Baseball has a lockout. What does that mean?

The sport of baseball came to a grinding halt last night at midnight ET when the collective bargaining agreement expired and owners unanimously voted to impose a player lockout. This means that for the first time since 1995, baseball will have a work stoppage, and while that doesn’t mean any games are in jeopardy for now, it does leave the future of the sport uncertain. Here is what you need to know about the baseball lockout.

What is a lockout?

A lockout is when owners prevent union members from working as a negotiating tactic during a labor dispute. This is in contrast with a strike, when workers refuse to work. A lockout is not necessarily a given when a labor deal expires, but owners decided to impose one to put pressure on the union.

Commissioner Rob Manfred issued the following statement following the vote to approve a lockout:

Despite the league’s best efforts to make a deal with the Players Association, we were unable to extend our 26 year-long history of labor peace and come to an agreement with the MLBPA before the current CBA expired. Therefore, we have been forced to commence a lockout of Major League players, effective at 12:01am ET on December 2.

I want to explain to you how we got here and why we have to take this action today. Simply put, we believe that an offseason lockout is the best mechanism to protect the 2022 season. We hope that the lockout will jumpstart the negotiations and get us to an agreement that will allow the season to start on time. This defensive lockout was necessary because the Players Association’s vision for Major League Baseball would threaten the ability of most teams to be competitive. It’s simply not a viable option. From the beginning, the MLBPA has been unwilling to move from their starting position, compromise, or collaborate on solutions.

The union issued its own response:

This is the ninth work stoppage in baseball history and the fourth lockout imposed by owners. None of the previous lockouts have resulted in canceled games.

• 1972 strike - April 1-13, 86 games lost
• 1973 lockout - February 8-25, no games lost
• 1976 lockout - March 1-17, no games lost
• 1980 strike - April 1-8, no games lost
• 1981 strike - June 12 - July 31, 713 games lost
• 1985 strike - August 6-7 , 2 games lost
• 1990 lockout - February 15 - March 19 - no games lost
• 1994-1995 strike - August 12, 1994 - April 2, 1995, 948 games lost including the World Series

What does a lockout mean?

Baseball will freeze all transactions until a new labor deal is worked out, which is why you saw a flurry of free agent signings the last few weeks. The Winter Meetings scheduled for December 6-9 in Orlando will continue on, but only for the minor league events. The Major League portion of the Rule 5 draft has been postponed indefinitely.

Union members will not be allowed to use Major League facilities, which isn’t a big issue for most players since it is the off-season. However, it means that rehabbing players won’t be able to use club facilities or use club medical staff. If the lockout extends into when spring training is scheduled to begin, the union will host workouts for players to prepare for the season.

Minor leaguers not on the 40-man roster will be allowed to use team facilities and participate in spring training and will not be seen as crossing the picket line by the union. Teams can still sign non-union members to minor league deals. The minor league season can continue on regardless of whether the lockout continues. So this means Bobby Witt, Jr. can play this spring, but MJ Melendez and Nick Pratto may have the start of their season jeopardized.

To comply with federal labor laws, MLB cannot profit off the promotion of players it has locked out. So you won’t be seeing any Royals ads with Salvador Perez or Whit Merrifield for a while. This also means MLB Network is going to be airing things like the 1986 All-Star Game and the film Rookie of the Year. Royals beat reporter Anne Rogers is also going to be relegated to writing about George Brett’s favorite restaurants in Las Vegas.

What are the two sides arguing about?

As always, money. Players want to be compensated fairly for their production, owners don’t want player salaries to eat up their profits. Revenues have been going up in baseball, but player salaries have stagnated, and even declined in recent years.

The biggest change the owners seem to want is over the luxury tax threshold. This effectively serves as a soft cap, penalizing teams that go over that amount in player payroll. The amount stood at $210 million in 2021 with only the Dodgers exceeding that number. Owners originally proposed lowering that all the way down to $180 million, and have even offered a salary floor as a concession to players to require low-spending teams to invest more in players. But the trade-off would be enormously beneficial to owners with four times more money coming off payrolls at the top end than being added at the bottom end by a floor. More recently owners have proposed increasing the threshold slightly to $214 million, but with increased penalties.

Both sides would like to see reforms to how service time affects free agency to end the practice of service time manipulation. Owners have proposed allowing players to become eligible for free agency once they turn 29.5 years old. Players have countered with a proposal that would phase in a new system that would eventually allow players to become free agents by the time they are 29.5 years old and have hit five years of service time with ways to “earn” more service time through accolades like All-Star picks or MVP awards. The union has also proposed that players become eligible for arbitration at two years of service time instead of the current three. Owners have proposed reforming the arbitration system by replacing it with a formula based on the Wins Above Replacement metric, a non-starter for the union.

Players would also like to see changes to the draft to disincentivize “tanking,” when teams gut their teams to improve draft position, and owners have proposed an NBA-style lottery. MLB draft pick compensation may be eliminated. The union would like less revenue sharing among clubs, something MLB has refused to make changes on. The union has offered an expanded playoff to the owners as a concession, with twelve teams in the post-season under a format yet to be agreed upon and possible realignment to two divisions. There is momentum for a universal designated hitter rule in both leagues. The two sides have agreed to raise the minimum wage, but disagree on how much to raise it by. MLB would like an international draft, something the union opposes. Players have offered to allow the display of sponsor logos on uniforms as a concession to owners. Commissioner Manfred said today that they will table issues relating to pace of play for now.

How long is this going to last?

It’s hard to say. Everyone seems to anticipate this lasting for at least a month or two, but many optimists think it will be resolved in time for the season to begin as scheduled, or at the very least, with a 1-2 week delay. Baseball was devastated by the 1994-95 strike and owners and players would like to avoid any situation close to that if possible.

The two sides held negotiations for just three hours yesterday, and there has been little movement in the last week. Both sides feel they have a strong position and can wait things out for awhile. It won’t be until spring training when financial pain is felt, as owners lose revenue they receive from spring training games. Players won’t feel the financial pain until the regular season is scheduled to begin, when they would receive their first paycheck. So don’t expect a lot of movement until each side gets closer to feeling financial pressure.

Tensions have been rising between owners and players for several years now. ESPN’s Jeff Passan characterized talks recently as such:

It’s not a lack of respect, even if there is anger all around. The talks aren’t pleasant, but they’re not supposed to be. The unspoken truth of all unions and employers is that it is an inherently adversarial relationship between two parties that also understand the greatest success comes from a partnership that makes both of them richer and grows the product.

In MLB and the MLBPA’s case, it’s more about where they started and how big a divide they must bridge. The players believe they’ve given up a spectacular amount of ground in recent years — just look at average salary, which stayed flat even as revenues climbed — and want to regain their footing with clear wins. The league is perfectly happy with the system as is — and it’s difficult to blame owners considering the strength they’ve slowly built over time.

The upside is that at least the two sides seem to be negotiating on the same issues. They may disagree on where the luxury tax threshold should be, but they agree there should be a luxury tax threshold. In 1994, owners were adamant about imposing a salary cap and were willing to do anything to get it. Players were adamant against a cap and were willing to do anything to prevent it. That led to baseball armageddon. This time around, the two sides at least seem to be on the same page, even if on opposite ends.