Everything you need to know about baseball's looming CBA midnight deadline
Where do negotiations between players and owners on a new Collective Bargaining Agreement stand?
Players and owners are negotiating a new collective bargaining agreement (CBA), which governs the working relationship between MLB players and MLB clubs. The current agreement, which has been in force since late 2011, expires at midnight ET on Thursday, which means we're in the final hours at this writing. So to get you prepped for the what is, one hopes, the homestretch, let's answer a few basic questions about the process ...
What are some of the major sticking points in the current talks?
Each CBA addresses a panoply of issues, most of them reducible to money flowing in one direction or the other. This time around, talks have reportedly centered on the luxury tax threshold on high team payrolls (it functions as a soft salary cap of sorts), the qualifying offer system for free agents (which is deeply unpopular with players), what portion of the league's gross revenues should be considered "up for grabs" in negotiations, and the owners' desire to implement an international draft.
It's the latter issue -- the international draft -- that seems to be the major sticking point. In the past, the Major League Baseball Players Association (MLBPA) has been willing to negotiate away the rights of non-members, as they did last time around when MLB implement hard budgets for the June draft. This time, though, they're getting some pushback from, in large part, some Latin American members of the MLBPA. That's because their younger countrymen stand to lose a lot of money if an international draft is implemented. Presently, amateurs in the Caribbean sign as international free agents. While there are signing limits in place, those rules are routinely flouted by clubs since the punishments involved don't serve as an ample deterrent.
The upshot is that the top amateurs from the Dominican Republic, Venezuela, Cuba and elsewhere presently sign for bonuses that far, far outstrip those paid to players subject to the June First-Year Player Draft (i.e., draft-eligible players in the United States, Canada, and Puerto Rico). Given the generally impoverished state of things in those Caribbean countries, natives of those countries who are MLBPA members aren't keen on the idea of drastically reducing the bonus money heading back home each year. While MLB has made noise about wanting to eliminate corruption and graft from the international signing process via a draft, it's really about reducing labor costs.
One might say it's unfair that the best draft-eligible players are deprived of similar paydays, and you'd be right. However, another way to remedy that is to open up the domestic/Canadian/Puerto Rican talent pool to market forces rather than exerting price controls over the Latin American talent pool. Owners won't find that argument on principle very persuasive because, again, this is about reducing labor costs.
As for the MLBPA, union leadership must navigate some treacherous shoals. One membership block is likely in favor of allowing an international draft in favor of CBA givebacks elsewhere -- givebacks that benefit current union members. The Latin American contingent, though, generally has different loyalties. That's understandable.
What's a possible compromise solution when it comes to the international signing system?
Don't be surprised if something like this comes out of the wash ...
Under discussion in CBA talks, per sources: A cap for each team on spending for int'l amateurs, as opposed to current pool/penalty system.— Ken Rosenthal (@Ken_Rosenthal) November 30, 2016
That would tamp down costs without being quite as restrictive as a draft with hard slotting. It would also be much easier to implement, as it would in essence play off the current system. It would, however, lay bare any claims of the owners' driving concern being the unseemly elements of the international scene.
What about this talk of a lockout?
It's been reported that owners may consider locking players out of spring training if no new CBA is agreed upon. This is likely a public negotiating posture to ramp up pressure on the players, but a vote authorizing a lockout is within the range of possibilities. In some ways, this would be a preemptive measure by the clubs.
If the season began without an agreement in place (a possibility), then the players would have more leverage because they could initiate a timely strike that would "strike" right at the heart of the owners' revenues -- i.e., ticket sales and, depending on how labor stoppages are addressed in the various contracts, media deals. Typically, players will time strikes late in the regular season so as to make the losses sting as much as possible. You'll recall that this is what happened in 1994, and the owners wound up not blinking and canceling the postseason.
Anyhow, a lockout would be the owners' way of precluding a player strike and thus shifting the pressure on to the players, who would risk not getting those paychecks starting in April. The reality of a lockout this time around seems remote -- it's necessarily a measure of last resort -- but it's a fluid situation at this writing.
What happens if midnight comes without an agreement?
Probably nothing. As noted, a midnight lockout is possible in the absence of a deal, but the more likely outcome is a negotiated extension of the current CBA to allow for more time to reach an accord on those issues ticked off above. In other words, midnight will almost certainly bring a new CBA or a temporary extension of the expiring one.
Will this impact next week's winter meetings?
If there's no agreement, yes. Some teams may skip the winter meetings altogether if an agreement isn't reached, and that's presumably the case even if there's an extension as opposed to a lockout. The winter meetings are a time for big financial commitments, and with the uncertainty of a CBA-less labor structure, teams would be loath to make such major decisions without knowing things like the luxury tax threshold and free agent compensation system. In the absence of a new CBA, it's possible the winter meetings will be greatly compromised or perhaps snuffed out altogether.
Is this uncertainty affecting the free-agent markets?
It probably is. Chiefly that's because the qualifying offer system mentioned above is still in force. By way of reminder, if teams tender qualifying offers (one year, $17.2 million for next season) to a pending free agent and the player subsequently declines that offer, then his former team is entitled to a compensatory draft pick once he signs with another club. As for the club that signs him, they must forfeit a high draft pick for the privilege of signing a qualifying-offer free agent and the draft bonus pool money associated with that pick. If the signing team picks within the top 10 overall picks, then they forfeit a second-round pick. Otherwise, the signing team forfeits a first-round pick. That second part of the system is "punishment for signing a free agent" as opposed to the implicit goal of compensating a team that lost one.
Right now, seven of the 10 players tendered qualifying offers remain on the market. Two -- Neil Walker of the Mets and Jeremy Hellickson of the Phillies -- accepted the QO, while another, Yoenis Cespedes of the Mets, wound up re-signing with his former team after he hit the market. In other words, no QO free agent has changed teams yet, and that's likely because the system is very soon going to be altered or go away entirely.
Have any predictions?
So glad you asked. I'll say a new CBA is agreed upon by the midnight deadline, which means no extension and, best of all, no lockout. Some specific predictions ...
- The cap system that Ken Rosenthal reported above will be agreed upon as a compromise, and it's a hard cap. However, written into the CBA will be the freedom to negotiate that particular issue outside of the CBA time-frame. As well, a fact-finding committee will be authorized to look into future implementation of an international draft.
- The threshold for the luxury tax (officially known as the "competitive balance tax") will be raised from the current figure of payrolls exceeding $189 million to more than $200 million.
- The qualifying offer system is left partially intact. Teams still must tender QOs to receive a compensation draft pick. However, teams are no longer penalized for signing QO free agents away from other teams.
Tick, tock, tick, tock ...