Pivotal issues in MLB lockout and potential impacts on Braves

If not for the lockout, CoolToday Park in North Port, Florida, would be abuzz with Braves spring workouts by now. (File photo by Curtis Compton/ccompton@ajc.com)

Credit: Curtis Compton

Combined ShapeCaption
If not for the lockout, CoolToday Park in North Port, Florida, would be abuzz with Braves spring workouts by now. (File photo by Curtis Compton/ccompton@ajc.com)

Credit: Curtis Compton

The lockout that has delayed spring training for the Braves and the 29 other MLB teams centers around money, as baseball’s labor disputes always do, but in tangled ways.

MLB hasn’t had a salary cap, and it won’t have one after this lockout ends, either. Instead, the fight is over how various measures might combine to encourage or discourage spending by owners on players.

ExploreThe Braves are sitting pretty, but much depends on Freddie Freeman

As the two sides negotiate this week in Jupiter, Florida, here are five pivotal issues that ultimately have to be resolved and how each could affect the Braves:

1. Luxury tax

The issue: In lieu of a salary cap, MLB has a luxury tax – also known as the competitive balance tax – that severely discourages spending beyond a certain payroll level by even the wealthiest clubs.

Last season, that level was $210 million, after which teams faced financial and draft-pick penalties. The two sides disagree on what the luxury-tax level should be in a new collective bargaining agreement and what the penalties should be for exceeding it.

The gap: Considerable. MLB has proposed modest increases in the threshold to $214 million this year and $222 million by 2026. The players have proposed $245 million this year and $273 million by 2026.

Just as contentious as the thresholds are the penalties for exceeding them. The tax rates in the previous CBA, which expired Dec. 1, varied depending on how often and by how much a team exceeded the threshold. The players view the owners’ most recent proposed changes, including higher tax rates for first-time exceeders, as potentially worse than the previous deal.

Giants (and former Braves) pitcher Alex Wood tweeted recently that the competitive balance tax “should be abolished, not enhanced.” He also wrote: “Teams already don’t spend (because) they use the current penalties as an excuse not to. Imagine if the penalties are worse.”

Potential impact on Braves: There is no indication the Braves will spend near the previous threshold, let alone a higher one. But a higher threshold might indirectly affect them by making some of their bigger-spending competitors willing to spend more.

2. Salary arbitration

The issue: Under the previous CBA, all players with at least three years of major-league service time were eligible for salary arbitration until they became free agents after six years. In addition, among players with between two and three years in the majors, the top 22% by service time were arbitration-eligible.

The union wants to make more players eligible sooner because salaries rise, often dramatically, in arbitration. The owners don’t want the eligibility parameters to increase.

The gap: Considerable. The union’s latest proposal calls for 75% of players with between two and three years service to qualify for arbitration, while the owners propose keeping the previous 22%. Both sides would maintain eligibility for all players with three through five years of service time.

In addition – let’s call this issue 2(b) – the union has proposed a new concept: a large pool of league-wide money that would be shared among players not yet eligible for arbitration, based on WAR statistics and awards voting. The owners are open to the concept but on a much smaller scale. While the union last week proposed a pool of $115 million to be split among 150 pre-arb players, the owners on Monday proposed $20 million split among 30 players.

Potential impact on Braves: Under the union proposal, an average of maybe two or three players per team per year could become arbitration-eligible earlier than in the past. As an example of the significance of that leverage, consider Braves pitcher Max Fried, who got a raise from $583,500 to $3.5 million in his first season of arbitration eligibility last year.

3. Revenue sharing

The issue: MLB teams share about 48% of their locally generated revenue, in effect transferring some money from the higher-revenue clubs to the lower-revenue clubs. The owners view that system as good for competitive balance, but Kennesaw State economics professor J.C. Bradbury, who studies the business of baseball, believes it “reduces the incentives to win.”

The gap: Significant. The union wants to reduce the amount of local revenue that is shared. MLB opposes any such decrease.

Potential impact on Braves: Hard to quantify because neither MLB nor Braves owner Liberty Media discloses the amount of money that changes hands via revenue sharing.

4. Tanking, etc.

The issue: Players – and many fans – are concerned about some teams not putting their best efforts toward winning. Some “tank” and seek to rebuild through high draft picks. Some keep payrolls perpetually low. Some keep top prospects in the minor leagues longer than necessary to delay their service-time clocks from starting toward free agency.

The gap: Narrowing. Both sides have made proposals to address these concerns, including an NBA-style draft lottery as an anti-tanking measure and several steps to discourage service-time manipulation. But disagreement remains on the details. For example, the owners Monday proposed a four-team lottery, and the union countered Tuesday with a seven-team lottery.

Potential impact on Braves: None for the foreseeable future, it could be argued from the perch of the reigning World Series champion, but it wasn’t long ago that the Braves based a successful rebuild on the tanking playbook they borrowed from the Cubs and Astros.

5. Minimum salary

The issue: As the game skews younger, the MLB minimum salary is a big deal because it (or close to it) is what most players are paid until they reach arbitration eligibility. The minimum last year was $570,500.

The gap: Not large enough to keep a deal from getting done if other issues are resolved. The players have proposed a 2022 minimum of $775,000, rising to $895,000 by 2026. The owners have offered two options. One would set the minimum for all pre-arbitration players at $630,000 in 2022, rising $10,000 per year through 2026. The other would set the 2022 minimum at $615,000 for rookies, $650,000 for players with one year of service time and $725,000 for those with two years experience. Each tier would rise $10,000 per year.

Potential impact on Braves: Eight players on their opening-day roster last year made within $30,000 of the minimum salary. Under the union proposal, those players would have made up to 36% more, demonstrating the importance of this issue to many young players. Even so, the additional cost to the club would have totaled less than $2 million.