The 2022 Lock Out: Update
The hard thing about playing ‘chicken’ is knowing when to flinch. Scott Glenn
February 27, 2022
The Lock Out of the Major League Players’ Union on December 1st, 2021, by the Major League Owners, rolls on with no end in sight. The negotiations for a new Collective Bargaining Agreement [CBA], the agreement under which the Major League Owners and Players operate, actually began in April 2021. The Players quickly made an offer for a new agreement in May 2021. The Owners finally made a counter-offer in August 2021. This counter-offer was basically unworkable. It signaled that the Owners had no actual interest in negotiating. When the previous CBA expired on December 1st, 2021, the Owners promptly locked the Players out rather than keep trying to negotiate. There has been no real progress made since then. The reason for this is actually quite simple. This is not a negotiation. This is a game of ‘chicken.’ The customary game of ‘chicken’ is two testosterone-addled imbeciles in fast cars driving directly at each other while accelerating. If one swerves, he loses and the other wins. If neither idiot swerves, they both lose. The Baseball Owners have decided to play ‘chicken’ with the Players rather than negotiate. The Owners obviously believe that the Players will eventually swerve. In military terms, the Owners have basically declared war. Is this a good business strategy? Unfortunately, we will find out and the baseball season of 2022 will be a casualty.
This is not a negotiation
In the new CBA, the Players wanted to stop what they believed was Owner manipulation of previous Agreements for their own benefit. According to the Players, the Owners ‘gamed’ the previous agreements by using their ability to control younger player salaries, combined with a system of Revenue Sharing between themselves, to markedly enlarge the Owners’ share of the Baseball’s total revenue. In other words, every Owner was able to make sizeable profits by simply deciding not to compete. The non-competitive Owner stripped his team of older highly paid players, filled his roster with cheap young players, and relied on the Revenue Sharing for his money. This strategy proved to be so lucrative that some teams seemed to become permanent doormats. The salaries of players, who were not stars but had accumulated enough service time to reach arbitration, collapsed. This Owner strategy was based on three prongs: the service time required for a player to reach Arbitration, the service time required for a player to reach free agency, and Owner Revenue Sharing. The Owners began their lock out by informing the Players that the following three topics were not subject to negotiation: 1) the Arbitration Threshold, 2) the Free Agency Threshold, and 3) Revenue Sharing between the Owners. In other words, the Owners declared that they would not swerve. Why did they do this?
Show me the Money!
Of course, the answer is money, billions and billions of dollars. In 2015, the Players’ total salaries were published as 3.90 billion dollars. Two years later, in 2017, the Players received a reported 4.25 billion dollars. In 2021, the Players’ total compensation was 4.05 billion dollars. In other words, the Players’ total salaries have remained flat and even receded slightly. In 2015, Baseball’s total revenue was reportedly 8.39 Billion dollars. In 2017, Baseball’s earnings were 9.46 billion dollars. In 2018, the Owners raked in 9.90 billion dollars. In 2019, the Owners supposedly took in 10.37 billion dollars. The 2021 revenue for the Major Leagues has not been reported yet. But it was almost surely more than the 10.37 billion dollars of 2019, possibly a great big deal more. Recently, the Major Leagues have renegotiated virtually all of their Major Television Deals. A conservative estimate from the published increases of these TV deals would push the total Major League revenues over 11 billion for 2021 and probably 12 billion if 2022 was actually played in full. The Owners would dispute these figures. But, in reality, these total revenue figures are almost surely too small (Forbes Magazine also estimates the Major Leagues’ total revenues, and their calculations are almost always 400-500 million greater per year). There is a good reason that the Owners always refuse to open their books.
The Owners’ non-competitive, guaranteed-profits strategy has transferred billions of dollars into their pockets. If these figures are remotely accurate (leaving out the 2020 Co-vid ruined season), there was an extra six to seven billion dollars total profit (at the very least) from 2015 to 2021 because the revenues did not stay flat like the Player’s total salaries did. The Owners got to keep this windfall for themselves. Looked at another way, if the total 2015 Player salaries were 3.90 billion dollars on total 2015 revenues of 8.39 billion, then the total 2021 Player salaries should have been 5.11 billion dollars if the 2021 total revenues were around 11 billion. The Owners would dispute these figures, make a false claim that they lost 3 or 4 billion dollars during the 2020 Co-vid season, and as always refuse to open up their books to prove anything beyond a reasonable doubt. But the fact remains that the obvious trend in Baseball, whatever the actual amount, is a gigantic transfer of the industry’s revenues from the Players to the Owners. Even the most biased of observers should be able to comprehend why the Players believe that they have been cheated. It is actually obvious that the Owners themselves know that they have cheated the Players. Their strategies are defensive. It is very obvious that the Owners would be completely happy to continue under the expired CBA and continue their present strategies. They will not swerve.
Other Owner Strategies
The Lock Out itself is also part of their strategy not to swerve. By locking the Players out, the Owners are actually leveraging one of their major advantages. The players are paid with regular paychecks throughout the season. However, only about 30 percent of the Owners revenue comes from gate receipts. They also receive a good amount from their local TV packages. But the Owners get a huge amount of their revenues from National TV packages televising post-season games. By the end of the season, the Players have received all of their salaries. But the Owners still have a huge pot of gold left over. This National television revenue will remain untouched as long as the season is eventually started. In other words, the Owners lose much less than the Players unless the entire season itself is canceled. Until the post-season is threatened, the Players actually have more incentive to settle than the Owners. How long can the Owners wait until the Lock Out begins to threaten the post season? The Co-vid wrecked season of 2020 certainly gives a clue. That season was limited to just 60 games. In other words, the Owners will only feel the pressure to actually make their best offer after the All Star Game with half the season gone. Of course, this is a defensive strategy somewhat like the “scorched-earth” tactic used by some militaries to fight a winning retreat.
Another part of the Owners’ strategy in this Baseball War is to pit the richer Players against the poorer Players. The Owners non-competitive guaranteed-profits strategy penalizes the star or superstar Players of the game the least of all. After these players make it through the gauntlet of club controlled years and arbitration to Free Agency, they are usually amply rewarded. The Players Union has always represented, first and foremost, the most successful players. The Players Union has never taken up the cause of the Minor League players that have been horribly mistreated by the Major League teams. The Players Union has negotiated again and again for benefits to accrue to their oldest and most successful members. The Owners have wisely used this fact to turn the tables on the Union. The Owners set up a system that rewards the best players on the backs of everyone else. The Executive Board of the Players Union consists of the following 8 players: Zack Britton, Jason Castro, Gerrit Cole, Francisco Lindor, Andrew Miller, James Paxton, Max Scherzer, Marcus Semien. Each and every one of these players has already reached free agency and/or become, at the least, very affluent or super wealthy. How long will the rich players of the Union fight on to reward the members who are not as well-off? The Owners are obviously betting that the rich Players driving the Union will not take it to the limit. This is also a defensive strategy that can only be successful if the Owners do not swerve.
The End Game
Despite the fact that the effectiveness of Owners’ strategy and tactics for re-negotiating the CBA are contingent on delay, many of the writers covering the Lock Out seem to take the small moves on the periphery of the negotiations as signs of progress. It is actually just a sound and a fury signifying nothing. The Owners and the Players can go back and forth on such subjects as raising the minimum salary, instituting a draft lottery, expanded play-offs, changing the number of player options, without ever touching the main issues. Only the Competitive Balance Tax [CBT] is a real matter of contention between the Owners and the Players on the table. The CBT (better know as the Luxury Tax) penalizes teams for spending too much on salaries. Because this is an actual issue, the Owners have been unbending on it. Rather than actually negotiate, the Owners continue to stall for time by asking for Federal Mediation (not for Federal Arbitration which would take the settlement out of their hands) and setting irrelevant deadlines for starting the season. The only reason for these deadlines is to put pressure on the Players. The Owners have also adopted the strategy of making the double-edged offer. The Owners offer to raise the salary ceiling slightly but only with much greater penalties for exceeding it. The Owners offer to raise the minimum salary slightly but only coupled with taking away the option of exceeding it for any player. It goes without saying that every one of these Owner moves is a refusal to swerve.
The Owners were able to chose the battleground for this Baseball War. They instituted the Lock Out. They set the Rules of Engagement by declaring three subjects off-limits. Because they were able to chose the initial field of combat, the actual day that this Lock Out is over will tell you who won. If the Lock Out ends in Spring Training, the Owners will have won an overwhelming victory. If it settles early in the 2022 season, the Owners will still have clearly won. If the Lock Out settles late in the first half of the season, they will still have won but probably with some concessions. The only way the Players can actually tie, or even win, this War is in a bloodbath where the 2022 season finally starts after the mid-season All-Star break. Only then will the pressure begin to mount on the Owners. Time is on the Owner’s side. Their strategy is essentially sound. Let the Bloodbath begin.
COMING UP: [Subjects that I am currently playing around with or researching. Time until posting may vary immensely.]
- Baseball’s Top 100: A History of Lists
- Roger Clemens and Generational Wealth
- What if Barry Bonds hadn’t taken Steroids?
- Where’s Winston: Negro Leagues Demographics
- The Demographics of the 1871 season.
- The Biography of Big Bill Smith
- The 1894 season of Grant ‘Home Run’ Johnson
- Year in Review, Part B: The Giants and Old Age
- Year in Review, Part C: The Braves and the Legacy of the Negro Leagues