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Home Maury Brown Tick... tick... tick... Reaching New MLB Labor Agreement Hits Critical Stretch

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Written by Maury Brown   
Friday, 04 November 2011 10:01

It was supposed to be during the World Series. Then, it was going to be late this week. But, as time continues to march forward, the ability for MLB and the MLBPA to reach a new labor agreement is stretching out.

The current labor agreement was announced during the World Series in 2006. For those asking why it is taking additional time, the answer is, we appear to be on the cusp of several significant changes on the labor front. The current CBA, by comparison, saw slight tweaks.

Six weeks from this coming Sunday, the current labor agreement expires. In speaking with sources close to the negotiations, none believe we are teetering on the edge of a strike or lockout, the latter of which has hit the NFL, and still plagues the NBA.

While the only date that really is critical is Sunday, Dec 11 when the agreement expires, there are some key dates that are in the forefront of the negotiator’s minds. Here’s where we are, and what will drive the sides forward.

What Happened?

Good question. The key sticking point has been owners want of a hard-slotting system for amateur draft bonuses. Commissioner Selig has said that it’s critical to get hard-slotting in place (currently, the league only recommends bonus money based upon where a player is selected; his “slot”). The players on the other hand see the hard-slots as a form of a cap.

The resolution appears to be a Luxury Tax. The slots will be recommended, but if a club decides to jump over that bonus figure, they’ll be hit with a tax.

The prevailing notion has been that the 24 hour delay in starting free agency was to allow the slotting system to be addressed. Owners need to know how the draft bonus situation will be in the new agreement to allow them to set budget for free agency. In other words, knowing how the system is creates cost certainty for budgets.

We’re now in free agency, so the sides clearly believe that moving forward is in the best interest of all sides. As mentioned, no one believes we’re on the edge of a work stoppage, but the more time drags on, the less time there is for planning for the upcoming season.

Running without a Cap in Baseball

Don’t expect clubs to run wild, but as of the end of the World Series, the Competitive Balance Tax (CBT), or as it’s better known as the Luxury Tax, has expired, ostensibly meaning MLB no longer has any kind of a cap system.

The soft-cap that penalizes clubs that spend over a payroll threshold has been in effect beginning with the 1997-99 agreement, and then was great modified into what has been in place for the last seven years beginning in 2003. All-time, $243,078,709 in CBT has been paid by the clubs, with the Yankees covering 83% of the total.

(See Luxury Tax Payouts For the History of Major League Baseball)

It’s a new wrinkle and something that needs addressing. The expectation is that CBT will be part of the new agreement, but it’s now a negotiable item after the season ended.

The Owners Meetings in Milwaukee

The first event that acts as a forcing function to get the new CBA in place is the Nov. 15-16 owners meetings to take place in Milwaukee. Beginning one week from this coming Tuesday, updates and discussions around a new CBA will allow the owners to get a feel for what is said to be a 5-year labor deal holds.

The Baseball Winter Meetings

Being held in Dallas this year, the Baseball Winter Meetings loom large for all the clubs as the event is seen as the catalyst for the first wave of free agent signings. The meetings historically have set the bar for the free agency market going forward, so owners and players alike will want to know what the playing field will be like under a new collective bargaining agreement.

With the meetings starting on Dec 5, just six days before the current CBA expires, getting a deal done beforehand becomes critical.

What’s Next?

As mentioned, there was a sense that an announcement was forthcoming this week. Now word is that negotiations will not occur again until Monday. While sources close to negotiations say that there is no concern about a work stoppage in baseball, as we get closer and closer to the Dec. 11 deadline, the possibility of such a thing occurring becomes greater.


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).

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