Fresh off what was by all accounts a stellar post-season for Major League Baseball, the league is now staring into the abyss, facing its first work stoppage in 26 years.
The labor crisis could pause the free-agent market and even threaten the start of spring training in February 2022.
Specifically, the five-year labor contract expires at midnight on December 1, and, given the time constraints, getting a new agreement done in time will be challenging to say the least.
What exactly is driving this crisis?
We sought out Michael Burwick, a partner in the sport law group at Greenspoon Marder, for some insights. What follows below is his interview:
Question: What factors are driving the current scenario?
Answer: Typically, collective bargaining agreements (CBAs) have expiration dates. The current five-year MLB CBA ends at 11:59 p.m. EST on December 1, 2021, so, without a resolution to the issues dividing the MLB owners and the MLB Players Association, there is likely to be a work stoppage on December 2. This does not necessarily mean that the forthcoming season will be affected, as there is still ample time to work out a new CBA, but it definitely places the issues dividing the two sides into sharper focus. Some of these factors include:
- Sharing percentage of MLB revenues / revenue split between labor and management;
- Pay scale for players, especially minimum pay level and pay in players’ early years of service;
- Service-time manipulation or when teams hold back a ready prospect in order to delay free agency or arbitration eligibility for a full year; and
Q: Have there been a similar scenarios in MLB or other sports?
A: While we have certainly seen impasses leading to strikes, lockouts, and other work stoppages across professional sports, it might be most helpful to look at Major League Baseball as a precedent. In late 1983, the owners and players agreed to a one-year extension to come to an agreement. That negotiation required significant MLB concessions to the Players Association in order to get the next season underway but was ultimately successful. In fact, the last CBA (the one in place before the soon-to-be-expiring agreement) was to expire on December 1, 2016, and the MLBPA and MLB did not arrive at an agreement until the day before expiration. Another happy ending, but the issues separating players and owners now are far more wide-ranging and also more complicated than those back in 2016.
Q: Does either side have the leverage going into negotiations?
A: Conventional wisdom and most prognosticators say that the owners have the leverage. I actually disagree. While the owners certainly have the financial advantage and are led by Commissioner Rob Manfred, who has a strong background in labor and employment law, the real question, in my opinion, is who the fans will blame for a work stoppage. The popularity of baseball is still quite tenuous right now, despite a fantastic post-season, especially with respect to younger demographics. There is also tremendous support these days for the worker over the owner, the little guy over the billionaire, pay equity, the optics of racial disparity between owners and players, diversity more generally, and concepts related thereto; that the fans, who are the real consumers in this case, may very well side with the players. Part of this also comes down to COVID-19 and filling ballparks again. Here, the power lies more with the owners, as they are in a better position to withstand a work stoppage. That said, both sides have extra incentive in the wake of COVID to fill seats and to participate in the revenue derived therefrom. The biggest issue is how that revenue will be allocated between players and owners.
Q: What is the most likely result to come from the negotiations?
A: MLB is playing defense right now in terms of the players asking more from the owners than vice versa. But the players are very united and there are definitely significant sticking points between the two sides with respect to pay, free agency, arbitration, rookie, and early-stage contracts. Baseball has always been a bit different than the NFL, NBA, and NHL. But the players’ salaries have declined 6% since 2017 while the salaries of NBA players have exploded, the NFL continues to be lucrative for players, and even the NHL is starting to put up some bigger numbers in terms of the pay packages recently offered to its players. The owners will have a lot to concede to the players to reach a deal, but I believe that a strike or a lockout can be avoided by an agreement on a revenue split that is more generous to the players and some forward momentum, although not as much as the players are seeking, on some of these other significant issues.
Q: How could this have been avoided?
A: It is truly difficult to opine on how this impasse could have been averted. So much has changed over the past couple of years, changes that were in no way foreseeable when the last CBA went into effect in 2016. That is one of the problems with collective bargaining agreements that are in place for five or ten years. When the world changes substantially, the number of items in dispute between players and owners (or union members and their employers) increases dramatically, as do the qualitative differences between the parties on an issue-by-issue basis. Both sides have been working since last spring to resolve these issues prior to the deadline. Perhaps if they had begun their efforts earlier, we would not be cutting it so close. That said, there is such a gulf that exists between the two sides that, no matter when negotiations began, we might very well still be in the same position we are in today.