Major League Baseball is canceling the start of the 2022 MLB season and postponing Opening Day with the MLB lockout now stretching into March.
MLB imposed a lockout on Dec. 2, 2021 following the expiration of the collective-bargaining agreement. Both sides expressed optimism for a new CBA being signed before spring training began. However, negotiations didn’t really pick up until January and MLB went 43 days without making a proposal after imposing the lockout. On Jan. 25, league officials first expressed a willingness to cancel games.
Following minuscule progress in negotiations throughout January, baseball entered February working with a countdown. Pitchers and catchers were originally scheduled to report for spring training by Feb. 16. However, early talks in February went poorly and many became increasingly fearful by Feb. 13 that the 2022 season would be delayed.
MLB delayed its spring training schedule on Feb. 18 and intermittent negotiations resulted in no real progress. Before MLB officials and the MLBPA met in Florida for a full week of in-person negotiations, the league imposed a Feb. 28 deadline for a new CBA to be reached or else Opening Day would be postponed.
“I consider missing games as a disastrous outcome for the industry.”Rob Manfred on possibility of 2022 season being postponed, (Feb. 10, 2022)
By Saturday, following six consecutive days of discussions and counter-proposals, both sides came away outraged with only minor gains made on small issues. While both sides continued discussions over the next four days, MLB announced Tuesday it is postponing the start of the 2022 season, canceling the first two series on the schedule.
Why is MLB lockout happening?
Only commissioner Rob Manfred and Major League Baseball have the authority to impose and end a lockout. It’s a strategic move used to create leverage in negotiations over the players’ union, putting a freeze on all major-league transactions and preventing players from being paid.
Importantly, no MLB lockout ever led to the cancelation of regular-season games until now. In the three instances when the league imposed a lockout, it only lasted for a few weeks to a month. This is unprecedented territory, led by Manfred.
- 1973 MLB lockout: No canceled games
- 1976 MLB lockout: No canceled games
- 1990 MLB lockout: No canceled games
Unsurprisingly, money is the entire issue. While players want to implement a draft lottery to prevent tanking and want a universal designated hitter, like owners’ push for expanded MLB playoffs, it all comes down to baseball revenue.
Competitive Balance Tax and player payrolls
One of the primary sticking points amid the negotiations is the luxury tax, which the league officially refers to as the competitive balance tax (CBT). It was created under the guise of balancing the playing field between teams with top payrolls in huge markets (New York Yankees, Los Angeles Dodgers) and low-budget teams (Tampa Bay Rays, Pittsburgh Pirates).
- 2021 MLB luxury tax threshold: $210 million
Under current rules, a team that goes over the luxury-tax threshold the first time must pay a 20% tax on every dollar above the $210 million soft cap. If a club goes over it for a second consecutive year, the figure rises to 30% and later 50% after a third consecutive season. If a team goes $40-plus million over, it also must move back 10 spots in the upcoming MLB Amateur Draft.
In 2021, only the Dodgers’ payroll ($271 million) exceed the final CBT. However, both the Yankees and New York Mets were projected to exceed it in 2022. In CBT history, only six teams ever exceeded the tax multiple times. A far greater issue, in the view of many players, is MLB teams are spending far less revenue on the actual team than before.
It’s reflected in payrolls from the 2021 season. According to Spotrac, 12 teams spent less than $100 million on player payroll this past season. Furthermore, four teams (Miami Marlins, Pittsburgh Pirates, Cleveland Guardians, Baltimore Orioles) spent less than $60 million.
- Owners’ proposed CBT: $220 million (2022), $220 million (2023), $220 million (’24), $224 million (’25), $230 million (’26)
- Players’ union proposed CBT: $238 million (2022), $244 million (2023), $250 million (2024), $256 million (2025), $263 million (2026)
While many owners have said operating an MLB team is not always profitable and can often end in financial losses, data suggests otherwise. The league earned $10.3 billion in revenue from the 2019 season, blowing past its record-setting marks a year prior.
The Atlanta Braves set franchise records for revenue before winning the World Series. On Feb. 25, Liberty Media – which owns the Braves – announced a $104 million gain in 2021. Additionally, recently-signed TV rights contracts with Fox ($5.1 billion total), Turner ($3 billion total) and Disney ($4 billion total) are projected to earn MLB $2-plus billion per year in revenue. Apple is also looking to buy broadcasting rights to games. MLB is reportedly seeking $100-$150 million per year from Amazon and NBC for additional broadcasting rights to games, with the talks progressing quickly before the lockout.
MLB minimum salaries, service-time manipulation
One of the cour issues relating to team spending centers on minimum salaries for MLB players. Major League Baseball has the lowest minimum salary of major pro sports (NFL, NBA and NHL).
Adding to the problem, teams often user service-time manipulation to keep players on the minimum salary as long as possible and delay them from becoming eligible for arbitration and free agency.
- 2021 MLB minimum salary: $570,500
While both sides agree minimum salaries need to be raised and are on the same page about a bonus pool for players who far exceed the value of their first contracts, there’s a wide gap in the proposals.
There is a pre-arbitration pool on the table, money that would be distributed to a specific number of 1-3 year players who meet certain requirements (top-5 for Rookie of the Year, top-3 for Hoffman/Rivera award, making first- or-second-team All-MLB, WAR finish). While the union wanted to expand the number of players eligible for Super-2 status – allowing them to reach arbitration earlier – the league refused to budge on that issue.
- Players’ proposed bonus pool: $85 million, $5 million annual increase over life of CBA
- Owners’ proposed bonus pool: $30 million, no increases over life of CBA
Tanking and expanded playoffs
Many players are also concerned about teams tanking, operating with the lowest payrolls and not fielding competitive teams. While it’s a method that has worked out for some clubs (Houston Astros, Chicago Cubs), it’s also viewed as a means of clubs not spending the revenue they generate on the on-field product.
Owners are open to the players’ proposal of a draft lottery, with the first seven picks determined by a lottery as the NBA and NHL use. If a team finishes at the bottom of the standings multiple seasons, it would move down in the draft order.
In order for a draft lottery to be imposed – something many around baseball believes will do little to slow down tanking – owners want the playoffs expanded to 14 teams. It’s viewed as a non-starter from the players’ perspective, considering the expanded playoffs mean significantly higher revenue for the league.
League officials proposed to start at a higher minimum salary, however, it came with a 14-team postseason. With the additional rights to playoff games worth far more in revenue for MLB than the increased minimum salary, the players’ union declined and stuck by a 12-team playoff.
When will the lockout end?
Opening Day, originally set for March 31, is out of the question. With players needing at least three weeks to prepare for a season, a CBA must be agreed to in a matter of weeks for the new schedule to begin in mid-April.
Considering the lack of progress after three months of a lockout, it’s increasingly possible the first pitch isn’t thrown until May or later. While the worst-case scenario – canceling the 2022 MLB season – is unlikely, it looks more possible than it did a few months ago.