Impending MLB Lockout: Key Issues in Collective Bargaining

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Baseball Labor Talks Focus on Revenue Sharing, Team Spending and a Salary Cap

Baseball’s current agreement ends on December 1, but negotiations are already underway. The last agreement was reached at the last minute, allowing baseball to continue. The sport previously experienced a strike in 1994.

The business of baseball has become increasingly complex, with betting, sponsorships, television contracts and franchises valued in the billions of dollars. Teams such as the Yankees and Dodgers have significant financial power, with the Dodgers also benefiting from their own television broadcast system.

Unlike the NFL, MLB does not divide all television revenue equally among its teams. Some revenue is shared, but the players want teams receiving that money to spend more of it. Large-market teams in New York, Los Angeles and Chicago continue to spend, while smaller-market teams such as Pittsburgh, Kansas City, Milwaukee and Tampa Bay spend less.

A major issue is the owners’ desire for a salary cap. The players oppose a cap but may consider one if it is paired with a salary floor requiring every team to spend a minimum amount. One figure mentioned was approximately $150 million, although that estimate was not presented as definitive. Several teams currently spend less than that over a season.

There is no immediate reason for concern, but the December 1 deadline will be important. A delay that produces a shortened season could benefit older, veteran teams. Playing 80 or 90 games instead of 162 could reduce fatigue and recovery demands, potentially helping a veteran roster such as the Dodgers.