CBA Musings (2/11): What’s Happening and What’s Next?

[Ted Schwerzler]

It’s not necessarily what has happened this week that makes it the most pivotal for CBA negotiations, but it is what’s to come. Rob Manfred hosted a joke of a press conference but revealed the owners would make another proposal on Saturday. From there, we’ll know how close we are to having baseball.

The owners spent the week in sunny Orlando, Florida, meeting over the course of a few days. After failing to offer a proposal to the union and requesting the help of a federal mediator last week, it seems they have hammered out the framework of a new deal.

It was never anything more than a hollow PR ploy when Rob Manfred and Major League Baseball asked for the assistance of a federal mediator. The owners went back on their decision to make a proposal to the union, and it’s also been their side that has failed to do much in the form of negotiating at all. Labor secretary Marty Walsh did have recent conversations with both sides, however, and hopefully, the plan here is less about Manfred and the owners trying to “win” than it is working towards a mutually beneficial resolution.

Like the owners, the players met in Arizona with Tony Clark and Dan Halem this week. Gerrit Cole tweeted out a similar sentiment to the ones we have seen on social media in recent weeks. The players are unified in their goals, and while they’ll bend and make certain concessions, it’s apparent they are focused on establishing the future of the game.
 
During Manfred’s press conference Thursday, the most preposterous statement was one that indicated owning a Major League Baseball team isn’t all that profitable. It’s a bald-faced lie, but one that Manfred has a platform to spew, and with hopes it’s believed by many. He concluded by suggesting that the owners would put forth a new proposal on Saturday and that “it’s a good one.” We’ll have to wait for that to be determined.

In the interim, we have some new agreed-upon rules for the future. The universal DH is now here to stay. That means Joe Ryan is the last Twins pitcher to ever take an at-bat, and Kenta Maeda is the last to record a hit. We also have a draft pick lottery system and, maybe most importantly, the removal of draft pick compensation tied to players that turn down the qualifying offer.
 
Understandably it’s the designated hitter change that has received headlines, but it’s the elimination of draft pick compensation that Minnesota should be most excited about. Not having to worry about losing an important pick to sign a top free agent should bring the playing field to a more level place.
 
Again, this week was all about the talk, and everything hinges on what we find out Saturday.

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[Trov]

As to the draft pick compensation, I think that is a huge thing.  I did not read about that yet but here.  I am having hard time finding much on that as well.  If accurate that is huge win for players and something they have wanted for a long time.  I do not know how I feel yet on it.  One, I would wonder if teams will get some comp pick between rounds for losing a QO player, or just no picks at all.  If that is the case, then the QO will just be dropped all together, because no team would give one if they get nothing for it. 

The QO has been what has driven many of the players issues over the last few FA rounds.  When it first started, teams really did not care much about losing that pick, and players loved the QO because it was the floor for talks to them.  

It eventually shifted to teams less willing to sign a player who had the QO tag, unless they were one of the top few players.  The reason was many of the guys were only going to give them 3 good years on average, but the pick would have good value for much longer than 3 years.  So teams started to see how big losing a 1st round was, and stopped offering contracts to mid-level guys that turned down QO and teams would even wait until after draft to sign players some years. The players were getting contracts for even less than the QO some times. 

This led to some players finally accepting the offer if their expected per year value was near the QO number.  Players should love the dropping of a team losing a pick.  I think if teams get a pick for losing a QO free agent, similar to the old class A and B free agents, that would be helpful for the smaller market teams.  The reason for the QO compensation was to help out smaller market teams that were losing a free agent.  Many forget we got Jose Berrios in a comp round pick from letting Cuddy walk, if there was no comp pick for letting Cuddy go, we would never have drafted Berrios.  

I do agree, that if the MLB really wants to pull the whole, teams do not make much money, then actually release your numbers. The Braves are the only publicly traded team, so their financials are available.  Here is link to article discussing them this last season https://www.ajc.com/sports/atlanta-braves/braves-latest-financial-results-are-in-third-quarter-revenue-hits-234m/XZUMUNPZQBFSLFNTMF3PEBBHUE/ It is not clear how much profit they made across the year, but they set record revenue last year.  If MLB really wants to cry they are not making money, let the world see how much they really are pulling in.  We can look at Braves, but they are only 1 team. 

[roger]

I believe, Ted, you are the one that may be making a less than accurate statement, calling Manfred's statement about profitability a bald-faced lie when comparing it to the stock market.  

You pulled up someone's text showing a 308% return from the S&P 500 (SPX) compared with team value increasing 564%.  I don't know if Manfred referred to the SPX or where the 2002 date came from.  I also don't know where the 564% came from, but will assume that as factual because I have no idea how to confirm it.

But timing can be everything.  Should you change the start date to October 1, 2002, the SPX has increased 498% (885.76 on 10/1/2002 and 4,418.64 at today's close).  That is approaching the stated increase in team values.

But who says Manfred was talking about the SPX, unless he referenced that.  The QQQ, which is an index fund that follows the NASDAQ, was at 36.08 on March 1, 2002 and closed today at 347.06.  If my California math is correct, that's a gain of 961.9%, or nearly 2x what team value has increased.  And if a basic index can increase by 961% during that 20 year period I suspect a lot sharp financial people, such as baseball owners, could beat that by a substantial amount.  So yes, Manfred was correct when he stated that owners could have done better by investing in the stock market.

With that said, I don't like most of what Manfred has brought to the game and believe that he, the owner's and MLBPA have all done a terrible job of dealing with getting a new agreement in place.  We need them to stop trying to make the other guy look bad and sit down and negotiate a deal that will make baseball a better game for the players, minor league players, staff and communities, other employees of the 30 teams, owners and most of all, us fans.

[USNMCPO]

With the Universal DH i wonder if the Twins will look to trade Sano. He will have a bigger market now. I have no idea if the Twins would want that but it raises the question.

[bean5302]

12 minutes ago, roger said:

...And if a basic index can increase by 961% during that 20 year period I suspect a lot sharp financial people, such as baseball owners, could beat that by a substantial amount.  So yes, Manfred was correct when he stated that owners could have done better by investing in the stock market...

and those are large cap index's you're talking about. The mutual funds which are based on the S&P 500 are considered Large Cap Blend funds which are not aggressive, and you're talking about groups of stocks similar to mutual funds rather than individual stocks like Amazon or Tesla.

In addition, if you're talking about internal profits, rates are typically much higher than you're expecting across many industries. Financial companies expect a ROE of approximately 12-14% for example, @Ted Schwerzler. It's common for me to speculate about things I'm not an expert about, but where I've formed some sort of hypothesis, but it seems you're really out of your element.

It's easy to create scapegoats out of successful businesspeople, and depending on the complaint, your mileage may vary on how accurate it is.

[bean5302]

Side note, the owners failed to offer a counter proposal after what could hardly be described as an offer by the MLBPA and I think would be much better categorized as an inflammatory statement lowering their request from $105MM to $100MM for pre-arbitration bonus pool.

Not that the haters of the MLB owners would have thought about this, but other than the $100MM reduction to revenue sharing initially proposed by the MLBPA and their subsequent reduction by $30MM (which owners dispute is accurate), the $105MM bonus pool would also come out of revenue sharing making the proposal tantamount to a $170-200MM reduction in revenue sharing overall proposed by the MLBPA.

To be honest, it's hard for me to respect any position critical of the owners and supportive of the MLBPA's positions in negotiations right now.

[HerbieFan]

No matter what happens, billionaire owners will continue to be billionaire owners.  Multi-millionaire players will continue to be multi-millionaires.  All the while, the "average Joe" fan will still not be able to afford to take a family of four to a baseball game without selling a kidney.  This whole thing is just disheartening for a pure baseball fan who counts down the days until we read "Pitchers and Catchers report"....

[Whitey333]

I agree that fans, as always, are ignored when it comes to these negotiations.  What is good for the future of the game should be most important.  Not who " wins or loses" the CBA negotiations.  I don't side with either players or owners.  They are both wrong.  Any work stoppage while normal working class Americans have been trying to survive a pandemic and economic crisis is short sighted and playing Russian roulette with the fans and future of MLB.  Instead they should be looking at what has ruined the game the past 5 years.  What has made it unwatchable and approaching unaffordable and fix it before it is beyond repair.

[Major League Ready]

16 hours ago, roger said:

I believe, Ted, you are the one that may be making a less than accurate statement, calling Manfred's statement about profitability a bald-faced lie when comparing it to the stock market.  

You pulled up someone's text showing a 308% return from the S&P 500 (SPX) compared with team value increasing 564%.  I don't know if Manfred referred to the SPX or where the 2002 date came from.  I also don't know where the 564% came from, but will assume that as factual because I have no idea how to confirm it.

But timing can be everything.  Should you change the start date to October 1, 2002, the SPX has increased 498% (885.76 on 10/1/2002 and 4,418.64 at today's close).  That is approaching the stated increase in team values.

But who says Manfred was talking about the SPX, unless he referenced that.  The QQQ, which is an index fund that follows the NASDAQ, was at 36.08 on March 1, 2002 and closed today at 347.06.  If my California math is correct, that's a gain of 961.9%, or nearly 2x what team value has increased.  And if a basic index can increase by 961% during that 20 year period I suspect a lot sharp financial people, such as baseball owners, could beat that by a substantial amount.  So yes, Manfred was correct when he stated that owners could have done better by investing in the stock market.

With that said, I don't like most of what Manfred has brought to the game and believe that he, the owner's and MLBPA have all done a terrible job of dealing with getting a new agreement in place.  We need them to stop trying to make the other guy look bad and sit down and negotiate a deal that will make baseball a better game for the players, minor league players, staff and communities, other employees of the 30 teams, owners and most of all, us fans.

Also, were capital contributions considered?  In other words, when improvements like the ones done at Target field are made, do owners borrow that money or do they contribute the capital?  IDK, but it would change the calculation.  

[Major League Ready]

3 hours ago, Whitey333 said:

I agree that fans, as always, are ignored when it comes to these negotiations.  What is good for the future of the game should be most important.  Not who " wins or loses" the CBA negotiations.  I don't side with either players or owners.  They are both wrong.  Any work stoppage while normal working class Americans have been trying to survive a pandemic and economic crisis is short sighted and playing Russian roulette with the fans and future of MLB.  Instead they should be looking at what has ruined the game the past 5 years.  What has made it unwatchable and approaching unaffordable and fix it before it is beyond repair.

Are the fans being completely ignored?  We don't know the exact motivation of owners.  However, generally speaking business owners are inherently very concerned about their product and their customers.  At least the successful ones are very mindful and this subset of entrepreneurs have been the most successful in America.   Anyone here a business owner or know one?  Do you or they care about you customers?  Even if the motivation is purely financial, there financial interests align with fan interests.  This is not even remotely true for players which is why we have demands that would be bad for the game and ownership not bending to those specific demands.

I think we can look at the universal DH as a cost they were willing to bare for the good of the game.  The draft lottery is a small thing but good for the game.  The international draft they proposed seemed to me that it would be good for the game.  Expanded playoffs are good for Owners and Players but they are also very good for the game IMO.  There were several different markets in 2020 that were energized by expanded playoffs.  

Maintaining a modest increase in the CBT threshold and maintaining revenue sharing are without question beneficial to the game.  Some big market fans might argue for shorter control but this would definitely promote a wide gap in parity.  I guess we could presume owners only did this for financial reasons but that seems pretty cynical.  What's good for the game is good for them financially.  This is a pretty easy premise to embrace yet fans want to believe the owners are against them.  They are not the side demanding change that would further the gap in parity.

If this latest proposal really does drop draft pick compensation, and add the DH, expanded playoffs, and a draft lottery, as well as a reasonable increase in league minimum, I don't know how we can conclude they have not done enough.

[Karbo]

Neither side gets to cry poverty. BOTH sides are stinkin rich. Owners of a business should make money as should employees. However it seems that in the case of pro ball they are trying so hard to beat each other they HAVE forgotten about the good of the game. IMO especially the players have no concern for the game. BOTH sides need to pull their heads out of their butts and act like grown adults, sit down and figure this out NOW! If they really wanted a true arbiter they only need to get a panel of real fans and get their input on what they want to see for rules. Then they could haggle out pay. Of course that would make too much sense.

[AceWrigley]

And now the owners want to mess with the minor leaguers and not pay them during spring training. Time for a new league.

[TheLeviathan]

Universal DH is the headliner for a reason: it is a wonderful step to improve the quality of baseball viewing.  Long overdue

[djvang]

We have tickets for spring training games Mar. 1, 2 & 4. Looks like we won't be using them.

 

[bean5302]

5 hours ago, AceWrigley said:

And now the owners want to mess with the minor leaguers and not pay them during spring training. Time for a new league.

Yeah... so the position has nothing to do with MLB planning not to pay players in Spring Training and everything to do with increasing their leverage in a pending class action lawsuit MLB will likely win. MLB is seeking to invalidate one of the arguments in the lawsuit, not necessarily make real changes. In other words, MLB is arguing it shouldn't "have" to pay the players, not that it is trying to "not" pay the players.

In any case, companies make moves like this all the time. Years ago I ran a website which evaluated products and specialized in a specific manufacturer. The company sent us a cease and desist order and we were forced to make some changes. We didn't make any money and you could decide they were being ridiculous using all their power against a tiny little internet site, but you'd be wrong. Defending their structure and legal rights is required in all instances, not just whenever companies feel like it. If a company doesn't defend it's rights, those rights can be considered abandoned.

By the way, MLB's argument seems pretty strong under U.S. law in my opinion and it's more reflective of laws which allow employers across the country to abuse workers. Fix the laws, don't expect companies to operate as charities.

[AceWrigley]

6 hours ago, TheLeviathan said:

Universal DH is the headliner for a reason: it is a wonderful step to improve the quality of baseball viewing.  Long overdue

I feel just the opposite. Some of the highest quality viewing is watching pitchers bat even if it is a poor hitter flailing away at the plate. "Big Sexy" at bats were a thing of pure entertainment. Some pitchers are good hitters which gives them an advantage in games they pitch, and sometimes the worst hitting pitcher gets a hit to change the dynamics of a game. Yes a lot of pitcher at-bats is trying to lay down a sacrifice bunt, but there's good action in that. The DH just introduces another grooved swing looking to go deep . . .whoopee.

p.s. If you haven't seen Bartolo Colon's one career homer which he hit off of James Shields in Petco in 2016 you gotta see it; great fun. Even the San Diego fans went nutz!

[AceWrigley]

From today: "The meeting lasted less than an hour, according to Joon Lee of ESPN, with the players coming away “unimpressed” — a word used by Lee, Tim Healey of Newsday and Bob Nightengale of USA Today. On the other hand, Michael Silverman of the Boston Globe reports that the league is “underwhelmed by underwhelmed MLBPA.” - Darragh McDonald of MLB Rumors.

Hmm, underwhelmed by their underwhelmedness. I think we have a ways to go yet.

[roger]

12 hours ago, AceWrigley said:

And now the owners want to mess with the minor leaguers and not pay them during spring training. Time for a new league.

Not certain, but haven't minor league players always (or at least recently) not been paid a salary in spring training?  Thought they got lodging and meal money only, although that could have changed.

[bean5302]

42 minutes ago, roger said:

Not certain, but haven't minor league players always (or at least recently) not been paid a salary in spring training?  Thought they got lodging and meal money only, although that could have changed.

A search I made suggested that MiLB are not paid and have not been paid for participating in Spring Training. So my argument is above is at least partially wrong.

MLB is arguing MiLB players should not be paid and they do not have the intention of paying them.

[ToddlerHarmon]

Whether or not Manfred is being truthful, he is definitely throwing out a red herring. If baseball teams are not making an adequate amount of money for the owners' tastes, then it is not at all obvious that is the players' fault. I've heard reported that MLB player compensation is 48% of league revenue, less than the portion of revenue earned by NBA players, for example, and less than the owners themselves offered in a previous CBA negotiation

[Major League Ready]

10 hours ago, AceWrigley said:

I feel just the opposite. Some of the highest quality viewing is watching pitchers bat even if it is a poor hitter flailing away at the plate. "Big Sexy" at bats were a thing of pure entertainment. Some pitchers are good hitters which gives them an advantage in games they pitch, and sometimes the worst hitting pitcher gets a hit to change the dynamics of a game. Yes a lot of pitcher at-bats is trying to lay down a sacrifice bunt, but there's good action in that. The DH just introduces another grooved swing looking to go deep . . .whoopee.

p.s. If you haven't seen Bartolo Colon's one career homer which he hit off of James Shields in Petco in 2016 you gotta see it; great fun. Even the San Diego fans went nutz!

Most of us watch MLB to see great talent.  The vast majority of pitchers are markedly worse than the worst position players.  Players flailing away is not a net positive when the game is suffering from a lack of action already.  Plus, injury concerns for pitchers make this an absolute no-brainer.  We can't complain about the state of the game while resisting change.  

[TheLeviathan]

11 hours ago, AceWrigley said:

I feel just the opposite. Some of the highest quality viewing is watching pitchers bat even if it is a poor hitter flailing away at the plate. "Big Sexy" at bats were a thing of pure entertainment. Some pitchers are good hitters which gives them an advantage in games they pitch, and sometimes the worst hitting pitcher gets a hit to change the dynamics of a game. Yes a lot of pitcher at-bats is trying to lay down a sacrifice bunt, but there's good action in that. The DH just introduces another grooved swing looking to go deep . . .whoopee.

p.s. If you haven't seen Bartolo Colon's one career homer which he hit off of James Shields in Petco in 2016 you gotta see it; great fun. Even the San Diego fans went nutz!

I see what you're saying about Colon or Madbum, but the truth is the vast majority of pitcher ABs are ugly, useless, or predictable.  IMO that doesn't help the game or the aesthetics of it.

[roger]

6 hours ago, ToddlerHarmon said:

Whether or not Manfred is being truthful, he is definitely throwing out a red herring. If baseball teams are not making an adequate amount of money for the owners' tastes, then it is not at all obvious that is the players' fault. I've heard reported that MLB player compensation is 48% of league revenue, less than the portion of revenue earned by NBA players, for example, and less than the owners themselves offered in a previous CBA negotiation

One has to be careful when comparing the percentage of revenue between sports.  Personally, I would think that a 50-50 split seems fair, but I don't know what the real underlying numbers are.  But comparing it to basketball isn't relevant. 

Basketball has little to no development cost, for example, they draft two kids every year and one makes the team.  By comparison, baseball teams need to operate an entire minor league system with nearly 200 players (including the DSL), coaching staffs and others involved in development.  I don't know how many amateur scouts basketball teams employ, but I recall from some time ago that the Twins had nearly 50 scouts.  I would expect the difference in these costs alone would be more than the small percentage of revenue difference between basketball and baseball.  

[ashbury]

6 hours ago, TheLeviathan said:

I see what you're saying about Colon or Madbum, but the truth is the vast majority of pitcher ABs are ugly, useless, or predictable.  IMO that doesn't help the game or the aesthetics of it.

Concur.  It's a question of game balance, and there were discussions of a forerunner to the DH at least as far back as the 1930s so the recognition of this problem is hardly a new thing.  (The 1930s are closer to the beginning of professional baseball than they are to the present day.)

The impact of a pitcher's arm on a game is far greater than any contribution he can make with the bat, and people recognized the fact once overhand delivery became legal, and certainly once the Dead Ball era was over.

It wouldn't have mattered last year if Matt Shoemaker had been uniquely capable among pitchers of hitting like Nelson Cruz, and all other pitchers hit like Walker Buehler, and there were no DH - using him on the mound meant a likely loss in each game he appeared.  That's a structural imbalance which the NL chooses to live with. 

Baseball is exceedingly conservative.  Movie footage of old football or basketball games look hardly at all like their modern incarnations.  Baseball still has pitchers hitting.

[Trov]

1 hour ago, roger said:

One has to be careful when comparing the percentage of revenue between sports.  Personally, I would think that a 50-50 split seems fair, but I don't know what the real underlying numbers are.  But comparing it to basketball isn't relevant. 

Basketball has little to no development cost, for example, they draft two kids every year and one makes the team.  By comparison, baseball teams need to operate an entire minor league system with nearly 200 players (including the DSL), coaching staffs and others involved in development.  I don't know how many amateur scouts basketball teams employ, but I recall from some time ago that the Twins had nearly 50 scouts.  I would expect the difference in these costs alone would be more than the small percentage of revenue difference between basketball and baseball.  

Two points.  One, the NBA does have a developmental league, the G-League.  Now, they do not have as many players in it, or as many coaches, there still is one.  Two, it is the leagues choice to have a developmental league with as many teams as they do.  The MLB players should not have to take less of a revenue share because the owners decide to hire more employees in other areas.  

The owners decide how much they pay the managers, scouts, and other employees.  After the revenue is split, they have their budget, the half that goes to them.  Then they should decide how it gets split up.  The players should not have to agree to a lessor share because there may be more employees on the other side.

If we use the NBA as an example.  They get like a 50/50 split or close to it.  There is 15 max players per team.  So the 50 that goes to players are split up by max between about 450 players.  Where in the MLB there is 40 man rosters, so 1,200 players split the revenue.  Lets say each league makes same amount of money.  Then if both had a 50/50 split the MLB players are splitting the same over many more players.  Your argument that the owners should get a greater split than in NBA because they have more employees to pay, can be argued the same way for the players, because they have more players to spread it out over.  Even if you argue that only 26 guys are on the active roster at any given time, you still are splitting it up over a much larger amount of players.  

[roger]

49 minutes ago, Trov said:

Two points.  One, the NBA does have a developmental league, the G-League.  Now, they do not have as many players in it, or as many coaches, there still is one.  Two, it is the leagues choice to have a developmental league with as many teams as they do.  The MLB players should not have to take less of a revenue share because the owners decide to hire more employees in other areas.  

The owners decide how much they pay the managers, scouts, and other employees.  After the revenue is split, they have their budget, the half that goes to them.  Then they should decide how it gets split up.  The players should not have to agree to a lessor share because there may be more employees on the other side.

If we use the NBA as an example.  They get like a 50/50 split or close to it.  There is 15 max players per team.  So the 50 that goes to players are split up by max between about 450 players.  Where in the MLB there is 40 man rosters, so 1,200 players split the revenue.  Lets say each league makes same amount of money.  Then if both had a 50/50 split the MLB players are splitting the same over many more players.  Your argument that the owners should get a greater split than in NBA because they have more employees to pay, can be argued the same way for the players, because they have more players to spread it out over.  Even if you argue that only 26 guys are on the active roster at any given time, you still are splitting it up over a much larger amount of players.  

Won't disagree with much of what you say.  However, you almost make it sound as if it is baseball's choice to have more development leagues and cost.  The truth is that many players come straight out of college to play with their NBA team.  I can't remember the last player to go straight from college to the big leagues, with even the best taking two to three years to arrive.  Thus, the games are different.  And that was my point, there are significant differences which makes it irrelevant to point out that one pays out 50% and the other 48%.  

[bean5302]

9 hours ago, ToddlerHarmon said:

Whether or not Manfred is being truthful, he is definitely throwing out a red herring. If baseball teams are not making an adequate amount of money for the owners' tastes, then it is not at all obvious that is the players' fault. I've heard reported that MLB player compensation is 48% of league revenue, less than the portion of revenue earned by NBA players, for example, and less than the owners themselves offered in a previous CBA negotiation

I've also heard people believe the Earth is flat and that Russia isn't being aggressive and that truckers aren't blockading Canada because of mask mandates.

The head of the MLBPA is officially on record the revenue split is acceptable. It's 50/50 split and MLBPA has no issues with the numbers which had been provided by MLB owners. Clark addressed the conspiracy theories in 2015 and 2018.

“Despite what you may have read or heard at any given time, the quote-unquote ‘player share’ is as close to 50-50 as it has been in a long time,” Clark said.

https://www.theringer.com/mlb/2018/2/21/17035624/mlb-revenue-sharing-owners-players-free-agency-rob-manfred

[Major League Ready]

 

Of course, you are right.  People get bent out of shape because they think these comparisons are meaningful when they provide no value at all.  Allow me to add a couple of thoughts.  The Twins bonus pools allotments are almost $14M which is 4.5-5% of revenue.  Also, MLB benefits are $16M a team according to spotrac. Is this being considered in these comparisons or are they simply salary comparisons?  IDK what the number is for NBA teams but I would assume considerably less given the smaller roster size.  How about maintenance cost.  I would guess it costs a whole lot more to maintain Target field.  What about travel.  Twice as many people to transport staying twice as many nights.  Even the small things like meals / bats and balls add up over an entire season.  

Too many people getting upset and taking a stand when they simply don't have enough information to warrant taking a position at all.