What MLB’s recent agreements mean for the next CBA

Perhaps the most notable legal news to come out of Major League Baseball in some time was last week’s announcement of a deal between the league and the MLB Players Association regarding how the two sides would address the delayed start to the season caused by the COVID-19 pandemic. Given the previous labor unrest, ranging from slow free agent markets to service time manipulation, you would have been forgiven for worrying that such negotiations would be potentially acrimonious. Instead, the league and union reached an accord relatively swiftly.

More interestingly, this was the first big test for new MLBPA Chief Negotiator Bruce Meyer, a veteran attorney whom many (including myself) believe to be the best sports labor lawyer in North America. The result wasn’t quite the coup that Meyer has previously negotiated, but it also contains a number of important points which illustrate the direction that the parties may be headed in future negotiations.

Current service time rules may be headed the way of the dinosaurs. The most notable part of Jeff Passan’s excellent reporting on the deal was this, about service time:

Players pushed to receive a full year of service time, which counts days toward free agency, arbitration and pension, even in the event of a canceled season. When MLB agreed to grant that, the path to a deal coming together was forged, according to sources.

The union agreed not to sue the league for full salaries in the event that the 2020 season never takes place, and MLB will advance players $170 million over the next two months, sources said. The MLBPA will divvy up the lump sum among four classes of players, with the majority of it going to those with guaranteed major league contracts. If games are played, the advance will count against final salaries, which will be prorated.

A lot of attention has been paid to the MLBPA’s salary concession in the event the season is canceled, but the full year of service time is a huge win for Meyer and the union, especially given the likelihood of a shortened season this year. This isn’t just about pending free agents like Mookie Betts and J.T. Realmuto, either. With this deal, the union secured pre-arbitration and arb-eligible players millions of dollars in salaries which would have been lost had the agreement preserved traditional service time rules. The union also demonstrated that it is possible to make service time rules less subject to manipulation.

Equally notable is the development that rosters may be expanded in a potentially shorter season, importantly creating additional MLB jobs in an environment where gaming the service time system will be far more difficult. The 2020 season (if it happens) may not be free of service time manipulation, but it will very likely be on a far lesser scale than we’re accustomed to seeing.

For lawyers, everything is precedential. Even if a novel ruling or agreement isn’t precedential in the legally binding sense, it nonetheless serves as a proof of concept for subsequent cases, establishing that this previously impossible option was now available. In many ways, this agreement sets the stage for a new set of service time rules in the next CBA. Now that the union has established, even in a limited setting, that service time need not be fixed to a number of games, an agreement which does away with service time manipulation appears far more likely than it did even a month ago.

On the other hand, the union still isn’t paying attention to its future. The 2020 draft was virtually gutted, limited to just five rounds with draconian bonus caps.

The players’ concessions on the draft will be more difficult for some to accept, but should not be considered surprising. Potential high school and college draftees are not yet members of the union. Merely preserving the 2020 draft was something of a victory from the players’ perspective — the owners wanted to cancel the draft with the idea of reallocating their savings to other areas while operating with lower revenues.

The agreement, however, gives baseball the right to shorten the draft from 40 rounds to five. Bonuses also will be deferred, with picks receiving an initial payment of $100,000 and getting the rest in equal amounts in 2021 and ’22. Non-drafted players can receive no more than $20,000, as opposed to $125,000 previously, before counting against a team’s allotment.

As I’ve written before, the biggest weakness for the union continues to be its willingness to sacrifice future members - be they minor league players or amateurs - for current MLB veterans. It may be a way to maintain labor peace in the short run, but in the long run this won’t ensure the long-term viability of the union. The MLBPA needs to take a much more sober view of its longstanding willingness to sacrifice its future members’ needs, for their sacrifices will end up weakening the union in the long run.

MLB’s leverage is less than it believed. Buried in Passan’s reporting was this fascinating nugget:

MLB’s negotiating posture reflected an ownership class fearful of the potential — slim though it may have been — of losing a salary grievance and desirous of limiting costs amid dwindling revenues. With no games until at least early June, owners have lost revenue streams from both gate receipts and local television contracts for at least two months.

This suggests that MLB owners are realizing that their recent stranglehold on the labor situation is far more tenuous than previously believed. In a walkout, strike, or other work stoppage, players would also have the ability to severely curtail those same two revenue streams: gate receipts and television contracts. Given teams’ reliance on television contracts directly, what we see here is a potential glimpse into how far owners are willing to go to avoid that eventuality - and it may well be farther than we’d initially hoped.

This doesn’t mean that labor peace in MLB is a foregone conclusion, and it remains to be seen how the league recovers from the pandemic when the crisis mercifully ends. At the same time, this agreement did provide a glimmer of hope for the union that they may have somewhat more leverage than they’d believed, and owners are rather less willing than they’d previously thought to sacrifice revenues in a labor dispute - especially so soon after the financial shock of the pandemic itself.