A general note: These answers were last updated in March 2021. This piece is intended as a writer’s guide to understanding key points about labor negotiations and not meant to be copied verbatim into an article.  

If you plan to quote anything in here, it is REQUIRED that you consult with Eugene and confirm that the information in here still applies.

Questions by Mark Simon, BBWAA – Answers prepared by: Eugene Freedman, Special Counsel to the President of the National Air Traffic Controllers Association. He may be reached at erf1@comcast.net or on Twitter @eugenefreedman.

Question: Looking ahead to the negotiations for the upcoming Collective Bargaining Agreement, can you list the 3 most basic concepts that a reporter who is new to covering this needs to understand?

Answer: 1) The duty to bargain – including mandatory subjects, permissive subjects, and illegal subjects.

Mandatory subjects are those subjects of bargaining related to wages, hours, and other terms and conditions of employment. Wages includes salary, other things associated with pay (like the league minimum, competitive balance tax, revenue sharing among the clubs, etc.), and financial benefits like pensions, health care, meal money, etc. Hours includes schedules, days off, reporting times, number of hours between night games and day games, etc. 

Other terms and conditions of employment are work that aren’t pay and schedule, such as travel, safety, drug testing, locker room and clubhouse conditions, disciplinary rules, etc.  Mandatory subjects include a reciprocal duty to bargain in good faith. Neither party can refuse to negotiate over mandatory subjects and if the parties reach impasse, they may engage in economic warfare (i.e. strike, lockout or imposition of last, best offer after impasse) over the negotiations of these subject matters.

Permissive subjects do not have a duty to bargain associated with them. Either party may refuse to negotiate or or refuse to agree to a proposal regarding a permissive subject throughout bargaining. For that reason, neither party may engage in economic warfare over these subjects. It would constitute an unfair labor practice (ULP) to do so. 

Consequently, if management has a permissive proposal on the table, it may not unilaterally implement its last, best offer, because the parties cannot be at impasse over a permissive subject.  Once a permissive subject has been tentatively agreed to by the parties, its reopening during those same negotiations is itself permissive*. 

One party may not walk away from the existing agreement.  Permissive subjects include ground rules for negotiations, settlement of ULP charges, internal union matters (dues structure, union election process), the makeup of each party’s negotiating team, whether they parties will use interest arbitration to resolve any impasses, the scope of the bargaining unit – who it includes and excludes.

*During the term of a CBA, it is permissive to reopen any subject already contained in the CBA. Parties can refuse to negotiate mandatory subjects during bargaining if they are covered by the CBA, because the duty to bargain has been met. However, matters not contemplated by the CBA must be negotiated if they cover mandatory subjects. Example: COVID protocols are not in the CBA, but health and safety are mandatory subjects.  The schedule is in the CBA, so the MLBPA did not have a duty to bargain over delaying the start of the season and could refuse without violating its duty to bargain.

Illegal subjects are those that violate law – such as a provision that discriminates based upon race, sex, national origin, age, or status in another protected group, closed shop (all employees must be union members prior to hire – this differs from union shop, in which employees must pay dues to the union by a certain date in order to maintain employment), 

2) The definition of impasse (see below)

3) Baseball’s financial records are privately held and not shared. There are a lot of streams of non-baseball related revenue, particularly in the area of real estate development.

Question: Based on the history of recent negotiations between the two sides, what are the most likely things reporters will need to dig into and fact check from the MLBPA? And what about from the owners?

Answer: 

1) From the MLBPA, the key will be to see how often and whether they issue press statements or interviews. The MLBPA has generally been quiet in recent negotiations. But, when Tony Clark has spoken, he has used the term “bad faith” a couple times. It’s important to remember that bad faith, under the National Labor Relations Act, is an allegation that the other party has failed to bargain in good faith. 

Tony frequently throws the word around in a colloquial manner, rather than applying the legal standard. When he says bad faith, the follow up question should always be, “is the Union filing an Unfair Labor Practice Charge with the NLRB?”  

If the Board finds a failure to bargain in good faith ULP by the Employer that restricts its ability to declare impasse and impose terms and conditions of employment. (e.g. Silverman v. MLB, 880 F. Supp. 246 (S.D.N.Y. 1995)) https://law.justia.com/cases/federal/district-courts/FSupp/880/246/1408599/

If Clark says, “bad faith” and the MLBPA will not be filing a charge, it likely means that there isn’t bad faith from a legal perspective, instead it means he’s not happy with the position of MLB in negotiations.

2) MLB and individual teams have, for decades, perhaps time immemorial, made unverified statements regarding their financial health, frequently claiming significant financial losses that are completely unverified or unverifiable with public information. These statements are self-serving and historical analyses have shown that these statements are generally false.  Teams are private companies and do not disclose their income and expenses. Many are integrated (by shared ownership) with their regional sports network and other baseball related revenue sources.  

Additionally, many teams now serve as REITs, developing land and leasing space in and around the ballpark.  They can move earnings around from one entity to another through the contract structure between the two companies. The teams themselves might be able to show losses, meanwhile the other entities are extremely profitable. Other revenue sources are obscured as well.  The only expenses that are public are player salaries.  Publishing an unverified statement of financial loss serves as team or league PR, not reporting.

Question: What issues figure to be the most challenging in this negotiation – and why?

Answer: 

1. The primary is the division of revenue related to expanded playoffs.  For decades, players receive their share based solely on gate receipts during the playoffs. In the 2020 restart negotiations, the MLBPA proposed sharing the increase in associated TV revenue 50/50.  This was the most contentious issue related to restarting the season in 2020 and MLB attempted to achieve its objective of expanded playoffs again in 2021, but was unwilling to link to revenue distribution to the players. MLB’s national TV contracts will be increasing from $1.5B/yr to $2B over the course of the next few years. This is without expanded playoffs. Whether and how the additional $16.67M per team/year is distributed to players in salaries and other incentives will be key to the negotiations.
2. Related to that is ensuring competitiveness.  One would suspect this is an issue between the ownership groups, but it will come out as an issue between the MLB and MLBPA.  Raising league minimum salaries and 40-man roster non-major league salaries will be an issue in ensuring that teams spend what they receive in shared revenues.
3. Free agent compensation. The draft pick compensation system has significantly reduced the market for free agents. The MLBPA will seek to eliminate or significantly change this process.
4. Service time manipulation. The recent comments by the Mariners’ former CEO highlight this issue.  Earlier access to arbitration and free agency will be on the table.

Question: Division of new revenue streams is an issue that figures to be newsworthy this year.  Are there any inner workings or fine-print details related to these that would be important for us to know?

Answer: Just like the general public, MLBPA is not granted broad access to revenue data and profit and loss statements. Because of this, they have to hire their own economists and do their own estimates.  TV revenues are usually publicized, but non-baseball related revenues, particularly in real estate development and leasing is not. These are the areas in which clubs are expanding most aggressively and it will be harder to link those to player salaries than baseball related revenues.

Question: Are there any laws that have been put into place since the last collective bargaining agreement that could impact these negotiations?

Answer: No. The National Labor Relations Act has been static since the Taft Hartley Amendments in 1947.  Although some interpretations of the Act have changed over time, those are usually on situations that won’t present themselves in these negotiations.  The PRO Act passed the House of Representatives last session; however, it did not come to a vote in the Senate. It would revise the NLRA in a number of areas, however it has not yet been reintroduced in this Congress. Among the relevant provisions, it would prohibit the hiring of permanent replacement of strikers.

https://aflcio.org/about/advocacy/legislative-alerts/letter-supporting-pro-act-0

Question:“You have noted in the past that ‘impasse’ is a commonly misunderstood term in labor negotiations. Can you explain it?”

Answer: Impasse is a term of art in labor law. It means that the negotiations have carried on for a period of time, the positions of parties have become fixed, and talks have reached a stalemate.

Impasse cannot exist over non-mandatory subjects of bargaining (mandatory subjects are wages, hours, and other terms and conditions of employment). When a bargaining impasse occurs is a matter of judgment based upon the bargaining history, good faith negotiations, length of negotiations, importance of the issue as to which there is a disagreement, and the contemporaneous understanding of the parties as to the state of negotiations.

The National Labor Relations Board considers the existence of an impasse to be a question of fact.

The Board considers: whether there has been a strike or the Union has consulted employees about one, however a strike does not necessarily create an impasse and it may, in fact, break a preexisting one; fluidity of the parties’ position; continuation of bargaining; statements by the parties concerning impasse; union animus evidence by prior or concurrent events; the importance of the issues and extent of difference; bargaining history; demonstrated willingness to consider the issues further; duration of hiatus between bargaining sessions; number and duration of bargaining sessions; and other actions inconsistent with impasse.

Impasse on one or more issues does not suspend the bargaining obligation on remaining, unsettled issues. Impasse does not remove the duty to bargain, it only suspends it because impasse is a temporary state of being, which can end suddenly.

Almost any changed condition can terminate an impasse. The NLRB has said, “anything that creates a new possibility of fruitful discussion breaks an impasse” including off the record discussions.

Question: What should reporters be watching for with regards to the luxury tax rules or any attempt to implement a salary cap?

Answer: The competitive balance tax and a salary cap were the two big issues in the negotiations going back to the 1994-5 strike. Many clubs have treated the competitive balance tax as a hard cap, while others have treated it as what it was intended to be. I think the question becomes, whether or not a minimum of some sort is negotiated. This can be done in many different ways, but it goes to how the competitive balance tax funds are distributed.  It also goes to how the clubs share revenue generally.  

There are a host of teams that spend less in salary than their receipts from national television and other shared revenues without even factoring in local revenue from tv, gate, and stadium-related revenue.  I think the focus will be at the bottom rather than the top in these upcoming negotiations.  Including a growth factor into the competitive balance tax shouldn’t be too contentious in and of itself, but it’s linked to the minimum spending aspects, which may be more difficult.

Question: What should reporters be watching for with regards to the negotiating teams in terms of their composition?

Answer: I think the key is the makeup of management’s team. There are a number of ownership groups that are more progressive on labor relations matters. Historically the Orioles have been (Angelos refused to field a team of replacement players during spring training in 1995). 

Another factor is the breakdown of what are considered larger markets and smaller markets. There is likely a quiet tension behind the scenes regarding teams not attempting to rebuild during their periods of exceptionally low payroll. The Pirates payroll will be approximately $30-40M in 2021, despite receiving $50M (this will increase to $67M with the extensions as they are implemented) in national TV revenue sharing.  Their local TV revenue is estimated to be worth over $40M.  

There are obviously other revenue sources as well. Historically, franchises that spend money like the Dodgers, Yankees, and others have had conflicts with those that do not spend what they are receiving in shared revenues.  It’s unclear what the various ownership groups now believe on these subjects, but the tension likely still exists.  The Commissioner has been very successful in keeping that tension out of public view.

Question: When the words “strike” and “lockout” come up, what questions should reporters be asking to better understand the situation?

Answer:  For strikes, the question is whether the Union is asserting management committed an Unfair Labor Practice(s) in bargaining. If proven, it would prohibit management from unilaterally implementing its last best offer, because the parties would not be at impasse. This is what happened in 1994-5.  I would not expect a strike unless it relates to a ULP.

See next answer regarding lockout. For a lockout the key is timing and limiting the free agent market.

Question: In this age of social media, public sentiment bends toward impatience quickly. Where is the point at which it would be most fair for a columnist to convey a feeling of concern about the state of the 2022 MLB season?

Answer:  The risk of a lockout to freeze the free agent market is the biggest thing looming over the expiration of the CBA.  MLB receives the majority of its national TV revenue from playoffs.  Because of this, a delayed start to the season affects the clubs less than it does the players, who receive all of their salaries during the regular season.  

This aspect became clearer by the postures of the parties in the restart negotiations in 2020 and the attempt by management to delay the start of the season in 2021.  A lockout in December 2021 would prevent any teams from signing free agents and serve as an attempt to whipsaw the bargaining unit by creating tension between those who are signed and those who are without guaranteed contracts.  

As the start of the spring training creeps ever closer, the lockout would create more tension by risking delay to the start of the regular season. That pressure primarily falls on the players, so resolving a “pay for 162” rather than pro-rata pay will become a new issue in negotiations.

—

Reporters: For more, please refer to the Q&A done by Tim Dierkes of MLB Trade Rumors:

https://www.mlbtraderumors.com/2021/01/mlb-cba-eugene-freedman.html