MLB lockout: Players finally asking for the right things

The MLB lockout continues to drag on. We’re around 10 weeks in, with no real movement nor an end in sight. Pitchers and catchers are supposed to be reporting to spring training next week, so we’re close to officially delaying things.

While this particular work stoppage involves millionaires vs. billionaires, at its core it’s still a battle between laborers and bosses. A pie is being earned, so how much of it should go to each side? The gargantuan size of the pie shouldn’t matter in principle. This conversation is about how much of it should be going to the laborers whose performances we actually tune in to watch.

On that topic, it’s never been easier to sympathize with the players. One reason is that the balance really does appear to have shifted too far away from them. Another is that they’re finally asking for the right things, and they’re doing so on pretty reasonable terms.

On the first point, here is an illustration of how far the process has skewed in the owners’ favor lately, with revenue far outpacing payrolls.

The graph continues with estimates of similar growth for the past two years during the pandemic.

The Competitive Balance Tax, colloquially known as the luxury tax, is sort of like a soft salary cap. The players always oppose a salary cap, so the fact that they want to raise the CBT is a given, but in this case it sure seems like they have a good case because it hasn’t been keeping up with league revenues lately.

It’s also arguable whether the current CBT has even promoted any “competitive balance” at all, or whether it would require an accompanying salary floor in order to be effective in forcing more parity. Adding such a payroll minimum is not an issue on the table right now, which makes the owners’ desire to more slowly grow the cap feel like a simple cost-cutting move rather than a genuine attempt at balance. For more details on negotiations over the CBT, check out this explainer and roundtable discussion from The Athletic.

The reasonable request to continue raising the CBT to keep up with normal salary inflation is part of a larger slate of completely fair demands by the players, which leads into our second point about the players asking for the right things.

In the past, the union has generally fought hardest for gains at the top of its ranks, hoping that every time the ceiling goes up on the biggest salaries it would lift up all the other lower tiers of players below them. But it ended up going too far, and they let the earning power of amateur and young players get stifled so fully that it began to drag down some other tiers above them.

Players now have to wait so long to hit the open market in free agency that too many of their prime years go undercompensated, and meanwhile teams have wisely learned not to overinvest on the declining backends of their careers. The laborers don’t get their fair share in their 20s, and now they don’t make up for it as often by getting overpaid in their 30s.

Now the players have realized that the area where they’re really losing the most money isn’t in the shrinking veteran free agent contracts, but rather the arbitration system that suppresses earnings during their most valuable seasons. As such, their top talking points this time around have been things like significantly raising the minimum salary, and reforming the arbitration system to get youngsters paid earlier. Not only is this a more glaring issue for them strategically, it’s also a more sympathetic stance for the public to get behind. They’re finally looking out for the relatively little guy.

“There’s a flaw in the way our CBA is structured,” said Royals star Whit Merrifield on Tuesday on Jayson Stark’s podcast. “There’s an exploitation with young players, and young players bring such a value to the game that they’re not being fairly compensated for.”

During the 2018 offseason, the talk of baseball was collusion. The top free agents weren’t getting the offers they were looking for, at the same time as total salaries weren’t keeping up with league revenues, and most people drew a hasty connection between the two.

But the problem that winter wasn’t collusion. It was that the top free agents that year weren’t superstars but were asking for ludicrous contracts, and most of them were represented by Scott Boras so of course they were all willing to hold out as long as possible to get what they wanted, which in turn delayed the rest of the market below them. As it turned out, most of the holdouts did end up getting paid handsomely, and most of them predictably didn’t keep producing enough to match those lofty long-term payouts.

No, the problem had already existed for years by that point, and it was that young stars in their prime years were getting short-changed during their six (or seven) years of team control. Clubs figuring out that it was a bad investment to overpay older stars was a natural result, a symptom of that root cause. Heck, it’s basically been the Oakland A’s entire strategy for the past two decades, and they’ve made the playoffs every other year during that span while spending no money and there’s an entire best-selling book and Oscar-nominated movie explaining how to do it. Of course the rest of the league was going to catch on eventually.

At the time in 2018, I was critical of the players because they weren’t operating within reality, or at least not evolving with it. They were still chasing yesterday’s old mega-deals for veterans in their 30s, long after the wisdom of such contracts had been thoroughly debunked, instead of shifting their sights toward fixing the gross underpayment of those in their 20s. Back then I wrote:

Brandon Moss already made this point. The players blew it on the last Collective Bargaining Agreement, and now they have to sleep in the bed they made until 2022. The MLBPA has plenty of strength, but in recent years it has never used that power to address any of the problems I just listed [including paying young players more in arbitration, and paying minor leaguers more]. As Tom Verducci of Sports Illustrated notes, the union “bargained for luxury, not labor.”

On the business side of the last CBA, the players succeeded in weakening the free agent qualifying offer system and slashing teams’ ability to spend on international amateurs, but they didn’t meaningfully raise the minimum salary. They focused on making the rich richer and the poor poorer, and now, shock of all shocks, the businesspeople who write the checks are more interested than ever in building around the youngsters whose salaries the MLBPA continues to stifle. In the previous CBA, from 2011, the players’ big victory was severely capping how much teams could spend on their draft picks. I can’t stress this enough – young players don’t earn their fair share because that’s how the MLBPA wants it and negotiates it.

... I’d have more sympathy for the players’ grievances if they were making the right ones. But they’re not lamenting the plight of pre-arbitration players, nor minor leaguers. They’re complaining that today’s top nine-figure contract offers aren’t high enough into the ninth figure, for players who objectively, statistically, categorically don’t deserve the ninth figure to begin with.

Over the next few winters, actual superstars hit the market and resumed getting the record-breaking deals they merited. And still, total salaries haven’t kept up, because the problem had always been happening at the bottom.

Now things are finally changing. The players have caught on, and they’re beginning to step up for the younger guard. Superstar pitcher and MLBPA rep Max Scherzer made that clear back in November, saying (via The Athletic), “Unless this CBA completely addresses the competition (issues) and younger players getting paid, that’s the only way I’m going to put my name on it.”

Scherzer maintained that stance last week, tweeting:

“We want a system where threshold and penalties don’t function as caps, allows younger players to realize more of their market value, makes service time manipulation a thing of the past, and eliminate tanking as a winning strategy.”

In the players’ defense, there wasn’t much they could do about this stuff back in 2018, except complain that the current system had passed them by. These issues can only be fixed in a new CBA, which wasn’t going to happen until this winter. And to hear Scherzer tell it (a couple years ago via NBC Sports), they got swindled by the league:

“[F]or us as players, the way the CBA things were negotiated when the owners asked for essentially price controls in the draft so that they wouldn’t be spending money on players in the draft so they would have more dollars to be able to spend on major league payroll, that hasn’t come to fruition the way MLB portrayed it.”

But even that “grand bargain,” as he recently referred to it in the LA Times, leaves out the decade in between the player getting drafted and reaching the “golden egg” of free agency. The MLBPA could have transferred money away from amateur draftees and toward major leaguers, without also ushering it away from a third-year star who just won the MVP and toward a 12th-year vet who was only healthy enough to play 60 games that summer.

We’ll see how much of this can get solved in the new CBA, but even suggestions for incremental improvement don’t seem to be gaining traction with owners. The result has been an epic standoff, between owners who have gotten too entitled to their highway robbery, and players who finally discovered the blueprints of the heist and want it to stop.

But at least the players are on the right road now. They haven’t been receiving their fair share for a while, and the new things they’re asking for this time around are a better path to getting there. A few years ago I harshly called them out for making the wrong complaints, but that’s no longer the case. The players’ demands this winter are completely reasonable and the owners are being ridiculous.

Epilogue: How players could take the next step

Quick sidebar with a parting thought.

In that 2019 NBCS article linked above, Scherzer said, “[I]n my belief, the players and the owners have a 50-50 split over the dollars created in this game. As players, we would just like to make sure that relationship continues at a 50-50 rate.”

In the LA Times article this winter, he said, paraphrased by MLB Trade Rumors, “Scherzer further reiterates that the union is not interested in any system that ties player compensation directly to league revenues, citing that doing so would implement a cap system that’s at odds with the sport’s free market economics.”

These are directly contradictory statements. You either want to guarantee a certain split, or you want to roll the dice on a free market where anything can happen including maybe you losing. It can’t be both ways, it has to be one or the other.

This is why I’ve long supported the NBA model, in which total league salaries are set at a percentage of total league revenue. It’s the most fair for everybody, and that should be especially attractive to the labor side since they’re the ones who get shafted throughout pretty much all of human history. Maybe they’ll catch on to that in time for the next CBA in five years, if they realize that hardcoding a 50/50 cap/floor is better for them than getting 40/60 in a free market like they’re doing now.