Economic fallout at the heart of the MLB labor dispute

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NEW YORK – Francisco Lindor’s $ 341 million contract with the New York Mets was supposed to be a boon to other shortstops. Ditto for pitchers when aces Gerrit Cole and Max Scherzer signed mega-deals.

Baseball players have long benefited from the spinoff economy, where the stars establish a market that leads to greater earnings for those below. While a slew of record-breaking deals over the past few seasons have raised the top of the salary scale, they haven’t done much for players at the bottom of the scale and may have contributed to a clearing up of the middle class.

At the heart of the financial differences that led to Major League Baseball’s first work stoppage in 26 years is players’ belief in a downward market and their desire to increase team payrolls.

Lindor, Cole and Scherzer are on the union’s eight-person executive subcommittee. The squad also includes infielder Marcus Semien, wide receiver Jason Castro and pitchers Zack Britton, Andrew Miller and James Paxton. Of those, only Castro – at $ 3.5 million – earned less than $ 12 million last season.

Of the 1,670 players who made it to a major league roster this year, 1,145 won less than $ 1 million, including 771 under $ 500,000 and 241 under $ 100,000.

“At the end of the day, we’re fighting to make things better in a lot of places for the next CBA,” Miller wrote in an email to The Associated Press. “We want every player to be treated and compensated fairly, that every team strives to win, and ultimately every fan of our game sees the best version of baseball possible. ”

Affected wages have been depressed by the luxury tax and a drop in major league payrolls since 2017, the union has proposed raising the tax threshold from $ 210 million to $ 245 million. The players would reduce free agent eligibility from six seasons of service in the big leagues to five for players 29.5 and under by 2025-2026 and reduce salary arbitration eligibility to two years. The overwhelming percentage of the earnings would go to the highest earners.

MLB says union proposals would cause more stars to leave smaller markets, a position actors say is a ruse designed to hide an aversion to increased spending.

“The closer you get to a free market, the closer you get to an accurate assessment of players, and the more restrictions there are, the more artificial the wages,” said Gabe Feldman, director of the sports law program. by Tulane. “But there is also the concern of all leagues, that if there is a free market, then teams in the big markets will attract all the best players because they are willing to pay more.”

Negotiations broke down on December 1, hours before the collective agreement expired, and the MLB launched a lockout the next day. The parties have been publicly silent ever since, and talks on key economics are not expected to resume until next month as the scheduled start of spring training on February 16 approaches.

MLB’s 100 highest-paid players accounted for 50.6% of 2021’s opening roster wins.

As many teams devoted a higher percentage of the payroll to the stars, some dumped journeymen with seven-figure salaries in favor of younger players on split contracts: salary much lower in minor leagues than in leagues. major. Because of this and the increased role of relievers, the bottom of the roster has become a constant turnover between majors and minors.

“We’ve been at war with our mid-level players for the past two decades, in salary cap sports and in luxury tax baseball and with free agencies,” said Bob Boland, a former agent. who teaches Penn. State School of Labor and Employment Relations. “If you are a union of players, you know that the high end of free agency will always have some value. What concerns you is whether there is a dynamic piece of the next level, and baseball has already cut that down energetically. ”

MLB has proposed raising the major league minimum wage from $ 570,500 to a series of levels: $ 600,000 for players with less than a year of service in the big leagues, $ 650,000 for at least one but less than two and $ 700,000 for at least two. Each would increase by $ 10,000 per year, to $ 640,000, $ 690,000 and $ 740,000 by 2026.

The players asked for the highest minimum percentage increase in decades: $ 775,000, rising to $ 875,000 by last season. Both parties would increase the minimums during assignment to minors.

The players have also proposed that those not yet eligible for arbitration share a bonus of $ 105 million from central income, based on WAR, appearances on an all-MLB squad, and recognition such as the top player in the game. position, the best pitcher and the best rookie.

Expanding the designated hitter to the National League would likely create several higher paying jobs for veteran hitters.

Baseball’s luxury tax threshold started at $ 117 million in 2003, rose to $ 148 million in 2007, and hit $ 206 million in 2019, the last season before the pandemic. The threshold is up 18% from 2013-19, a period in which MLB announced revenue figures with a 49% increase.

Commissioner Rob Manfred estimated MLB’s operating losses at $ 3 billion in 2020 due to the pandemic and said it was too early to announce a figure for 2021.

At most, six teams paid the luxury tax in any season, and the standard was closer to three. Many clubs have treated the threshold as a cap, making the tax the most important factor in limiting club spending. If the level of taxation were the only factor, the proposed changes to free agency and arbitration would likely transfer an extra percentage of money to the stars, but the union insists the economic system is not sum and that its proposals have cumulative benefits for many actors.

The teams have proposed a tax threshold of $ 214 million for each of the next three seasons, rising to $ 216 million in 2025 and $ 220 million in 2026.

And while the teams have proposed a minimum payroll of $ 100 million, it would be funded by a 25% tax on payrolls above $ 180 million. The union says the penalty at the top would more than make up for any gain at the bottom.

Plus, players want to stop what they call tanking and what clubs call prudent decisions to demolish big league rosters in the short term in order to rebuild for longer term success.

Both sides have offered to extend the playoffs, owners of 10 teams to 14 and players to 12, which would encourage more competition. Players also want safeguards against the manipulation of service time, such as providing the ability to accumulate service time based on achievements.

Negotiators also discussed an NBA-style draft lottery, but owners would limit it to the top three teams and players expand it to the top eight. The union would reward smaller market teams with additional draft picks for success, like making the playoffs or finishing with a winning record.

For now, possible changes to speed up the pace of play have been put aside.


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