Several years ago, Major League Baseball and its owners saw a clever trend that was reshaping the financial coastline that separated them from the players in arbitration.
For years, players and teams had exchanged salary figures for arbitration hearings and then had up until the time of the hearing to negotiate a deal. One of the largest gaps came in 2016 as Jake Arrieta, then the Cubs’ ace, submitted a $13-million salary, and the Cubs countered with a $7.5 million offer. Despite the difference, Arrieta never saw a hearing. They settled at $10.7 million — not too far from the middle. This was the strategy. By filing higher than they could argue to an arbiter, agents were changing the tide of talks by tugging up that midpoint, using a team’s eagerness to settle against it.
A majority of teams, including the Cardinals, responded within the past two years by adopting a strict “file and trial” policy. Once the sides exchange salaries, they go to a hearing — and the salary request would have to be defended. Period. Owners wanted to reclaim some land in arbitration and stop the midpoint tug. In order to do so, they put the pressure on agents to submit a salary they could win in a hearing and, thus, quickly reduce inflation and, over time, bring back the value of midpoint agreements.
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With that background, consider a brief summary of the past two weeks and the laborious, halting, sometimes rancorous attempt Major League Baseball is making to return from the coronavirus shutdown.
MLB owners propose an 82-game schedule.
Union counters with a proposed 114-game schedule.
Owners discuss imposing a 50-game schedule.
Do the math.
The midpoint is the original 82-game format.
This is how both sides orbit a solution — trying to get the right gravitational pull on one side that draws the agreement their way, while ceding on the other side. And during the tick-tock of talks it can seem that the sides are at polar opposites, tugging apart, when really they are carving out and defining the area where they’ll eventually land. Even when the rhetoric seems divisive and deafening — from players on Twitter, from sources talking to the media, for even Trevor Bauer and Scott Boras — there is cause for optimism, because as long as the two sides are talking they are identifying and revealing what they are willing to give to get. They’re called negotiations, after all. If there wasn’t a back and forth like this, they’d be called agreements.
“Baseball will find a way to get going again,” an official recently told me.
The latest rounds of talks screeched in front of a wall Wednesday as, according to The Athletic, the owners declined the player’s 114-game schedule and did not offer a counterproposal. The 50-game schedule remains a possibility, revealing the limits to which the owners intend to pay players, the narrow window they see for a season, and how swiftly they want to assure a postseason.
This helps define where the owners’ “puke point” for an agreement is.
One of the main issues steering these discussions between potholes has been the March agreement to pay players their prorated salaries based on the number of games in a shortened season. The owners argue that agreement was based on having fans (ticket buyers) in the stands, and with empty ballparks the calculus has changed. Revenues will shrivel. Some owners have argued that it will be cost prohibitive to pay prorated salaries and still have games in the ballpark. It’s a cash-losing proposition. The players have said an agreement is an agreement, and they want a longer season because it’s a chance to reclaim more of their prorated (by game) salary.
All along, the owners could run the numbers on what they could stomach. It’s really just an interception on a X-Y graph.
X is money (cost to play games or revenue from games).
Y is games played.
Where the cost and revenue lines meet is the break-even number of games based on having players take a prorated salary. That’s the sweet spot the owners want to hit. It sure seems like 50 is close to the number, based on the owners’ discussion, and now the union knows it.
The owners’ first proposal — which included pay cuts beyond prorated, and deeper cuts to higher-paid players — was an attempt to tug the number of games up by diluting the cost of each game. The response was predictable. Players took to social media to express frustration, anger, disappointment, and scoff at the proposal. They got something far more valuable than sound bites, though. They got information on the owners’ financial stance. It wasn’t a peek at all of the owners’ cards, but in this poker game it was a better understanding of the confidence in those cards. The players responded by doing their own math that they could make more money by playing more games and upped the number of games, nudging that midpoint to their side.
And so the game of negotiations continued. But it’s not swinging back and forth from extreme to extreme as it does in the comments. Rather, it’s like a pendulum swinging from proposal to proposal to proposal to define the sweep of interests, the true goals of the two sides, and then arriving and pointing at a place for agreement.
We’ve seen this happen already. MLB brainstorms the Arizona Bubble plan. Players don’t like the idea of being removed from their families and dropped into isolation. MLB expands to a hub idea, or keeping the spring training divisions. The arc widens. Players respond. MLB discusses a regional setup, one where teams and divisions are geographically organized.
Expanded rosters, universal DH, and so on …
Nods all around.
The urgency to have a season played and a postseason finished before a possible second wave of the coronavirus is guiding the owners’ hands, and the players know that. Arizona owner Ken Kendrick said as much Tuesday during a radio interview on the “Burns and Gambo Show” when he explained “our model is and will never be changed that we will not be playing baseball in the month of November or later.”
Players also know how essential it is for the industry — owners and players — to reach the postseason revenue jackpot at the end of the season. That, too, is a driving force. And so the tugs at the midpoint continue. The possibility of deferred salaries does the same, shifting the lines of money and games again to a new meeting point.
There is, however, one area where both sides should pull the tides in the same direction.
In a text this past week, Cardinals lefty Andrew Miller, a member of the Major League Baseball Players’ Associations executive subcommittee, stressed that so much of the discussion has fixated on the financial aspect of a return and the jockeying around revenue. But it should not overlook how “we still have work to do on a health and safety plan as players are not only asked to risk their own health, but that of their families as well,” he wrote.
Any return to play hinges on the testing necessary to assure the health of players, coaches, support staff, and the structure of the league. Players have to be comfortable that they are not putting their current and future health at risk (and that of their families), and the owners likewise have to know the testing is broad enough, quick enough, and reliable enough that it does everything possible to avoid another shutdown of the league. That does mean widespread testing and how MLB’s access compares to their communities. That means diligence on the players’ part away from the ballpark. It means discipline and nimbleness on both sides. That means it’s not just an agreement, it’s a commitment. Health becomes a mutual priority.
Let the revenue negotiations be about winning incremental debates. But the health side of any return should be about the well-being of the players and the game, at large.
That’s more than good health.
That’s good strategy because it’s good faith.