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Rob Manfred’s cancelation of MLB games could — and should — have been avoided

MLB: Lockout The Palm Beach Post-USA TODAY NETWORK

There’s no Major League Baseball spring training right now — which means no ties, which is another shame but we’ll deal with that later — and there won’t be real games for the first week of the regular season. Based on where negotiations are at, and the need for a proper spring training, there almost certainly won’t be games on April 7 or 8 either.

The worst part of MLB’s mess is how easily avoidable it was.

Owners and players aren’t fighting over some dramatic, structural change to the sport. Whenever a new deal is reached, the economic system of the game will be mostly the same, with a few small tweaks. The two sides are arguing over how to split a tremendously large pie.

A notable aspect of this particular work stoppage is that there’s still roughly half of an offseason to complete. Once things start up again, there are still scores of free agents to sign, there will be salary arbitration hearings to schedule, and a major league Rule 5 Draft to be held, among other things. All of these could have happened on schedule, and been completed by the end of February had MLB owners not locked the players out.

The two sides could have continued to negotiate after the previous collective bargaining agreement expired. This might have eventually led to a player strike, yes, but which would only put us in the exact moment the sport is in now, only with its offseason already finished.

A main reason the league instituted the lockout immediately after the CBA expired helps identify a main sticking point in negotiations. From Article XXIII, section I of the 2017-21 CBA:

There shall be no Competitive Balance Tax in place following the 2021 championship season, and the Parties expressly acknowledge and agree that the provisions of this Article XXIII (except those concern- ing the collection and distribution of the Competitive Balance Tax proceeds for the 2021 Contract Year and the assessment of any associated penalties for exceeding the Base Tax or Surcharge Thresholds) shall not survive the expiration of this Agreement.

The competitive balance tax sunset at 11:59 p.m. ET on December 1, along with the expiration of the CBA. Had the two sides continued to bargain, even into the season, they would continue under the provisions of the previous CBA. But a competitive balance tax would not be active in 2022, unless there is one included in a new agreement.

By the time the previous CBA expired, the Mets were already at roughly $265 million in payroll for 2022. The Dodgers, once their arbitration cases are settled and 0-3 players under contract, would be at roughly $235 million, and that’s before making some needed additions. That’s why there’s a lockout more than anything, to keep the big spenders in check.

But there will almost certainly be a competitive balance tax in the next CBA. It’s just a matter of figuring out the thresholds and the tax rates.

Competing CBT offers

Side 2022 2023 2024 2025 2026
Side 2022 2023 2024 2025 2026
Players $238m $244m $250m $256m $263m
Owners $220m $220m $220m $224m $230m
Sources: Associated Press & The Athletic

Again, nothing in the current proposals is a huge fundamental change. In 1994, the two sides fought over a salary cap, leading to a strike that wiped out a World Series. MLB doesn’t have a salary cap in name, but it basically has one in practice.

Last year the Dodgers paid a hefty competitive balance tax ($36.2 million), but they were one of only two teams to exceed the $210 million threshold, along with the Padres. Four more teams (Phillies, Yankees, Mets, Astros) spent within $3.5 million of the threshold.

Under the last five years of the previous CBA, teams spent within $5 million of the threshold 15 times, an average of three per year.

“We look at the competitive balance tax as a breakaway spending mechanism. That’s how this thing was originally negotiated in when you look at the history of baseball and labor. We’re not seeing that function as breakaway spending. We’re seeing that act as a salary cap,” said Max Scherzer, who is on the MLBPA executive subcommittee. “No other way can it be shown, point blank and simple, than the San Diego Padres having a higher payroll than the New York Yankees.”

Some teams have shown they will occasionally spend up to the limit, especially with the previous tax rates — 20 percent, 32 percent, 62.5 percent for the three threshold levels for first-time exceeders, with higher rates for going over the threshold in consecutive years — which are reportedly also part of the current proposals.

During his press conference in Jupiter, Florida on Tuesday, commissioner Rob Manfred was asked why the owners’ last offer included no raise in the CBT threshold until the fourth year of the deal.

“It’s important to look at the pattern of increases in the CBT threshold for the last several agreements,” Manfred said. “The proposal we made is right in line with the increases we’ve seen in the past.”

The current iteration of competitive balance tax, with established thresholds and taxes for going over, began in 2003. Here’s a look at those thresholds for the last four collective bargaining agreements.

Competitive balance tax from previous CBAs

CBA years First-year threshold Inc. over prev. yr Last-year threshold Inc. over prev. CBA
CBA years First-year threshold Inc. over prev. yr Last-year threshold Inc. over prev. CBA
2003-06 $117,000,000 n/a $136,500,000 n/a
2007-11 $148,000,000 8.4% $178,000,000 30.4%
2012-16 $178,000,000 0.0% $189,000,000 6.2%
2017-21 $195,000,000 3.2% $210,000,000 11.1%

The owners’ offer of a $220 million is a 4.8-percent increase over last year’s threshold, and the 2026 threshold of $230 million would be a 9.5-percent increase over 2021. Being right in line with recent history is part of the problem, contributing to the widening gap between league revenues and player salaries.

From 2003 to 2019, the last full season with reported data, the CBT threshold grew 76 percent. During that time, per Statista, league revenues grew by 184 percent.

“You also need to remember that the last five years have been very difficult years from a revenue perspective for the industry given the pandemic,” Manfred added with a straight face Tuesday (this was when he wasn’t smiling during the press conference in which he canceled a week of regular season games).

The pandemic was tough on everyone, Rob. That includes the players, who were paid a little over a third of their salaries in 2020, and it includes team employees furloughed or laid off. It was especially rough on game-day stadium workers, without games to work then and now.

Those workers don’t have the luxury of returning to the relatively bulletproof investment of owning an MLB team, in which got back to being exceedingly profitable in 2021. Just ask the Braves.

Even if teams aren’t making money hand over fist annually, owners always make out like bandits in the long term when they sell. Even if they drag their team into bankruptcy. In fact, maybe the current owners who can’t stand the thought of paying players more should sell their teams.

After all, as Manfred said (again, somehow with a straight face) that owning an MLB franchise was less profitable than the stock market.

Maybe that’s why Manfred was laughing on Tuesday. He thinks we’re all idiots.