CBA Musings (1/28): What’s Happening and What’s Next?

[Ted Schwerzler]

Another week of progress, and we’re ending January on a better note than we entered it. Major League Baseball met twice with the union this week, and while the results may not have been substantial, at least they’re going through the motions.

After meeting for less than 10 minutes before locking out the players back in December and then spending more than 40 days before issuing a proposal, it’s noteworthy that the league engaged the union on consecutive days this week. The meeting results aren’t exactly heartwarming, but there’s a blueprint towards a path forward.

The most drastic change in negotiations the past week came from the players' side. Wanting to reach free agency sooner, they desired to shorten team control. During Monday’s meeting with the league, the union removed their request for an age-based free agency system. This signaled a substantial concession on their side and should be used as a powerful bargaining chip when discussing the idea of give and take during future topics.
 
Unfortunately, per The Athletic’s Evan Drellich, MLB Deputy Commissioner Dan Halem said the league was “willing to lose games over outstanding issues” in the same meeting.

Britt Ghiroli, who was previously featured here at Twins Daily in a “Women in Baseball” piece, wrote a great article on the state of the lockout. A takeaway for me was this comment, “Whether this painfully slow sparring between baseball and its players is necessary isn’t the question. It’s why those with the longest-term investment in the game are seemingly unconcerned with prioritizing the quality of the product, treating fans like a steady constant instead of something that the sport has to sustain, grow and develop to stay viable.”

Former General Manager Jim Bowden made a point to contend that the players' concession was a large one, and the league needed to follow suit. Unfortunately, when the two sides met a second day, Major League Baseball did little to uphold their side on Tuesday. Jeff Passan outlined the changes, and while the league agreed on salary raises and pre-arbitration bonus pools, the extent they’re willing to go was laughable at best.

In a piece from The Score’s Travis Sawchik, we see how far baseball lags regarding the minimum salary. The bump of $15k is so negligible that it fails to keep up with the inflation rate from the time it was last adjusted. The focal economics point from the union side has been in helping young players get paid. The reality is that very few major leaguers make significant sums of money, and a career can be incredibly short. Searching for an avenue that immediately and adequately compensates talent is important. As of right now, it’s not something the league is too concerned about. From an ownership standpoint, slight raises to the minimum should be considered inconsequential, but remaining tight on the issue is as shortsighted as the unwillingness to compensate minor leaguers fairly.

One quote from Monday’s meetings grabbed headlines and came from Colorado Rockies owner Dick Monfort. His franchise has largely been a dumpster fire of financial peril for quite some time. He poured gasoline on the situation, complaining some owners have trouble affording their teams and the additional costs Covid-19 has created. In short, a billionaire wants us to feel sorry for the lack of egregious revenues regarding something only one-percenters will ever experience. As you can expect, it wasn’t received positively.
 
Let’s dig in for another week of this charade. Pitchers and catchers are supposed to report for Spring Training just over two weeks from now.

 

View full article

[DocBauer]

I was legitimately impressed by the MLBPA when they pulled back and made concessions in order to facilitate negotiations. I was appalled by the counter offers from the owners.

Additionally, I think it's about time for the union to look out for the young and mid-tier players with a raise in salaries. Again, the counter from ownership just seemed ridiculous and counter productive to me.

I have issues with both sides, and have in past negotiations. But I'm amazed at how unintelligent a billionaire business owner  can be. Just feels like they are OK with killing the sport instead of nourishing its growth. 

Monfort's comment is so egregious I can't even laugh at it.

[LA VIkes Fan]

I also have issues with both sides too numerous to list here, but I am amazed how poorly MLB/the owners are handling this negotiation. They seem to have a complete tin ear from a PR standpoint and also appear to have little real interest in a resolution that doesn't include the MLBPA making some significant concessions. I'm now starting to realize that this "negotiation" is going to stretch into the regular season unless someone takes control that actually has some business sense. Manfred is not that guy.

Monfort's comment if he was quoted accurately both amazing and not amazing at the same time. I'm a lawyer and litigate business cases for companies and wealthy entrepreneurs. I almost NEVER allowed my clients to speak directly to the other side about settling the case. Why not? Because most of them start out with the unbreakable sense that they are the truly aggrieved party and if everybody just understood how truly aggrieved they really were, they would instantly agree and the case would be over. Guess what? Both sides think they are the truly aggrieved party and telling the other side you are the only aggrieved one doesn't help, it makes things worse and marks you as a narrow minded, unthinking idiot. That's why you let the lawyers do the talking. Here, MLB should have a chief negotiator who actually does the union negotiations for a living do all of the talking, not a Billionaire owner who does not regularly negotiate union contracts. Add to that the fact that Monfort runs what is perhaps the most ineptly run of all the current MLB franchises and I am appalled that he is let anywhere near a union negotiation committee, much less the chairman of that committee. Who makes these assignments? There has to be at least one MLB owner that actually understands union negotiations, the necessary PR in negotiations, and actually could add value to the discussions. Monfort absolutely is not that guy, 

This is incredibly painful to watch. I'll continue to interact with you guys on baseball substance because you are knowledgeable and very fun to talk baseball with, but I'm done with these negotiations. A pox on both of their houses. We are watching the slow and continued disintegration of baseball as an important force in the American life.

 

[High heat]

I think the easiest solution to this is to change the competitive balance money and a portion of the revenue sharing money and instead of paying the teams the league pays the players who have not reached free agency directly.  This would be divided up based on performance. This gives young players more $ before free agency and can be easily divided fairly though out the league.  

You could even take a portion of that and give incentives to players who sign or extend with the team that drafted and developed the player.  Say any player who signs an extension with a team before entering the final year of arbitration if that player had logged 150+ minor league games with that organization would be eligible for $ from the revenue sharing.  This would given incentives to players to sign long term deals earlier in the arbitration process and would also incentives teams to reach out and bargain with younger players to sign extensions and put and incentive to teams to keep and develop players.  

[wsnydes]

It's hard to get too excited about how things transpired this week.  Even when there appears to be some movement, it almost seems backward.

[Major League Ready]

14 hours ago, LA VIkes Fan said:

I also have issues with both sides too numerous to list here, but I am amazed how poorly MLB/the owners are handling this negotiation. They seem to have a complete tin ear from a PR standpoint and also appear to have little real interest in a resolution that doesn't include the MLBPA making some significant concessions. I'm now starting to realize that this "negotiation" is going to stretch into the regular season unless someone takes control that actually has some business sense. Manfred is not that guy.

 

I disagree counselor.  The starting point by which to determine who is asking for concessions is not the new ask, it’s where they left off.  If Party 1 has a contract for services expire at $X and party 2 asks for 1.5X, in a new contract, and we arrive at 1.25X, the person conceding something is party 1 as I see it.    

They owners have not asked for a salary cap like other sports have.  They have not asked for a maximum annual amount like some sports.  They have not asked for the number of years to be limited and they have not asked for non-guaranteed contracts.  The owners are asking for one thing, expanded playoffs.  Given 85-90% of that money will go to player salaries, I would not call that asking for a concession.  All of the concessions necessary to get a new CBA will be on the part of ownership.  
 

 

[Major League Ready]

12 hours ago, High heat said:

I think the easiest solution to this is to change the competitive balance money and a portion of the revenue sharing money and instead of paying the teams the league pays the players who have not reached free agency directly.  This would be divided up based on performance. This gives young players more $ before free agency and can be easily divided fairly though out the league.  

You could even take a portion of that and give incentives to players who sign or extend with the team that drafted and developed the player.  Say any player who signs an extension with a team before entering the final year of arbitration if that player had logged 150+ minor league games with that organization would be eligible for $ from the revenue sharing.  This would given incentives to players to sign long term deals earlier in the arbitration process and would also incentives teams to reach out and bargain with younger players to sign extensions and put and incentive to teams to keep and develop players.  

How would you be balancing revenue if you don't give it to the teams with less revenue.  That would not promote parity.   Now, if we are talking about the penalties, there may be an opportunity to distribute that differently.  Currently, the first $13 million will be used to defray clubs' funding obligations under the MLB Players Benefits Agreements. Of the remaining sum, 50% of the remaining proceeds collected for each Contract Year, with accrued interest, will be used to fund player compensation as described in the MLB Players Benefits Plan Agreements and the other 50% shall be distributed to clubs that did not exceed the Base Tax Threshold in that Contract Year.[6]

The 50% distributed to clubs that did not exceed the Base Tax Threshold means wealthy clubs that are just under the cap still get revenue.  That money could be distributed in a manner that better served parity.  The 50% going to player benefits could be distributed among prearb players or the bottom 25% or some other manner that does not include the highest paid players. 

Increasing penalties and distributing differently would serve competitive parity as well provide additional compensation to lower paid players.  However, the players are very would likely stringently resist increasing penalties for exceeding the CBT threshold.

[bighat]

16 hours ago, DocBauer said:

I'm amazed at how unintelligent a billionaire business owner  can be.

That's because many of them are complete buffoons.

I think a common mistake we make is to assume that these "billionaire business owners" are intelligent, self-made men who got where they are today thanks to an incredible work ethic, negotiation skills, and god-given wits. Bull roar.

Jim Pohlad's dad was a self-made billionaire, but Jim himself probably couldn't figure out how to work the check-out counter at Pump-N-Munch.

Same goes for many (not all) of the other owners. 75% of  them are rich kids of the ultra-elite, sitting on a mountain of family wealth. These guys aren't smart and haven't worked a day in their lives, unless you count the little fake jobs their dads set up for them once they turned 25. Seriously, just pick an owner and google them, here are a couple at random:

Ricketts family, CHC. - Their dad founded TD Ameritrade, but they've never done a damn thing. They moved to Chicago for college (thanks to "donations" from their dad to the University of Chicago), and liked drinking and partying in Wrigleyville so much that their dad eventually bought the team for them. That's pretty much it.

Robert Nutting, PIT - Dad owned a huge newspaper publishing business, sent him to a fancy east coast college and handed him the reigns to the empire as soon as he finished undergrad. Bored an approaching a mid-life crisis, he bought the Pirates.

John Malone, ALT - Born rich, inherited tons more wealth when daddy died and then their lawyers started gobbling up land on his behalf. Currently listed as the single largest landowner in the United States, but the guy hasn't ever set foot on 99% of it.

Yes, there are exceptions, but the majority of these MLB owners wouldn't know how to negotiate their monthly bill with DirecTV, let alone make a deal with the Player's Union. They sit back and let their lawyers negotiate for them, people who have no interest in the game and are only looking to expand their own lifestyles so they can buy that 5th condo in Breckenridge.

Time to stop calling these owners "businessmen", when all they've really done in life is sat on a fat pile of money their families left them.

[Major League Ready]

3 hours ago, bighat said:

That's because many of them are complete buffoons.

I think a common mistake we make is to assume that these "billionaire business owners" are intelligent, self-made men who got where they are today thanks to an incredible work ethic, negotiation skills, and god-given wits. Bull roar.

Jim Pohlad's dad was a self-made billionaire, but Jim himself probably couldn't figure out how to work the check-out counter at Pump-N-Munch.

Same goes for many (not all) of the other owners. 75% of  them are rich kids of the ultra-elite, sitting on a mountain of family wealth. These guys aren't smart and haven't worked a day in their lives, unless you count the little fake jobs their dads set up for them once they turned 25. Seriously, just pick an owner and google them, here are a couple at random:

Ricketts family, CHC. - Their dad founded TD Ameritrade, but they've never done a damn thing. They moved to Chicago for college (thanks to "donations" from their dad to the University of Chicago), and liked drinking and partying in Wrigleyville so much that their dad eventually bought the team for them. That's pretty much it.

Robert Nutting, PIT - Dad owned a huge newspaper publishing business, sent him to a fancy east coast college and handed him the reigns to the empire as soon as he finished undergrad. Bored an approaching a mid-life crisis, he bought the Pirates.

John Malone, ALT - Born rich, inherited tons more wealth when daddy died and then their lawyers started gobbling up land on his behalf. Currently listed as the single largest landowner in the United States, but the guy hasn't ever set foot on 99% of it.

Yes, there are exceptions, but the majority of these MLB owners wouldn't know how to negotiate their monthly bill with DirecTV, let alone make a deal with the Player's Union. They sit back and let their lawyers negotiate for them, people who have no interest in the game and are only looking to expand their own lifestyles so they can buy that 5th condo in Breckenridge.

Time to stop calling these owners "businessmen", when all they've really done in life is sat on a fat pile of money their families left them.

I accepted your challenge and starting going through them one by one.  The premise that owners are stupid is floated here so frequently I wanted to have an informed opinion on this assertion.  Plus, I thought others might be interested in the credentials of ownership.  I got as far as Kansas City before calling it day because the facts tell a consistent story that did not require I look at every team.  The net is that you sound like a 30 handicap calling Tiger Woods a hack.  I pasted these descriptions from Baseball Reference and Wikipedia.  I am glad you provided an opportunity to point out just how ridiculous fans can be.  Most of these individuals have extremely impressive credentials individually.  Given the many minority owners and corporations involved, collectively you are talking about dozens of exceptionally accomplished individuals.   There are a few lawyers among them too and lawyers know how to negotiate.  To sit here and call the collective buffoons makes a statement all right but it’s not about the competence of owners.  

Arizona – Ken Kendrick founded Datatel, a software company, in 1968. In 1989, he became the principal investor in Woodforest National Bank

Atlanta Braves – Liberty Media Is a $9B entity that owns a variety of businesses.  This company generates almost as much revenue as the 30 MLB teams combined.  Obviously Liberty media contributes an impressive array of business acumen to the owners group. 

Baltimore – Peter Angelos. the son of Greek immigrants, he was a self-made man, rising up from a gritty working class neighborhood to run his own law firm in Baltimore. He made his fortune pleading in favor of workers incapacitated by exposure to asbestos and winning enormous settlements.

Boston – John Henry & Tom Werner.  Henry grew up on a farm in southern Illinois and made his fortune by investing on commodities option. He is known in the options industry for his reliance on analytical methods as opposed to playing hunches.
Werner made his fortune as a television producer.  A commodities trader and a TV producer.  Does not sound like a guy with meager analytical or negotiating skills.

Chicago Cubs - Ricketts grew up in Omaha, NE, the son of the founder of Ameritrade Corporation, a brokerage firm. He obtained an undergraduate degree and an MBA from the University of Chicago.  Yes, he grew up entitled but the MBA suggests he is far from a “Baffon”.  The average GMAT score for applicants at U of C is 732 so it probably takes at least 700 to get in which is the 88th percentile of all applicants.  He is not dumb.

Chicago White Sox – Jerry Reinsdorf - Reinsdorf earned a bachelor's degree from George Washington University in Washington, D.C.where he became a member of Alpha Epsilon Pi. He subsequently moved to Chicago in 1957.[9] Reinsdorf became a CPA and lawyer as well as a registered mortgage underwriter and a certified review appraiser. He leveraged a full scholarship offer from the University of Chicago Law School into a scholarship from the Northwestern University School of Law. Yep, areal moron witrh no credentials to suggest he could negotiate his direct tv bill.

Cincinnati Reds - Robert Castellini – Education: Georgetown and an MBA from the Wharton School of Business.  Once he had graduated, Castellini went home to work at his family’s business, which is called Castellini Co. At the time, Castellini Co. was not doing as well as it is now, which speaks well of Castellini’s contributions to the family business over the course of his multi-decade career.

Cleveland - Larry Dolan  - Education: Notre Dame.  Upon leaving Notre Dame, Dolan served in the United States Marine Corps for two years, where he attained the rank of first lieutenant. Upon leaving the Marine Corps in 1958, Dolan worked as assistant prosecutor in Geauga County, Ohio before going into private practice. He eventually became president and managing partner of Thrasher, Dinsmore, & Dolan in Chardon, Ohio.

Colorado Rockies - Dick Monfort graduated from the University of Northern Colorado, Greeley with a bachelor's degree in Business Management. He joined Monfort of Colorado in 1974 as a cattle buyer. He then served as vice president federal cattle procurement from 1979–81, group vice president of cattle products 1983-1984 and executive vice president 1984-1987. When ConAgra bought Monfort of Colorado in 1987, Dick became president of ConAgra Red Meats. At the University of Northern Colorado, Dick serves on the board of trustees along with the board of directors at University of Colorado Hospital, Denver Zoo, and the Colorado Economic Development Board. Dick now resides in Denver, Colorado with his wife Karen. 

Charlie Monfort graduated from the University of Utah with a bachelor's degree in Marketing and Business Management.  Charlie started working for the family business Monfort of Colorado, Inc. also in 1988 as president of International Sales until 1996. In 1996, Charlie became president of ConAgra Foods International; later leaving in 1998 to concentrate on his previous commitment to the Rockies.  Charlie also serves on the Board of Trustees at Colorado Mesa Universit. He is also a board member of the Kempe Foundation, the Special Olympics, and the Monfort Family Foundation. 

Detroit Tigers – Chris Ilitch did in fact inherit his position.  As president and CEO, Ilitch leads and provides oversight to the Ilitch companies, including Little Caesars Pizza, Blue Line Distribution, the Detroit Red Wings, Olympia Entertainment, the Detroit Tigers, Olympia Development of Michigan (real estate), Little Caesars Pizza Kit Fundraising Program, and Champion Foods (food manufacturing).  That’s a pretty big job.  Inherited or not, that’s a pretty good business education by default.  I have no idea just how competent he is in this role but assuming he is stupid because he inherited a role is a big stretch.

Houston Astros - Jim Crane - After graduating from college, Crane went into the insurance business. Crane borrowed $10,000 from his sister and founded Eagle USA Airfreight, an air-freight logistics business.

Crane took his profits from EGL and formed Crane Capital Group. He also became a director and shareholder in Western Gas Holdings, LLC.  an energy company operating in the southeastern Rocky Mountain region and southern Mid-Continent area.  Western Gas Holdings and Western Gas Partners were acquired by Anadarko Petroleum.  Crane is also the majority shareholder in Crane Worldwide Logistics LLC, chairman of the board for CargoJet, and director of both Nabors Industries and natural gas company Western Midstream.

Kansas City Royals - John Sherman - Sherman graduated from Ottawa University. He later founded LPG Services Group, which later merged with Dynegy. In 1996, Sherman founded Inergy. It merged with Crestwood Holdings in 2013.  Sherman bought a minority share of the Cleveland Indians in 2016, and became their vice chairman

There is one other ownership group that is unique and should not be ignored because I stopped at KC.  The Mariners are owner by First Avenue Entertainment and 17 minority owners.  They are led by John W. Stanton.  He is the Chairman of Trilogy International Partners, Inc., which operates wireless systems internationally, Trilogy Equity Partners, which invests in wireless-related companies.  Stanton founded and served as Chairman and Chief Executive Officer of Western Wireless Corporation, a wireless telecommunications company, from 1992 until shortly after its acquisition by ALLTEL Corporation in 2005. He was Chairman and a director of T-Mobile USA, formerly VoiceStream Wireless Corporation, a mobile telecommunications company, from 1994 to 2004, and was Chief Executive Officer from 1998 to 2003. Mr. Stanton was a director of Clearwire Corp. from 2008 to 2013, Chairman between 2011 and 2013, and interim Chief Executive Officer during 2011. 

The whole ownership is stupid thing really needs a deeper level of consideration.  The definition of random might require a little looking into as well.
 

[Blyleven2011]

Love of Money is the root of all evil .. according to a source I read 

 the owners and players are punching their ticket for a fiery eternity  ,,, according to a source I read 

[GoBravesGo]

I am a lawyer also.  So I have some interest in following the negotiations.  I understand waiting until the last minute.  I do it if I have a difficult or unreasonable lawyer on the other side.  I use the pressure of the court calendar to extract a better deal.  However, I often start negotiations early in those cases where there is a large gulf on the issues.  Then I wrap up at the last minute, if necessary.  MLB has such a large gulf here, but both sides in the negotiations waited too long to begin work and have wasted a ton of time.  Three hours of meetings in nearly 60 days is inexcusable.  Unless there are back channel negotiations, I don't see much progress here.  I fear that the 2022 season and part of the 2023 season may be gone.  I see incompetence and rigidity, not firmness, in these negotiations.  I hope this is a misperception and that I am wrong.     

[Squirrel]

6 minutes ago, GoBravesGo said:

I am a lawyer also.  So I have some interest in following the negotiations.  I understand waiting until the last minute.  I do it if I have a difficult or unreasonable lawyer on the other side.  I use the pressure of the court calendar to extract a better deal.  However, I often start negotiations early in those cases where there is a large gulf on the issues.  Then I wrap up at the last minute, if necessary.  MLB has such a large gulf here, but both sides in the negotiations waited too long to begin work and have wasted a ton of time.  Three hours of meetings in nearly 60 days is inexcusable.  Unless there are back channel negotiations, I don't see much progress here.  I fear that the 2022 season and part of the 2023 season may be gone.  I see incompetence and rigidity, not firmness, in these negotiations.  I hope this is a misperception and that I am wrong.     

From my experience of being in complicated labor negotiations, it all depends on the willingness of both parties. Long, productive negotiating sessions can bring about a resolution rather quickly. (Rather quickly means within a couple days.) It just depends on the willingness to compromise ... and both sides need to compromise, this isn't the fault of just one side. If they are making progress, and hopeful a resolution can be reached, I hope the owners will end the lockout so players can get a jump on getting back to work. That would go a long way in signaling good faith. But, that would depend on the perceived progress from either side's pov

[High heat]

10 hours ago, Major League Ready said:

How would you be balancing revenue if you don't give it to the teams with less revenue.  That would not promote parity.   Now, if we are talking about the penalties, there may be an opportunity to distribute that differently.  Currently, the first $13 million will be used to defray clubs' funding obligations under the MLB Players Benefits Agreements. Of the remaining sum, 50% of the remaining proceeds collected for each Contract Year, with accrued interest, will be used to fund player compensation as described in the MLB Players Benefits Plan Agreements and the other 50% shall be distributed to clubs that did not exceed the Base Tax Threshold in that Contract Year.[6]

The 50% distributed to clubs that did not exceed the Base Tax Threshold means wealthy clubs that are just under the cap still get revenue.  That money could be distributed in a manner that better served parity.  The 50% going to player benefits could be distributed among prearb players or the bottom 25% or some other manner that does not include the highest paid players. 

Increasing penalties and distributing differently would serve competitive parity as well provide additional compensation to lower paid players.  However, the players are very would likely stringently resist increasing penalties for exceeding the CBT threshold.

The current system distributes the revenue sharing to teams and the bottom teams arent spending the $ on player salary as it stands.  

This system would put $ back to the players directly insuring a percentage of $ made would be distributed to the players who havent had the opportunity to reach market value.  It would also encourage small market teams to sign extensions with players developed in there system as a cost curtain and would still incentives the player to sign because they would be able to get closer to market value. 

 

The players union issue with the luxury tax is it places a cap on the teams who are willing to spend large dollars and the bottom spending teams still wont spend on players. The bottom spending teams are currently receiving more $ in revenue sharing then they are currently spending on player salary. In terms the revenue just going into owners pockets. 

 

How do you force the distribution of $ to ALL players while still allowing teams to rebuild through player development and allow teams to spend big on the great players without the small market teams to just be feeder systems for the large makret clubs. 

[Trov]

I would say there is movement, but it is very small movement.  On the major issues both sides are still very far apart.  This is not good and needs to make huge movement soon, or we will lose games.  The fact that the owners are not willing to share their financials with players keeps that distrust going.  It suggests that they are taking a much larger slice of the pie and are worried once the players see it will upset the players.  This may be true, under the why are you hiding this info kind of thing.  

[Major League Ready]

1 hour ago, Trov said:

I would say there is movement, but it is very small movement.  On the major issues both sides are still very far apart.  This is not good and needs to make huge movement soon, or we will lose games.  The fact that the owners are not willing to share their financials with players keeps that distrust going.  It suggests that they are taking a much larger slice of the pie and are worried once the players see it will upset the players.  This may be true, under the why are you hiding this info kind of thing.  

How would sharing financial resolve the problem created by the demand to lower revenue sharing or increase the CBT threshold?  The relative profitability of the league would not change the fact that an increase of the CBT threshold or the lowering or revenue sharing will ABSOLUTELY for certain increase the level of competitive disparity that exists today?