tank,” pay their roster nothing, and just let the local TV, national TV, streaming, and gambling revenues roll right in.

The introduction of a salary floor is something you’re going to become very familiar with over the next few months. The owners have already proposed a laughably low one. Both the NBA and NHL have salary floors within the same neighborhood as their cap (NBA is 90 percent, NHL is 85 percent). The MLB’s offer on a salary floor was 55 percent of its offered, lowered luxury tax threshold. You see the problem, and that’s if the players are even willing to discuss a salary floor, which they have not stated. But as the owners have proposed it, it will probably be part of any final agreement, but as some concession from the owners to get something more draconian somewhere else. If the players do accept a salary floor, it has to be in the same neighborhood as the tax/cap, not the Hubble-distance the owners first offered.


Service Time

The next big area of contention is service time. You’ve been inundated with stories the past decade about teams holding a player in the minors for a month or so when they’re clearly ready to be in the majors to get an extra season of control. Frankly, this whole system needs to be burned down, but that’s not going to happen. Players want to reach free agency faster, where the bigger bucks and freedom lie, and owners want to keep them from it. Right now, a player has to accrue seven years of service time before free agency. Players almost certainly want to get this to four or five, so they can hit free agency at 26 or 27 instead of around 30. Which has become an age that MLB front offices have become incredibly unlikely to hand out multi-year deals with a lot of zeroes, except for the absolute top echelon of players. Again, the owners have offered a complete non-starter of granting free agency at 29.5 years old. This is an opening salvo, and makes you wonder what the final number is they’ll settle for. 27? 28?


The MLBPA might not be interested in choosing a definite age, or at least not granting free agency by age alone. More and more players hit the Majors at 20 and 21 and 22 these days, and tying them to their teams for six or seven years isn’t really the point. A hybrid of service time/or age is the solution here, but getting there will be ugly.

The arbitration system, which players get after three years of service time in the majors (sometimes two but rarely), will also come under the microscope, but linked with the service time issue.


Gambling revenue

Sitting just to the side is what players will think of gambling revenue. Teams like the Cubs and Mets are already planning or have sportsbooks at their parks. Do owners think these are their own revenues to keep? Do players think they should get some of that too? Some estimates have gambling worth around $1 billion to baseball, annually. Players won’t get a crack at all the real estate deals owners make for the land around their park, but this is based on what they do on the field. They’ll take a run at it.


There are other issues, such as draft slotting and international signings and maybe just getting it down to one draft, as well as rules changes. But all of those will fall after the two sides reconcile how owners continue to get richer and players don’t.

How long will this all take? Well, it’s been eight years since any league missed regular-season time due to labor strife (the NHL). It seemed like the leagues learned that this was something that they should avoid at all costs. But as we saw last year between the players and owners when they were trying to figure out a pandemic-shortened season, the relationship is Hoth-icy. And these aren’t small issues, but the whole structure of the game. Spring training starting in late February is a forlorn hope. If nothing is solved by the second week of March, then the season is going to be delayed too. This seems a pretty safe bet. But one would hope neither side is so hellbent that they miss a whole season. TV ratings were basically in the toilet this season, indicating that MLB is on more perilous ground with the public than it would admit. A missed season, and it’ll likely never recover.


It’s going to be a cold winter, and it might last a while.