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Owners and players are talking, and that’s a good thing

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Are we starting to see some progress on the lockout?

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Boston Red Sox v Chicago White Sox Photo by Jonathan Daniel/Getty Images

On December 2, the collective bargaining agreement between players and owners expired. The owners locked the players out and instituted a transactions freeze. And nothing happened. The two sides met once briefly in December, not much happened, and since then owners and players have been playing a game of chicken to see who will blink first.

With five weeks left to go before spring training games begin, the two sides finally met again on Monday and showed the first signs of any traction in these negotiations. Let’s take a look at some of the issues.

Service-time manipulation

The common practice of calling up top prospects in mid-April to push back their free agency by a full year has been a thorn in the side of the union. They had proposed allowing players to qualify for free agency by hitting a certain age threshold, even if they hadn’t reached the requisite six-year requirement. Owners had countered with a proposal to make free agency eligibility completely age-based - players couldn’t become free agents until turning 29.5 years old, regardless of service time. That didn’t fly with players, and with owners remaining steadfast in wanting to hold onto their young star players, the union agreed to table their proposal on Monday. That’s not great news for fans that want to see young stars like Bobby Witt, Jr. on Opening Day, but this can always be an issue that is picked back up, if both sides see service time manipulation as an issue.

Arbitration-eligibility

Players want to funnel more money to younger players, who are typically well underpaid for their production. They have proposed reducing the amount of time for players to become arbitration-eligible from three years to two. Owners had countered with a proposal to pay pre-free agency-eligible players according to a WAR-based formula. Last week, they offered to pay players with two-to-three years of service time based on a formula, and eliminate the “Super-Two” arbitration status.

Players rejected this idea on Monday, and according to Evan Dreilich of The Athletic, the league has “no interest in discussing” moving arbitration-eligibility up. So this remains one of the larger points of contention, and with teams moving away from spending on free agents, you can bet the union will remain steadfast in getting more compensation for pre-free agent players.

Revenue sharing

Players want to cut down on the amount teams share with each other, proposing a $100 million cut in what larger market teams dole out. After talks on Monday, they reduced that ask to a $30 million cut. The union has been against revenue sharing, arguing that it reduces what the top teams can spend on free agency.

To be honest, I don’t quite get the union’s stance on this one. The Yankees could cut a $100 million check to the Royals and still have enough to spend on Carlos Correa. But if the small market teams had more money, they could, in theory, be bidders for free agents more, which drives up the price and makes players richer. I understand the Royals could spend more money now, and there is no guarantee that the Royals wouldn’t just pocket that money. But perhaps that is why the union should try to negotiate a salary floor at some point.

In any case, the union did move in the owner’s direction on this one, at least some owners. Revenue sharing could be a divisive topic among owners, with the Yankees and Royals perhaps having different opinions on what would be best.

The draft

Tanking has become a concern in baseball, with some teams trading away much of their big league talent to plummet in the standings and net better draft picks (and larger draft pools) to fill the farm system. Both the players and the owners have proposed a draft lottery, similar to what the NBA uses, to discourage teams from tanking. Players have suggested having a lottery for the worst eight teams, while owners have countered with a lottery of just the three worst teams with a provision that a team cannot be in the lottery three consecutive years. Passan reports the union rejected the three-team lottery proposal on Monday and wants a greater disincentive for teams to tank.

Owners have also proposed an international draft, something players have opposed. They have also offered to eliminate draft pick compensation for free agents, an issue that was already watered down in the last labor deal. The two sides don’t seem too far apart here - they both agree on the need for some sort of lottery, it is just a matter of hammering out the details. I don’t know that the owner are going to fight too hard for an international draft - that money is a drop in the bucket - but look for some reforms to an international signing system everyone agrees is flawed.

The luxury tax threshold

This was negotiated into the 2012 collective bargaining agreement, and has turned into a de facto soft salary cap. Teams that spend over a certain amount - $210 million in 2021 - are taxed at a rate of 20 percent, up to $230 million when they are taxed at a rate of 32 percent, up to $250 million when they are taxed at a rate of 62.5 percent. Players have adamantly fought against a salary cap - that was the issue most at play in the 1994 strike. Last year, only the Padres and Dodgers went over the threshhold, and the punishments have been a deterrent that have been a factor in stemming the rise in salaries.

Owners had proposed lowering the threshold all the way down to $180 million, coupled with a salary floor, but that would have left players with far less than what they receive now. More recently, owners have proposed a threshold around $214-220 million, while players want it increased to $245 million with lesser penalties. Both sides see this as one of the biggest issues of contention, but we’re just talking numbers here, there should be some middle number in between both proposals that they can agree on.

Other issues

  • Players have agreed to allow advertising patches on uniforms as a concession to owners.
  • A universal designated hitter rule seems likely with owners offering it as a concession to players.
  • Players and owners both agree the minimum wage should be increased, but differ on how much it should go up by.
  • Owners have proposed expanding the playoffs to 14, players have countered with 12 teams, fearing that too many playoff teams could reduce the incentive to improve ballclubs.

According to reports the discussions were heated, with players irked by comments that owners were willing to cancel games over some of the remaining issues, while owners have called those comments “mischaracterized.” But the good thing is they are talking. And they have more plans to meet today. They may not get a deal done this week, or even next week. You may not see pitchers and catchers report by mid-February. But for the first time since the labor deal expired, fans can have some hope that this resolves itself before any games are lost. And isn’t baseball all about hope?