MLB Lockout: A Primer
By Austin Schoff
If you follow Major League Baseball, chances are that you know the league and the player’s association are currently in their first labor stoppage since 1994. In this post, we will cover the definition of a lockout, what the key issues are, and how the lockout will end.
What is a lockout?
A lockout is a work stoppage initiated by the ownership via the office of the commissioner. In this case, the owners of the 30 MLB clubs instructed MLB commissioner Rob Manfred to lock out the players from team facilities until a new Collective Bargaining Agreement (“CBA”) can be reached.
What is a CBA?
The CBA governs how clubs are allowed to operate. It sets the rules for free agency, draft salaries, and arbitration eligibility as well as on-field rules affecting gameplay such as whether a universal Designated Hitter should be implemented.
How did we get to this point?
Up until 1975, the MLB had a reserve clause. This allowed clubs to set the price of all players and control player movement. For example, if you were a star pitcher who had completed the terms of your contract, the club you played for would still retain your rights to play in the Major League the following season. In 1970, former Cardinals outfielder Curt Flood, with the support of new MLBPA head Marvin Miller, sued Major League Baseball. His claim was that the reserve clause violated antitrust law. Although Flood lost his case in the Supreme Court and was subsequently shut out from baseball, the MLBPA was successfully able to overturn the reserve clause in 1976. This led to free agency and the explosion of player salaries.
Labor battles remained contentious throughout the 1980s and reached a pinnacle in 1994. On August 12, 1994, the MLBPA followed through with their threat to strike. After failed negotiations, the 1994 World Series was cancelled. In January of 1995, 11 MLB players won lawsuits against Major League owners claiming that teams had colluded to reduce their salaries in free agency, further weakening relations between the players and the owners. Finally, after then Judge Sonia Sotomayor issued an injunction against the MLB preventing them from using replacement players, the MLBPA and MLB returned to play in 1995.
So, why is there a lockout?
Competitive Balance. In 2012, the Houston Astros hired Jeff Lunhow as their new General Manager. He immediately traded away or released any player with a high salary, lowering their opening day active roster payroll from $77 million in 2011 to $26 million in 2013. During this time, the Astros fielded some of the worst teams in the league, winning a combined 106 games over a two year period. However, the Astros’ purposeful ineptitude allowed them to hold the number 1 overall pick for 2012, 2013, AND 2014. Tanking allowed them to acquire high end talent, and even though their 2013 and 2014 picks did not pan out, they were able to stockpile talent that they could keep for many years (players do not reach free agency currently until they have completed six major league seasons with their current club). The success of the Astros rebuild convinced many other teams to follow suit, depressing player salaries, since fewer teams trying to compete means fewer suitors for free agents.
Club control of players. Remember, teams control the first six seasons of a player’s MLB career, or potentially longer depending on when the player was called up. A prime example of this is the Cubs’ handling of Kris Bryant. Bryant had blazed through the minor leagues and clearly should have been called up to play third base at the start of the 2015 MLB Season. However, the Cubs held Bryant in AAA for 12 days in April - by him playing 12 games. This meant that Cubs would gain an extra season of club control (the 2021 season).
Furthermore, the current system of club control allows players to reach the open market after their peak years have passed. Because of this system, Kris Bryant became a free agent at 30. In the age of analytics, the going consensus is that long-term contracts for players over 30 do not pay out well. As such, teams are hesitant to sign older players to big contracts. This dampens player salaries and makes it so that the club gets a bargain for the first six years.
What will happen?
Only time will tell. After signing two collective bargaining agreements that overwhelmingly benefitted the owners, the MLBPA seems united to sign a better deal for both the union members and minor leaguers who are not yet part of the union. In my view, a perfect deal allows for players to achieve larger salaries earlier in their careers while the MLB increases revenue sharing amongst teams, allowing for small-market teams to spend to keep players on their teams. The MLB and MLBPA cannot afford a continuation of the current system. If fans of small-market and mid-market teams have to sit through consistent rebuilding cycles, the game will lose popularity to the other sports, and both the players and management will lose.
Final Thoughts
Our goal as a company is to provide athletes with a resource to better reach their fans. As the lockout continues, we hope that the players are able to shore up their social media presence and find different outlets to get paid for their talents and knowledge. By having alternative options, players can increase their negotiating power at the bargaining table. At Couro, one way we can empower athletes is to be on their side as they negotiate for what is fairly and rightly theirs.
