With Players and Owners Dug in, What's the Endgame for MLB's Negotiations?

Another day, another proposal and presumably another rejection.
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The Major League Baseball Players Association took a hardline position early in negotiations with MLB: it would not accept a pay cut of their per-game rate of salaries. The issue has galvanized players like we haven’t seen in years. Unlike free agent compensation, pension plans and economic systems, a pay cut is easy to understand and affects everyone. Their unified voice has been strong and impressive.

The economic cost of an intractable position, however, is becoming more apparent as the days fall off the calendar. The risk is the players wind up with less money without an agreement with the owners than with one.

Players and owners agreed on March 26 that “absent agreement by the parties,” the Office of the Commissioner could construct a season “using best efforts to play as many games as possible.” That gave commissioner Rob Manfred control of the baseball calendar. And Manfred wants the regular season to end Sept. 27 and a 16-team postseason to end no later than Nov. 1, based on concern of public health officials about a possible second surge of the pandemic.

With Manfred controlling the calendar, every day that goes by without an agreement means regular season games are lost for good. And that’s why the owners’ proposals, incremental as they are, keep declining in games. Their latest offer made Friday: 72 games at 80% pro-rated pay, plus a $50 million players pool for the postseason, according to two sources familiar with the offer.

If players took that deal, they would get about 37% of their total salaries, or $1.503 billion.

If no agreement is reached, MLB could schedule a season of 48 games with players receiving 100% pay on a prorated basis. In that scenario, players would get about 30% of their total salaries, or about $1.205 billion. The difference: $300 million.

Understand negotiations are much more complicated, including how much money owners would tie to the completion of a full postseason (about $180 million). This bit of simple math is used only to illustrate how the negotiations have entered the endgame and where they will be decided.

A baseball left on the ground in the rain

As Manfred told me Wednesday on MLB Network, there will be baseball this year. He can say that with such certainty because of the agreement between owners and players in March. The remaining question is whether we are looking at 48 games or closer to 70 games. And we will know that within a week or two.

Last month Nationals pitcher Max Scherzer made the union’s position very clear. He released a statement after a conference call with other players saying, “there’s no need to engage with MLB in any further compensation reductions.”

Scherzer saw the union’s agreement to prorated salaries as a pay cut. And that’s where the union drew the line. He wrote, “There’s no justification to accept a 2nd pay cut based upon the current information the union has received.”

The union doesn’t trust the owners’ financial figures. Distrust makes for difficult negotiations, which gives you an idea of what the next Collective Bargaining Agreement talks might look like.

But consider what is happening now as its own event. This is a one-time fix to something nobody anticipated: a global pandemic that has shut down all sports. It needs to be addressed strictly within those boundaries, and it will be.

With Manfred controlling the calendar, these are the pressure points without an agreement: A 48-game season that ends on Sept. 27 would have to begin Aug. 3. A season that begins Aug. 3 requires players to begin training camp July 13. And a training camp that begins July 13 needs a “go” announcement by July 6 in order to allow for COVID-19 testing and educational seminars to be conducted.

MLB has asked the union to respond to their latest offer by Sunday night. With an agreement, however unlikely, you could see games as soon as July 6.

Both sides have held together well during the course of negotiations. After three proposals went back and forth this week, now the ball is in the players’ court. There has been no indication they have softened on their opposition to taking a “second pay cut.” As time runs out, now there is $300 million riding on that position.