As the present MLB lockout threatens to bleed into spring training, recent talks between MLB and the MLBPA have not inspired much optimism.

MLB submitted a proposal to the MLBPA, which is the first communication between the two sides since December 2, 2021. However, the owners and players still seem very far apart on some key issues.

Pitchers and catchers would be reporting to spring training roughly a month from now, but both sides have a long way to go before baseball activity resumes.

To recap, the largest issues regarding the new CBA involve revenue sharing, player arbitration, service time, and the luxury tax.

In recent years, the luxury tax has been acting as a de facto salary cap for MLB teams. As a majority of teams in the league have steered well clear of reaching this spending threshold, the luxury tax seems to have had the largest impact on larger market teams with championship ambitions. It is believed that this is what prevents fringe playoff teams from making big trade deadline acquisitions and big splashes in off-season free agency.

Reported figures for MLB’s new proposal for the luxury tax threshold were to increase the threshold from $210 to $214 million. MLBPA’s last reported proposal was to raise the threshold to $245 million.

Interestingly, with the permeation of analytics in MLB roster construction and more forward thinking front offices, teams have been able to do much more on the field with considerably less payroll expense. It doesn’t make the luxury tax threshold issue moot, but it does show that- at a certain level- spending more money does not necessarily get teams over the hump. Proving that going over the luxury tax does not equate to championship rings.

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While it’s easy to argue one more costly star could win a team like the Tampa Bay Rays a title, the argument can be made that the lower priced and less efficient talent around a player like Bryce Harper or Mike Trout is what keeps teams like the Philadelphia Phillies and Los Angeles Angels away from the promised land.

It seems one of the bigger arguments from the MLBPA for raising the luxury tax, is to raise the competitive balance among teams that are willing to spend for higher priced veteran talent. However, one of the fundamental issues the MLBPA seems miss, is that the market does not value veteran talent like it used to. Baseball just isn’t popular enough for big names to be as significant movers of the needle anymore and most veteran’s on field production can be replaced for much cheaper.

As baseball continues to decline in popularity, that seems to hurt the smaller name veterans more. There seems to be a belief that service time and name recognition carry the same market cap that they did in the 90’s or early 00’s. They do not.

In a time when MLB’s most popular player is barely recognizable to the average person, veteran players need to swallow the tough pill that “veteran” does not equal “star” and more importantly, in the current business model, being a veteran does not entitle a player to the types of contracts we were seeing even less than a decade ago.

That is why the more significant and possibly more contentious issue of the upcoming CBA will be around service time and free agency. It seems one of the main drivers of the discontent around the arbitration process, free agency, and the luxury tax, stems from veterans trying to make up lost wages from their rookie contracts later in free agency. Only to find that their dollar value in the market does not seem to fairly reflect their perceived value.

With the start of Spring Training looming, the current CBA negotiations run the risk of pushing back the start of the season. The MLBPA and MLB seem to be miles away on certain topics, but the luxory tax issue and the service time issues will be headliners of the new CBA.

There will certainly have to be concessions made in order to get a new CBA signed before baseball activities can resume. While the service time portion of the new CBA may have a longer lasting and broader reaching impact on the players, it seems as though the luxory tax issue may be the most winnable battle at the onset. Perhaps the luxory tax threshold becomes the first domino to fall and the negotiations can proceed swiftly from there. But the question remains; how much is this lockout going to hurt the game moving forward.

Source: Forbes – Business

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