by Mike Maffie and Steve Mancuso

The worst-case option and why MLB owners will avoid it

Within the last 48 hours, Major League owners and the MLBPA have submitted new proposals in their return-to-play negotiations for the 2020 season. Owners made an offer Monday and the players responded yesterday.

The dueling proposals attempt to change and interpret a March agreement between the two sides. The March agreement sets the baseline for current negotiations because it forecloses topics of bargaining. This is important because it means that neither side is compelled to negotiate on these issues. The key elements of that understanding:

  1. Owners would pay players a straight pro-rated percentage of their salaries based on the number of games played,
  2. Players grant the Commissioner (owners) the authority to determine when play would resume, the number of games and the schedule, the Commissioner must make a best effort to play as many games as feasible,
  3. Working conditions, such as health and safety would be negotiated at a later time

A little more than a week ago, we were optimistic that money wouldn’t ultimately be a reason to prevent MLB from playing games in 2020. Where do things stand now?

Comparing the two latest offers

Regular Season Owners proposed a 76-game schedule, the players countered with 89. It has been reported that the proposed Opening Day for both sides is July 10. The owners want the regular season to end no later than September 27 to permit the postseason to conclude in October. The players proposal would extend the regular season a couple weeks, to October 11. More on the calendar in a minute.

Salaries Owners proposed paying players 75% of their prorated salaries. But players would receive that percent only if the full postseason plays out. Otherwise, players would receive only 50% of their prorated salaries. The MLBPA proposal held firm with its insistence on 100% prorated salaries per the March agreement.

Expanded Postseason The number of teams that qualify for the postseason is set by the Collective Bargaining Agreement that covers the 2017-2021 seasons. Any change in that deal must be agreed to by the players. The owners most recent proposal expands the 2020 postseason by one round, increasing the number of teams in each league that qualify from five to eight. The MLBPA has said it will support this not only for 2020, but also a similar expansion in 2021. In previous round of offers, expansion had been an increase to seven teams per league.

Health Opt Out There are three categories of players related to the COVID opt out: (1) Players who fall into a high-risk category due to underlying health conditions, (2) players who have family members in a high-risk category, and (3) players who want to opt out even though they are not at an enhanced risk. State and Federal laws such as the Family and Medical Leave Act and the Americans with Disabilities Act also govern these items.

MLB agreed to the players’ earlier proposal to pay salary and service time for high-risk players who opt out, essentially treating them as injured. The MLBPA has accepted the owners’ proposal that players who opt out who are not in the high-risk category are not entitled to salary or service time.

Revenue Enhancers Players once again offered to play a Home Run Derby and All-Star Game in the fall, both of which are huge money makers for owners. Owners offered to forgive 20% of the $170 million in salaries already advanced to players during April and May.

The looming calendar and the worst-case option

Before the pandemic, the MLB regular season was to finish on September 27 and the World Series start on October 22 and conclude no later than October 30.

Owners have not wavered in their desire to maintain these dates in any new schedule. They have expressed several reasons for that preference, including avoiding a COVID resurgence, avoiding more head-to-head matchups with the NFL and that the networks have already set these dates on their schedules.

Both sides chose Friday, July 10 as Opening Day in their most recent offers. That’s one month from today. Assuming an agreement was reached in the next few days, players would need that time to arrange travel to team sites from around the world, undergo COVID testing and education, then conduct a three-week training camp.

An Opening Day of July 10 creates 80 calendar days to play the 76 regular season games in the owners’ proposal and finish on September 27. The players proposal of 89 regular season games concludes on October 10.

Salaries and schedule aren’t the only relevant issues to get the season started. The question of working conditions – the COVID opt out clause – was explicitly tabled in the March agreement and must be resolved through good faith negotiations before any games can be played.

If health and safety issues are settled, but the sides can’t reach agreement on changes to the March deal which the owners seek, commissioner Rob Manfred could impose a 48-game season, which he is entitled to do based on our understanding of the March deal. Owners would have to pay players full prorated salary for every game. A 48-game season ending on September 27 could begin August 7.

A commissioner-declared 48-game season is viewed as the default option by the league and worst-case option by players and fans. Fortunately, there are significant incentives for the owners to avoid that resolution, including the risk of losing a 9-figure labor grievance.

Triggering a player grievance

Based on the March agreement, the Commissioner has discretion to determine the season length and set the schedule, as long as he makes the best effort to play as many games as possible.

If the Commissioner imposed a 48-game season, players could respond by filing a grievance under the Collective Bargaining Agreement arguing that Manfred didn’t make a “best effort” to play as many games as possible. The grievance procedure is outlined in detail in the current CBA. A panel of three arbitrators would hear and adjudicate the dispute.

It’s important to note that the iron rule of the workplace is that union members must “obey now, grieve later.” When employees suspect a contract violation, they may not engage in “self-help” when the collective bargaining agreement provides a remedy for contract violations. (There are small exceptions to the “self-help” rule in the instance of health and safety.)

If players win their grievance, the arbitrator will generally provide a remedy that makes them whole. Since players would “obey now,” filing a grievance would mean that players begin working under management’s proposed schedule. The baseball season would begin as dictated by the Commissioner while the grievance moves in the background.

The arbitrators would be tasked to examine if management violated the terms of the March agreement, and if so, determine a remedy for the contract violation. In the hearing, the panel would enforce the plain terms of the March deal. In the event that the panel could not clearly interpret the meaning of the text, they would ask the parties to present evidence that supports their interpretation of the phrases in question.

Common forms of evidence here are bargaining proposals or notes taken by either side during the negotiation. For example, if management proposed language that read, “Players shall receive pro-rated salaries for games played with fans” and it was shortened to “Players shall receive pro-rated salaries for games played” in the final agreement, that would be strong evidence that the parties intended for the phrase to mean that players should receive pro-rated salaries for games played with or without fans. The panel would place more weight on the evidence closest to the moment of the March agreement, taking into account the sequence of proposals.

The owners defense would be perilous. Given that they proposed 82-game and 76-game seasons in the bargaining process, they can’t argue logistic feasibility required a 48-game season. They would have to claim that economic feasibility was the cause. But once they do that, the panel can compel them to provide evidence for that claim – by opening up financial documents.

That’s the nuclear option from the owners’ standpoint. The last thing they want to do, particularly in a year leading up to a new round of CBA negotiations, is show their books. It’s possible a ruling by the arbitration panel ordering owners to supply documents might cause the owners to just settle the grievance.

If the MLBPA wins its grievance, the arbitration panel would determine a remedy that would make the players whole. In this case, that’s pretty clear. As part of the grievance process, the MLBPA would have made a case for a different, higher number of games that could have been played. The owners would owe the players the difference in pay between a 48-game and a longer season, at full pro-rated pay.

For example, if the arbitration panel sides with the players and believes that an 82-game season was possible, owners would have to pay players the difference between 48 and 82 games, or 34 games worth of wages. That’s about $840 million.

Other reasons the owners don’t want a 48-game season

Beyond the desire to avoid a massive grievance loss, owners have other significant financial incentives to avoid the Commissioner’s 48-game default option.

First, owners would forfeit the expanded postseason agreement. The number of teams that qualify for the postseason is set by the CBA. The Commissioner does not have the authority to add teams without player consent.

An extra set of postseason series would make the league a huge amount of money. You’re talking about an extra eight 3-game series. Beyond that, a two-year experiment with 16 teams could lead to that format becoming a permanent feature. Beyond 2021, it would have to be negotiated in the next CBA, but if fans loved the expanded format, and MLB was willing to share the added revenue with the players, more teams could become permanent.

Labor lawyer Eugene Freedman (who may have had the same professors in Collective Bargaining and Labor Law at Cornell that Rob Manfred did) makes the case this helps the owners more in the long term than saving the money they are trying to deny the players in 2020.

Second, owners would also forfeit the players offer of a 2020 Home Run Derby and 2020 All-Star Game. Craig Edwards at FanGraphs estimated the added postseason rounds plus All-Star Game and Home Run Derby could amount to $500 million in added revenue through broadcast rights alone.

Third, imposing this outcome on the players, and the subsequent grievance process – win or lose – would poison the ground for the upcoming CBA negotiations. To the extent that Manfred can act as an agent independent of owner wishes (he works for them, after all), he’ll push for a negotiated deal for the sake of labor relations peace.

Finally, a 48-game season may not be seen as legitimate by a segment of fans. Do owners want to be seen as the ones standing in the way of more baseball? We might even see a few players sit out rather than play at heightened health risks for a third of their original salary.

Where is this headed?

Each side is quick to leak denunciation of the other side’s offer. That’s a PR dance dutifully reported and abetted by certain national baseball writers. If you pay attention to the terms being discussed, including ones not often in the headlines, the sides are moving in the direction of a structure that could make sense for a deal, albeit slowly.

Ownership is the side that benefits most from this process dragging along. Reducing the season from 82 to 76 games saves them money. So will waiting another week for a 70-game structure. The wild card, as it has been from the start, is division among ownership ranks. Owners have different views toward the labor process and varying financial deals with regional sports networks. Imagine trying to herd eccentric billionaires into a common view. If ownership had been negotiating with a single voice, we’d have had a deal by now.

This should have been resolved a week or more ago: an 82-game season, 100% pro-rated salaries, expanded postseason for two years, a 2020 Home Run Derby and All-Star Game, high-risk player and family opt-out with service time and salary. Terms such as salary deferral and salary advance forgiveness could play minor roles.

Time is now a factor. An 82-game season is much less likely than it was a week ago. We’ll be saying the same thing about a 76-game season a week from now if there isn’t an agreement. Each week that goes by lowers that number.

We expect there will be a deal and the Commissioner won’t have to resort to the 48-game baseline option. Owners want an expanded postseason, for now and the future, and should be willing to pay for it. They also should pay for a Home Run Derby and All-Star Game. Each concession would come as adding to the number 48, the number of regular season games. They’ll also avoid rolling the dice on the grievance hearing. The realistic worst-case number is probably 60 or 64.

That said, it is possible enough owners are pushing for a scorched-earth strategy toward the union that we end up with the 48-game default season. That outcome would negatively impact owner bank statements and set back labor peace.

It would also come at our expense – baseball fans.

Steve Mancuso is a lifelong Reds fan who grew up during the Big Red Machine era. He’s been writing about the Reds for more than ten years. Steve’s fondest memories about the Reds include attending a couple 1975 World Series games, being at Homer Bailey’s second no-hitter and going nuts for Jay Bruce at Clinchmas. Steve was also at all three games of the 2012 NLDS, but it’s too soon to talk about that.

13 Comments
Oldest
Newest
Inline Feedbacks
View all comments
pinson343
pinson343
2 years ago

Highly informative again, Steve. You’ve reinforced my take on the most recent exchanges, which was that the owners will avoid the 48 game scenario mainly because an extended postseason is critical for them. So they’re running down the clock to 60-65 games at which point they’ll agree to a pro-rated salary. But it’s a dangerous game they’re playing. The players know what they’re doing. The players will not for example agree to give away their right to hold MLB liable for a health problem that develops for one or more players. Probably not a good example because can’t believe the owners would think this is realistic, but it has been raised by the media as another impasse.

pinson343
pinson343
2 years ago

I’m most angry at the owners who have no problem with accepting zero games in 2020. In my fantasies Manfred pulls out his “in the best interest of baseball” power and after this is over orders them to find buyers of their teams. (I’m aware it’s a fantasy.)

But the players are not blameless in this. A number of them have cited the importance of the 2020 agreement for future players. I’m not questioning their sincerity (although in some cases one probably could), I’m questioning their priorities. Nothing they agree to for 2020 with respect to playing without fans in the stands necessarily carries over. The highest priority for owners and players right now should be about the 2020 season, that merits full focus. The time to get tough, if you must, is the next CBA.

Baseball will not die, as some have said, without a 2020 or even without a 2021 season. It’s just too great a game. But owners and players seem out of touch with the long term damage, at least in public statements. Not exactly an original observation, I know, but from the outside it seems to be true.

Brian B.
Brian B.
2 years ago

Thanks for continuing to provide this type of analysis on these negotiations. I haven’t found anything so in-depth or level headed on any other site. Here’s hoping the owners can get on the same page and salvage a season of at least 70+ games.

pinson343
pinson343
2 years ago
Reply to  Brian B.

Brian B.: Agree 100%.

pinson343
pinson343
2 years ago

“Imagine trying to herd eccentric billionaires into a common view.” Like trying to give 30 cats a bath.
But isn’t this Manfred’s job, to emerge with a single voice ?

Michael Maffie
2 years ago
Reply to  Steve Mancuso

Bargaining on your own side of the table can be a lot more contentious than what happens across the table. For owners, they might not be very reliant on baseball as a revenue source, letting them take a more aggressive stance out of ideological reasons or emotional responses. Not all of them will be like this, but as Steve said, their diverse set of interests makes it harder to come together for a final deal.

Brian Van Hook
2 years ago

Appreciate the analysis and comments, as usual. With the latest round of predictions for rising Covid cases as states try to reopen, I can’t help but wonder if a lot of this doesn’t become a moot point.

pinson343
pinson343
2 years ago

I thought Mike and Steve would be amused to hear that David Samson on Sports HQ/CBS just stated (more than once) that he and regular guest Jim Bowden were “the only two” (completely unqualified, apparently the only two in the world) who remained steadfast in predicting a 60+ game schedule for 2020.

pinson343
pinson343
2 years ago
Reply to  Steve Mancuso

I don’t think they’re smart enough to know to read your and Mike’s post. But then again, I’m suspicious about they’re being smart enough to make that prediction. So it remains a mystery.