MLB Could See Painful Lockout When Labor Agreement Expires, And That’s Just the Beginning

If the 99-day lockout by MLB owners in 2022 seemed painful, the division lines in 2026 will become more pronounced when Major League Baseball’s current labor agreement expires between not just owners and players but owners against owners. In less than a year, the owners of the series have already implemented significant changes.

Who “wins” a labor market is in the eye of the beholder. Whether an agreement seems to favor one side or the other, in the end both will say they didn’t get everything they hoped for. The most recent CBA set the tone for the future, and that future looks bleak for fans.

It was reported this week that the league has created an Economic Reform Committee to examine several factors. It will inevitably lead to suggestions – some that can be made unilaterally, others that the players want to accept. At the very least, it will provide fuel for battles between the owners and battles with the players in the future. Here are some of the key questions to come.

Changing Regional Sports Network Model Creating Further Economic Inequality

The league is staring down the barrel of the regional sports network model being thrown around. The 19 Bally Sports RSNs owned by McNaird are on the brink of bankruptcy, and owned by Warner Bros/Discovery, AT&T.
RSN cut payments to the Astros, Rockies, and Pirates. More than any other sport, local media rights are very important to football. While the NFL, with its small number of high-demand games, sees rights fees distributed fairly through a centralized model, MLB has always had the individual clubs work out their own media rights deals. With a large market, the advantage of big brands, the RSNs created an economic imbalance. As subscribers have accelerated leaving traditional linear TV in favor of streaming, the RSN model is on the verge of collapse.

The league is willing to take back rights from Sinclair to all or some of the Bally Sports RSNs and with that, go direct to consumers (DTC) through the league’s MLB.TV streaming service. Blackouts would be lowered and fans would be able to choose teams individually in the market. The issue here is that the DTC model will see lower revenues than received through traditional bundled cable or satcaster distribution. And the matter of that economic inequality increases under this model. Clubs like the Yankees, Dodgers, Cubs and Red Sox would certainly be better than the Pirates, Rockies, Rays, or A’s of the league.

While MLB has also said it is looking at producing games through the MLB Network that could be sold to cable and satellite providers for traditional television, there is little doubt that as the decline in subscribers increases mentioned above, that the amount received from those markets will fall compared to the amount. getting clubs.

Increased Revenue Share, And Grow Targeted Revenue

The dramatic change in the media landscape is starting the discussion on increased revenue sharing. For MLB commissioner Rob Manfred, there are two difficulties in going from the concept of increasing to decreasing the amount of revenue shared by major revenue clubs: one is asking those major revenue makers to increase revenue to more generating clubs low. The other challenge is revenue sharing as part of the collective bargaining with the MLBPA. With the likes of Steve Cohen of the Mets pushing the free agent market up a notch, there is bound to be some debate as to whether there are any tangible benefits to increased revenue for the minors. After all, more than one complaint has been filed against several clubs claiming they didn’t use those funds to make their MLB teams competitive on the field.

The only thing the league can do unilaterally is increase centralized revenue through sponsorships and other means. While the league has not said if the concept is being considered, corporate naming rights for treasured events is an idea. Would it surprise anyone to see a postseason series be something like, “The American League Championship sponsored by “?

Addressing Declining Attendance

Major League Baseball attendance has declined nine straight seasons and was down nearly 6% in 2022 compared to 2019, the last season before the pandemic. Before the explosion of media rights, the gate was the biggest revenue generator in the league. As media rights became a huge cash cow, less pressure was placed on attendance.

As the RSN model shifts, clubs will certainly focus on how to get their fans to the ballpark where not only ticket revenue is generated, but concessions, merchandise, and often parking revenue. If in 2022 fans were worried about gathering large forces while the pandemic was just getting worse, 2023 should provide an atmosphere closer to fan behavior in 2019 before the pandemic.

Why 2026 Could See Prolonged Lockout and Potential Wage “Compression” Talk

While the owners lock horns with owners, and make no mistake, Manfred & Co. will see. to make concessions to the players. As part of the bargain for the current labor market that started in 2022, there were several concepts in offer packages that removed what almost sacred mechanisms the players earned the right to. In one motion, the owners offered to dissolve salary arbitration in favor of an entirely new system. The players were dealing with it as a non-starter, but if that was before the emerging economic pressures of the RSN model changing, why wouldn’t they come back to those concepts or those more still radical in 2026 when the current CBA expires?

And while some may question whether a salary cap squeeze is coming, it’s more likely that Manfred would look to tackle the stakes in favor of achieving salary “compression” rather than a system that looks more like the NFL. , NBA, or NHL. After all, there are still owners who were around when the ’94-’95 strike happened and they know that nothing promotes the players more than the subject of a cap system.

Instead, look for the owners to come back with a huge drop in the luxury threshold with some counter that would look for a soft floor. Although this was part of the 2022 marketing sessions and was rejected, owners may be more willing to hold the line this time at the cost of losing games.

The only thing the players could respond to this kind of hard ball is this: the RSN model was at risk before the pandemic. The owners knew Bally Sports was in financial trouble last year when it took a cash infusion of $600 million to stave off bankruptcy. And yet the 2022-23 off-season has been a feeding frenzy of free agent signings with clubs treating as if no financial hardship ever loomed. “Nobody held a gun to the heads of the owners and forced them to throw,” might be one way the MLBPA leadership could respond.

In other words, the owners will be forced to deal with the economic difference through revenue sharing and centralized revenue rather than through some mechanism that ties MLB to what is largely not a free market.

Other Questions

  • The league’s owners have seen costs increase in other areas, as well, which is whatever the first collective bargaining agreement with players in the minor leagues looks like. This could put additional pressure on MiLB and MLB owners looking to defer costs.
  • Also, while the league will look to bring more fans to the game, they must balance increased costs due to inflation entering the picture. Somehow, someway, it all comes back to the fan and for that, there will probably be some cost increases.
  • Perhaps the question for some clubs but which could benefit the fans is this: is it Netflix
    , Hulu, Disney+, or any of the other streaming services, if you’re not offering great content, consumers tend to walk away. Aren’t sports more than entertainment? There will be increased pressure on owners to offer value that draws fans in and keeps them there. And what is the biggest drawing element? Won. MLB will look to make winning easier in 2026 by adding two more playoff teams to the picture. Owners should be less likely to sit back again and again when operating on weak teams. Whether it’s high-revenue clubs, MLBPA watching to see how it’s spent, or a push to attract fans to streaming services, clubs that benefit from the revenue sharing system may not be able to get what they have. no longer work.

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