With the recent expiration of Major League Baseball’s Collective Bargaining Agreement, Alex and Bobby are taking some time to break down key concepts that will be on the table in the coming weeks and months and examine what’s at stake for each side.
To round out the series, they bring on Nathaniel Grow, associate professor of business law and ethics at Indiana University, to take a look at baseball’s opaque revenue sharing system, parsing out how the system works for or against certain owners, what sets it apart from other sports’ models, how MLB’s antitrust-exempt status play into this and other CBA fault lines, what potential recourse the players have if they really want a fight, and much more.
Follow Nathaniel Grow on Twitter at @NathanielGrow
Links:
The CBA ABCs: Salary Arbitration (feat. Jerry Blevins & Kevin Goldstein)
The CBA ABCs: Competitive Balance Tax (feat. Maury Brown and Lindsey Adler)
Contextualize these discussions with our CBA crash course
Songs featured in this episode:
Title Fight — “Mrahc” • Jennifer Lara — “I Am In Love” • The Bitter Tears — “Bachelors Say” • Booker T & the M.G.’s — “Green Onions”
Episode Transcript
[INTRO MUSIC]
Tell us a little bit about what you saw and and and being able to relay that message to Cora when you watch Kimbrel pitching and kind of help out so he wasn’t Tipping his Pitches. So Tipping Pitches, we hear about it all the time. People are home on the stand, what Tipping Pitches it’s all about. It’s amazing. That’s remarkable.
BOBBY: Alex, I have a confession to make. On behalf of the both of us to the listeners of the Tipping Pitches Podcast.
ALEX: All right, lay on them. I don’t know what it is, so I’m a little nervous. Uhm please don’t pull curtain [0:43]–
BOBBY: Why would you know what it is? Why would I prep you about the jokes beforehand? That’s where the magic dies, you prep beforehand. Because–
ALEX: [0:48]
BOBBY: –the confession is that neither of us have ever attended to Major League Baseball Hall of Fame. Oh, these guys, they get up here and they talk about baseball every week and they’ve never even been to the Hall of Fame. They’ve never even made the pilgrimage to the religious experience that is Cooper sound, frauds were frauds, Alex.
ALEX: Yes, in in more ways than one, but especially never having been to the Hall of Fame. And I think it’d be a lovely experience. Uhm, I’ve never cared a a lot about, you know, the kind of minutiae of the Hall of Fame like year to year, who gets in and, and who doesn’t. And, you know, where do you draw the line between what is morally acceptable and what is just ethically reprehensible? And I’m just like–
BOBBY: I can’t wait to be one of these guys that’s tweeting in like, 10 years. That’s like, I voted for Curt Schilling because I felt my logic compels me.
ALEX: Yeah, you know, I we need some some consistency here, right? If we’re gonna, if we’re going to induct all the old racists in the Hall of Fame, it probably makes sense that we induct the new ones, too, right?
BOBBY: I guess so, the reason that I make this confession is because I I want to go, I have nothing against the Hall of Fame. I’d–
ALEX: Yeah.
BOBBY: –really love to go, but I’ve just never done it. I went to a concert in Cooperstown, New York once. Didn’t make it over to the Hall of Fame, though, unfortunately. That’s right down the street.
ALEX: Wow, that’s bleak. So you been to Cooperstown, proper?
BOBBY: Yeah. Beautiful, big rolling hills, open fields, surreal heartland of New York.
ALEX: If you say I feel like I forget that. It’s just like in New York. Obviously, it’s not like in like, just outside of New York City or whatever. But I feel like I think [2:39]–
BOBBY: Wow, so what you’re saying is you forget that there’s people that live outside of New York City? Is that what you’re saying?
ALEX: Yes, I do. Upstate starts at like Times Square, you know.
BOBBY: Wow, upstate starts at Westchester.
ALEX: I I don’t actually have a strong opinion on where upstate starts. I know New Yorkers, I have plenty of feels about it. And if you, if you say the wrong thing, then you you might have your new New Yorker card revoked. But–
BOBBY: I don’t think that either of us really have a New Yorker card to be honest.
ALEX: No, I don’t. I don’t think so.
BOBBY: Anyway, Hall of Fame. The reason that I make this confession is because we got a bunch of Hall of Fame news that a bunch of places have also talked about in greater depth than you and I will. Maybe this is part of the reason why we just don’t care about Hall of Fame inductions, we’ve just never been there. Maybe if we make a pilgrimage to there together, next year, the whole podcast will be about the Hall of Fame. It’ll just be like Tipping Pitches Hall of Fame edition.
ALEX: Yeah. Well, I think there’s plenty of interesting historical artifacts there, you know. I do think that like there’s a lot that I would love to see. And also, the Hall of Fame itself, just as an institution is incredibly outdated and not suited for this current moment of honoring baseball’s history. And it’s making strides, as we will talk about, but it just has, it has plenty of blind spots, let’s just say that.
BOBBY: And it just shows them consistently year over year, and–
ALEX: Uh-hmm.
BOBBY: –we’re going to talk about–
ALEX: Year and year.
BOBBY: –that in just a second. We’re also going to do our third and final installment of the CBA ABCs about revenue sharing, it is the most confusing of the three topics that we have attempted to tackle. But we’re joined by Nathaniel Grow, who is a Professor, associate Professor of Business Law and Ethics at Indiana University. I hope I’m getting that title right. Alex gets the full title correct when we introduce Nathaniel so hang tight if you’re waiting to hear his full title that does not fit on the business card. But before we do all of that I am Bobby Wagner.
ALEX: I am Alex Bazeley.
BOBBY: And you are listening to Tipping Pitches.
[4:40]
[Transition Music]
BOBBY: Alex, as you alluded to, in our intro, the Hall of Fame for its many flaws, is making some progress and for all of its blind spots, It does carry this sort of gravitas of dictating what MLB history is. And that picture was very unclear for a very long time and it is starting to get clear. And part of that clarity comes from the inductions of guys like the those of whom they included in the MLB Golden Age committee or whatever they’re actually calling it now. The MLB old timers committee where it says a panel of 12 people who vote should who should be included, who has fallen off the ballot. It is not up to the BBWAA, it is up to a smaller panelist who can be inducted after the fact after they are no longer on the ballot. That news came out this past week. Six people were elected via that process. Bud Fowler, who some credit as the first African American baseball player in organized professional baseball. He played, he last played in the 1890s. So it’s a very very far in the rear view. Gil Hodges, who is a legend to my favorite team, the New York Mets. He is in the Mets Hall of Fame. He played on the worst baseball team ever, the 1963 Mets, but then he managed the 1969 Mets. He’s also very important to the Dodgers fan base. Tony Oliva, who spent his entire professional career with the Minnesota Twins a Cuban baseball player in the 1960s. Minnie Minoso who is a Chicago was a Chicago White Sox player. But more importantly, it was one of the first Cuban foreign players to play professional baseball in the United States and pave the way for Cuban players. Buck O’Neil, who was the First Baseman and Manager for the very famous and historic Kansas City Monarchs of the Negro American League. It was unbelievable that he was not in the Hall of Fame until now. And then finally, Jim Kaat, who had a very long career as a 25 year career as a Major League Baseball Pitcher. He is now a Major League Baseball Broadcaster. So Alex, I know we don’t talk too much about the Hall of Fame on this, but on this podcast. But it felt like a sort of landmark moment to watch guys like Minoso and Buck O’Neil particularly. It feels like we are sort of in a transitional period now where the Hall of Fame is changing the way that it thinks about itself. And that has led to writing some wrongs that were extremely glaring from its past, like Buck O’Neil, like Minnie Minoso. I will say that it is still not right at one wrong, which is Dick Allen, who is one just by any metric, one of the best baseball, one of the best hitters in baseball history. Philadelphia Phillies Third Baseman from the 1960s, he still has not made it and he got 11 of 12 required votes to make it in. So he came one vote short. Hopefully they continue to write wrongs like they did this year in the future. And that applies to Dick Allen. it’s just a shame that he’s not alive to see it. Because he should have made it in via the BBWAA vote, but for a myriad of reasons he was not well liked because of basically racist reasons when he played baseball. So yeah, so I know, we don’t talk about it too much on the show. But did you have much of a response to to this news coming out last week?
ALEX: I think my response was largely limited to it’s about time. These are wrongs that we didn’t just come to terms with in the last year, right? Minnie Minoso, the game’s first black Cuban player has deserved to be in the Hall of Fame for years, right? And he he died back in 2015, just months after he and Oliva failed to be inducted by the Hall of Fame. And it’s, it feels really bittersweet, because, like a lot of the other issues that we talked about with baseball, these are the the problems that are being solved, are the very ones that were created by these institutions, right? So I don’t necessarily feel compelled to applaud the you know, the Hall of Fame for coming to terms with what many baseball fans have known for a long time. But I do you think it is a worthy moment to reflect on the value of these players to baseball’s rich history. And the fact that so many of these players were some of the earliest ambassadors for baseball around the country, right? In the in the first half of the 20th century. And even before that, it’s jarring to me that their names were not in the Hall of Fame in this capacity before that, you know. I think it also kind of illuminates the somewhat archaic structure of how all these players are voted in, Right? There are various committees that are cordoned off by the years in which the players played, right. So some of these players were inducted by the the golden era committee and some of them were inducted by the the early baseball era committee, and–
BOBBY: I have only so much space in my brain, I can’t remember names of committees. They’re like barely [10:09]–
ALEX: I can’t say and remember [10:10]–
BOBBY: –ladies Senate Budget Committee or whatever Senate Budget Office?
ALEX: I. Yeah, I can’t. I don’t I don’t really know what they do. Yeah, I think that that’s where my head is that is that this is a this is a definitely a win for the, you know, the official record the official history of the sport. But it’s only telling us the stuff that we knew to be true for for a long time now.
BOBBY: Yeah. And I I’m just reminded of the fact that these historical institutions of white baseball, need pressure, external pressure for these changes to really come to fore. Like, I just don’t think that much of this happens without the existence and the consistent storytelling of a place like the Negro Leagues Hall of Fame. Like, why wasn’t Buck O’Neil and before this? I can’t answer that question. I can presume because the Hall of Fame didn’t give a shit about the Negro Leagues until, you know until they were forced to. But I do know that the reason that we know that it was such a mistake for so long is because guys like Bob Kendrick, and the Negro Leagues Hall of Fame, more generally, keep these stories rich, and alive and contextualized in the present day. And so this is a huge win for them, as well. And they should, they should soak in that win. Because, you know, just because the the official quote unquote “official record” of Major League Baseball is telling one story doesn’t mean that it’s the truth, you know. It there are, there are multiple histories, depending on whose perspective you filter that lens through. And it is a good thing. That MLB is now filtering their perspective through different lenses than they used to and is open to filtering their lens through different perspectives that they used to. But the the Hall of Fame in Cooperstown is still playing catch up because of how resistant they were to this idea for so long.
ALEX: Right. It’s been 15 years since the Hall of Fame inducted any players from the the Negro Leagues and that era of black baseball, right? And as you mentioned, I think this probably doesn’t happen without the external pressures of [12:34]–
BOBBY: The existence of other institutions outside of the Hall of Fame, you know.
ALEX: Right, exactly. And it makes me think of our conversation that we had with Clinton Gates last year, around the inclusion of Negro League Baseball’s stats in the, in the official record of baseball. And how these players and their stats and their legacies are, do not suddenly become legitimate, just because they are acknowledged as such by–
BOBBY: Or different, they’re just like–
ALEX: [13:02]
BOBBY: –these people were wholly formed human beings who were doing it separately because they weren’t allowed to do it with MLB you know, like–
ALEX: Right, exactly. And so it’s, they are as legitimate and worthy of the claim as they were 10 or 20 or 50 years ago, and this doesn’t necessarily change that. I I hope that this comes with a bit of a reckoning of baseball’s blind spot. It definitely felt like a like a win, especially in our corner of [13:32] internet. There were a lot of people who were really rallying for these players to get in there. But you know, again, it’s just one step.
BOBBY: Yeah. Last thing on the Hall of Fame I’m very happy for our friend Shakeia Taylor, who’s been on this podcast multiple times. I believe she might hold the title belt for most appearances on Tipping Pitches. Not named Bobby and Alex, who was really pushing very hard for many many years so specifically and has become sort of a an an expert Minuso’s Hall of Fame candidacy and was doing some hits on local television and etc, etc. So congrats to Shakeia for getting to enjoy that experience of seeing that news come across the timeline. Let’s move on because we have a lot to get to in this episode, we have a a a lengthy but very illuminating conversation coming up with Nathaniel Grow about revenue sharing. Before we do kind of our general background history about revenue sharing, I want to remind people it is December is holiday gift giving season if you would like to give the gift of some Tipping Pitches merch that says, Unionize the Miners Or “Steal Bases Not Wages” or is a beautiful rendition of a elephant sending on a billionaire and crushing him. We’re had this is no billionaires and baseball or stickers of any of those designs. Wow, the the laundry list is getting long here for me to do this, Alex. The link is tiny.cc\nationalized to get to our store. You can use this promo code STRIKE, S-T-R-I-K-E in all caps for 15% off your entire purchase. We’ve passed the deadline for when it will guarantee guaranteed to arrive by December 25th. But there’s always a possibility that depending on where you are in the United States that it will still arrive before December 25th. Or there’s the possibility that you just give it to the person when they arrive. Dates are a social construct. This is a a pagan holiday now at this point.
ALEX: Yes, I can’t wait for [15:26]–
BOBBY: Give it to someone for New Years.
ALEX: Right, honestly, yes. I’m very excited for mine to arrive this coming Monday. So that you know, we get a little quality control going, we’ll be able to report back to you whether they are indeed worth the purchase, right? It’s still might be up in the air.
BOBBY: Wow. All right, consumer report. Jeez.
ALEX: I want to be transparent with our with our listeners, you know. I God forbid we put out a product that is that is below our standards.
BOBBY: This is very true. We hope that it it holds up to your very, very high standards. I know that it will I know that. Well, the good people at FAI marketing, they have us down. It’s and it’s Union Main, Alex. So you can never talk shit about it, Union Main.
ALEX: That’s so true. I mean, they really are. This isn’t even marketing for the shirts, but they’re so comfortable. I’m wearing one right now, as we record this, and–
BOBBY: They are.
ALEX: –they really are enjoyable to wear on the house to a baseball game.
BOBBY: Yeah, I’m excited to receive my stickers. Seriously, because then I can refresh some of the stickers that are on my laptop, you know. I can, I can get a get an edgier look, you know, maybe fill it up with stickers as opposed to just one or two here and there. New Tipping Pitches challenge. Put your sticker somewhere, send us a picture of where you put the sticker, whether that’s next season during the baseball season at the MLB stadium. Don’t put it on like a seat though. Because then someone’s gonna have to peel it off, you know, put it in a more creative place so that it’ll stay forever. [16:57]–
ALEX: Or a door to the Executives Office, the elevator that the that goes upstairs.
BOBBY: Yeah. Or put it on your laptop or your water bottle and send us a picture and we’ll give you a shout out on the podcast. Okay, revenue sharing time, revenue sharing time, Alex. What is revenue sharing? Really? No, like, what is it? I need you to tell me because it’s so complicated.
ALEX: You know, I wish I could illuminate this for you in a way that would be meaningful. And and and this is why we brought on some–someone who’s actually smarter than us to talk about–
BOBBY: Yeah.
ALEX: –what revenue sharing actually is [17:32]–
BOBBY: I need you to actually be here every week, not like getting your Law degree instead, like I can’t be in like Business Law 101 on Sundays when we record this podcast, I need you to be here.
ALEX: Yeah, I mean, so revenue sharing obviously came about in the late of the 94-95 strike that we have talked about on on these last two episodes, diving into the CBA. It was it was one of the big economic agreements, that–
BOBBY: 94-95 was the big bang of the current–
ALEX: Right [18:06]–
BOBBY: [18:06] everything came from.
ALEX: Yes, it was a cultural reset, as they say. Yeah, you have revenue sharing, you had you had arbitration, you had the luxury tax, these key issues that we are we are talking about. Revenue sharing is really the the one that was intended to address competition in the sport. You know, waxing and waning levels of competition, depending on the market you’re in. And bridging that divide between these so called small and big market teams. So each team has revenue that comes in and be it from, you know, the national pool of TV money, or your your local TV revenue. All of that stuff gets pooled together and divvied out and you know, you pay into it or receive money based on your payroll based on the, you know, the what is deemed to be your market size. And while initially it was intended to kind of create this sort of economic parody. As we know, in recent years, owners have kind of wised up to the fact that they’re able to pocket some of this revenue sharing money without necessarily improving the onfield product. And as we’ll get into the way that the system is set up, it is such that teams are not necessarily incentivized to actually spend this money, right? You might want teams to act like a bigger market team. But if you start acting like a bigger market team, all of a sudden, you’re the one who’s paying more into the pot, right? Those revenue sharing receipts get smaller and smaller, the better your team actually does. It’s almost like baseball is not incentivizing teams to win right now that might be going out on a limb with that though.
BOBBY: Yeah, so there are these two buckets of revenue sharing. On one hand, you have the very simple system of all of the money that Major League Baseball makes as a brand, the the office of Major League Baseball nationally. So when they negotiate National TV deals with ESPN so that you can hear Alex Rodriguez, Alex Rodriguez dulcet tones in your ear every Sunday night and stiff, your local broadcaster, all of that money. Licensing deals for jerseys when you have to pay $129 out of pocket that goes into the one bucket. All of those things, national streaming rights, international rights, those are all included in that bucket. And then on the other hand, you have your, what they call the net local revenue pool, which comes from all of the other stuff that is dictated by market. So your regional cable deal, your ticket sales, your sports book that you included, next to your ballpark. All of the stuff that is baseball related income, that is specific to a team, because they are a team in that city in that market, that is local revenue. And that gets split up differently, it gets split up, you pay 48% of that, I believe that Nathaniel mentioned you pay 48% of that into a pool, and then it gets split up evenly among the 30 teams. So if I’m let’s just use round numbers, because it’s easier if I’m the New York Yankees, and I have to put 200–I have to put $100 million into that pool. These are made up numbers, these are not the actual numbers that these teams are putting in. Because a big part of this is that we don’t know the actual numbers that these teams are putting in, which is why it’s very hard to talk about this concept. And as we’ll get into with Nathaniel, why it’s very hard for the players to try to fix this concept when it comes to benefiting them from a collective bargaining standpoint. So from the Yankees, I put in $100 million into that pool, that’s 48% of my local revenue, whatever. It doesn’t actually land that evenly. But whatever, for the sake of conversation $100 million. And if I’m the Pittsburgh Pirates, and I only put $30 million into that pool. I’m obviously getting back more once we divide the revenues equally than the Yankees were. Because if the Yankees are making the most, they’re going to be above the average. So they’re actually going to lose money on that deal. Whereas if the Pirates are making the least they’re going to be below the league average, and they’re going to be making money on that deal. Does that make sense?
ALEX: I think so. I mean, what it sounds like is–
BOBBY: I guess I should have said that if the league average is then 50 million. So if the Yankees put in 100, the pirates put in 10. A League average is 50. Then the Yankees have lost 50 million and the Pirates have made 40.
ALEX: Yeah, and this was initially intended to subsidize what these smaller market teams that the revenues that they were going to be missing out on. Because they are not attracting or not attracting as many fans as a team like a like the Red Sox or the Yankees or the Dodgers are doing, right? But in practice, what that’s done is given teams an excuse to not need to attract fans. Because if you are making less than the average in terms of local revenue, but you know that the the vicious 10 teams in the league are going to cover that difference for you. What is the incentive to get better, you know, like they’ve just done the hard work for you.
BOBBY: Go get a job Marlin, stop living off the subsidization of bait big Major League Baseball.
ALEX: The Marlin’s we, we don’t even have time to get into [23:28]–
BOBBY: They catch [23:28] strays in this they just–
ALEX: But–
BOBBY: –had so many strays.
ALEX: The Marlins are such a stunning example of how broken MLB’s economic system is, right? I mean, most notably back in 2010, right? When they dumped their entire roster because they didn’t feel like spending money on their best player, right. Everyone except for [23:49] is basically they got rid of. Remember when [23:52] was on the Marlins? That’s another topic. But it got so bad to the point where Major League Baseball actually said okay, we are going to start keeping an eye on you. Because you literally are like flaunting this system in our very faces. So can you make a handshake agreement to spend this money on onfield product and the Marlins were like sure, yeah. We’ll we’ll tell you that we’ll do that.
BOBBY: This is a this is like a slight offshoot, Alex, but because he brought up the Marlins, we can go down that rabbit hole a little bit. I was listening to an interview with Dan Le Batard, and John Skipper and David Sampson. John Skipper, the former President of ESPN who negotiated a lot of these National TV deals. David Sampson, the former business side president of the Miami Marlins, who was there since they were sold to Jeffrey Loria in the early 2000s. And lived throughout the exchange of ownership from Loria to you know, the Derek Jeter lead. But really Bruce Sherman financially backed ownership group that owns the Marlins now and with regards to like cable rights and revenue sharing, this came up in that interview. And Sampson, the guy running the Marlins was like, We never thought of how any cable rights deal would affect fans or viewers, or our payroll. And I was like, what? Because he was saying, like, he was saying, We strictly only thought of it as will the revenue sharing check, be able to like will that, will that help our bottom line? Essentially, he’s saying, like, will this TV deal, this National TV deal or this local TV deal that we sign, will this make us financially liquid enough to continue to run a team? Whereas, you know, from the fan side, we drive ourselves crazy talking about, does making a good tea? Or making a good league with competitiveness and keeping your players does that make you financially viable in a market and able to attract fans and bigger TV deals and all of these things? And this guy was like, no, it’s all about the revenue sharing. Simply but are we giving too much out and revenue sharing? Versus are we taking in enough in revenue sharing? And I’m like, geez, this this is just driving me crazy.
ALEX: Yeah, even not knowing the the hard and fast numbers, we still kind of every few years, I feel like someone illuminates how the system actually works, you know. Whether it’s through leaked financial documents or or, you know, a a part owner saying the quiet part out loud, or whatever it might be.
BOBBY: Yeah. Or SEC filings with the Braves. Like there are–
ALEX: Ex–exactly.
BOBBY: –things that we can use as clues. But we don’t have really the whole picture without kind of being a detective.
ALEX: Yeah. But that’s why we wanted to bring someone on who would actually help us break this down, and really measure out what’s at stake for the owners for the players, what potential recourse the players have in changing this system. Because it’s as you may be able to guess, not exactly the easiest thing to to hammer out at the table.
BOBBY: Strap in, we’re going to talk about dissolving the union. And then suing MLB for antitrust law.
ALEX: All right, well, before we scooped Nathaniel too much, let’s, uh, let’s get to our conversation with Nathaniel Grow, about revenue sharing.
[27:20]
[Transition Music]
ALEX: All right, for our final installment of CBA ABCs. To talk about revenue sharing, we are joined by Nathaniel Grow. He is an Associate Professor of Business Law and Ethics. And Yormark Family Director of the Sports Industry Workshop at the Kelley School of Business at Indiana University. Nathaniel, hello.
NATHANIEL: Hey, thanks for having me.
ALEX: Thanks for coming on. We wanted to talk about revenue sharing. You’ve your your work has been featured in places like FanGraphs. And you’ve been talking kind of a lot lately about what’s what’s at stake during the in the CBA. What we can kind of expect over the next couple months and some potential paths for the the owners and the players to reach what they’re trying to achieve in this round of CBA? We wanted to talk about revenue sharing, because it’s kind of the final piece of the puzzle. And it is also the the most inscrutable part of the the CBA. So before we dive into it, we’re just kind of curious, how do you even start writing or thinking about this sort of thing, right? The numbers I feel like are all there, they’re hidden behind closed doors. It’s a very thorny issue as it is, and it’s even thornier when you’re having to pull your data from Forbes or, you know, Maury Brown, who we had on last week. It’s a, it can be kind of a cluster sometimes. So how do you go about starting that kind of work?
NATHANIEL: Yeah, so I think A you’re right, that it’s difficult to get precise numbers. I I in my sense is to that, maybe this is lazy on my part. I don’t know how much it matters, exactly how precise it is. Because I think you can get like if you’re it’s one of those things where you’re never going to have the exact numbers unless you’re in the league office. Or probably the union assuming that it’s everything’s being reported accurately, right? Like outside of those two groups, it’s just not going to happen. And so at that point, the best estimates are probably going to be within pretty, you know, maybe some broad strokes, but a pretty accurate and so at that point, I think just kind of understanding the the framework roughly of how it works and what’s happening there. But then I think more important, just from like a basic fan perspective, just understanding the actual ramifications of it. Because I think they’re complicated and, you know, I’m not an economist, but economists could model the stuff a thousand different ways all day long, right and see. Because there’s so many different moving parts, to tweaking that sort of thing. But I think you’re just getting the general understanding of what’s happening and why it matters. Probably more important and exactly what you know. I mean, 10s of 1000s of dollars the royals received in getting on revenue sharing income this year.
ALEX: Right, yeah. It’s more of the equation than it is the actual end result, right?
NATHANIEL: Exactly, exactly.
BOBBY: So Nathaniel, one of the things that we’ve been talking about, as we’ve done this sort of mini series CBA ABC. We talked about Salary Arbitration first, then we talked about Competitive Balance Tax. And of course, Competitive Balance Tax is a big part of revenue sharing. But what but one of the ways we’ve been talking about these things is how they sort of evolved over time? And led to this point in history as the union and owners are negotiating this CBA and talking about some of these concepts. How the long history of them plays into, you know, animosity, or plays into legal precedent within the CBA about how they’re being discussed, and what is really on the table versus what is probably likely going to stay the same about these systems. So I’m wondering for you, if you could kind of talk about as revenue sharing formula was really introduced in the 2002 CBA. How different is it now versus how it was then? And if you could kind of ballpark it, whose direction has it gone in more versus the owners and the players?
NATHANIEL: So yeah, I I mean, well, sorry let me hit the second part first. I think that’s where it gets a little in my mind, at least it gets a little bit complicated, because it’s I realized, as soon as I say, this is gonna totally derail on like a five minute diatribe or not diatribe but like [31:29]–
BOBBY: Bring it on–
NATHANIEL: –you know–
ALEX: –it’s all about the place for it.
NATHANIEL: Right. But like, I think like reasonable minds could definitely disagree on who had benefits and why, right? So I think the players union standpoint, if you look, historically, 50 plus year perspective has been, we want the big market clubs to drive the salary scale, the Yankees are competing vigorously in the free agent market and the Dodgers, right? They’re going to a rising tide lifts all boats, and that they start spending lots of money. It’ll trickle down through arbitration and all this other stuff. But on the flip side, there’s also the argument, which I think is kind of what drove a lot of it back in 2002, rightly or wrongly, was that there are competitive balance issues in the sport, Bud Selig was big on, you know, your small market teams need to have that hope for, you know, making the playoffs. And it hasn’t worked out, always the way that it was intended to perhaps. But the some of the ideas, maybe if you take some of that money from the Yankees, and give it to the Pirates and the Royals, that that will allow them to obviously boost their payrolls enough that, you know, depending on how you look at it, and how you model it. You could say that that’s a net gain for the players, because more money is going to be flowing to enough lower level clubs. They’re going to spend more than the Yankees would have spent on that incremental revenue difference just on player salary, right? You could look at it as a negative because the Yankees are more constrained and not spending as much. There’s also [32:47] I mean, just from an economic standpoint. You know, I think that one of the ramifications of revenue sharing, which you know, that maybe the average fan doesn’t always appreciate is that, it decreases the incentive to win. If you’re the Yankees, and every single dollar or every single win, you get, you can model how much marginal additional revenue you’re going to derive from that you know. That a 95 win team is going to produce x number of millions of dollars more than a 92 win team. Then there’s going to be an economic formula to determine how much more to spend to try to get up to that extra dollar value, right? But when you’re taking x percent of the money off the top, and spreading it around to the rest of the league, that disincentivizes the Yankees to some extent, because now they’re only going to get 60% of the value of that extra when rather, you know even if if if that probably makes sense. So if it doesn’t, I can go into it more. But I I just think it’s really complicated. And I’m not an economist, I haven’t studied enough to be able to definitively state for myself, like where I think it comes down. And it probably varies depending on the year, and you know, how the money’s being spen and all of that stuff. To to circle back to the original question, yeah. So back in 2002, you know, anytime you get something introduced originally, not anytime, but probably more often than not in a CBA it’s gonna be a little bit more modest at first kind of like, you know, the luxury tax was originally it was way higher as a percentage of average revenue, right? And then it’s, you know, it gets different over time. So from from the standpoint that if you look at it, revenue sharing from this position of the players union, rightly or wrongly that they’d rather have less of it. Because they’d rather the Yankees spending more, I think you’ve seen more revenue sharing over the years. Again, reasonable minds could disagree is that is just having more if revenue sharing result in more parity with that actually better for the players. Because it makes the product as a whole the league as a whole more attractive and TV your dollars go. You know, it’s there’s so many different factors, it’s hard to say for sure if it’s been good or bad for any particular party, but the owners definitely like it. Some of the owners, at least a lot of the owners like it. And so for that reason, it’s probably fair to assume that they believe that it benefits now, at the end of the day,
ALEX: I I wanted to hit on that a little bit because this is one of the the issues. The the only issues really the biggest one, where the owners actually are not necessarily on the same side about, right? There actually is some internal disagreement, that the Yankees notoriously don’t love revenue sharing as you just eliminated, right? The the big market teams, I, you know, if they’re gonna have the, the top chunk of of their payroll cut off or whatever. Obviously you, you know, you know, you don’t want to be subsidizing smaller market teams or whatever. And it’s that that competition point that you brought up is really interesting because it it disincentivizes, large market teams to go out and spend a lot. But at the at the same time, it almost kind of disincentivizes small market teams as well, right? Because if you invest that money back onto the field, and create a winning product and bring in more revenues, all of a sudden, you’re gonna be getting less of that revenue sharing, right? You’re gonna be paying into the piece of the pie a little bit more. So I’m, I’m wondering, first, why you think that, that, you know, a big market team would go along with this sort of thing? Is it out of the goodness of their hearts that Randy Levine says, you know, those Royals, I, they they need a bit of a boost from us. And more broadly speaking, kind of how does the the legality of this sort of thingwork when it comes to, from the player’s perspective? Or if you’re an outside investor looking to to buy an MLB? Team, you know, and your your revenues might be directed elsewhere. Can you break that down for us a little bit?
NATHANIEL: Sure. So the first part, you know, yeah, I think you’re right, that the Yankees, I mean, I wouldn’t want to give away 150 million or probably more, whatever they’re giving away, right? I don’t think anybody would. So that makes sense. I think that if, and I think you’re right, that this is one of the areas where the owners could fracture. And you saw that more like the 90s, there was more of a fight between big market and small market owners during these negotiations. And the players kind of use that to drive them apart and split. You know, their their unity, seems like the owners are more on the same page. And it’s hard to tell if they’re just better messaging now, and just keeping stuff behind closed doors, or if there actually are all on the same page. You know, if you’re the Yankees, I don’t think you’d like it. But at the same time, I mean, they, you know, some of it comes down to what sources of revenue are and are not included. So that’s gonna be one big factor. So I guess just to just to state it, clearly, there’s, there’s two big pots of revenue sharing money in MLB. There’s all the National revenue in terms of television deals national like licensing, you know, merchandising, and stuff like that. That money all gets split equally. What we’re really talking about is revenue sharing, you know, so yeah, maybe the Yankees would like to have more of that, because the value of the Yankees makes ESPN and Fox pay a little bit more for the MLB TV rights. But overall, I don’t think that there’s as much of a fight about splitting the National television contract 30 equal slices as there would be about the local revenue side, right? So on a local revenue side, that’s where you get into off the top, every team pays, I forget exactly what the percentage is, I’m trying to look it up really quick. I think like 40, something 48% of their individual local revenues go into this big pot. And then they get divided up amongst very using various formulas in terms of some equal shares, some market size, some success, you know, all that sort of good stuff. That’s the pot, we’re really talking about where the Yankees are going to be upset, and you potentially see the competitive balance implications. I think you’re right, that the competitive balance implications cut in a bunch of different ways. And again, I think reasonable minds could disagree on it, right? Are you better off having a boatload of 88 to 90 win teams? Does that make it more exciting now a bunch of teams clustering, not at night, but you know, 78, to 88 min. cluster of a bunch of teams there with crazy playoff chases, but no elite teams. So you’re better off having, you know, the historic 110 plus win teams, and then a bunch of really crappy, you know, 50 win teams at the bottom. Yeah, different minds could disagree on that, right? Ultimately, the Yankees were convinced that it was in the best interest of the league to go along with this. And I I I will confess, I don’t know enough about exactly, I don’t [39:09] remember, never read about the history of exactly how that you know, was forced through. But I think that they’ve agreed with it. But on the owner side, there is always gonna be this delicate balance of the Yankees and the Dodgers, the Cubs and Red Sox could eventually just say no, we’re not going to sign off. If if they can get a critical enough massive block of CBA. They’re not going to get it’s not gonna get signed off on just the same as a number of lower, you know, market lower revenue teams. There’s kind of these two, it it’s this weird negotiation, right? So it’s kind of your question about the legality of it. The owners could not just implement revenue sharing on their own without the players agreement, because it is going to affect the flow of money going to the players. It’s going to have enough of a direct or indirect link to Conference Player Compensation. It has to be collectively bargained,
BOBBY: Right.
NATHANIEL: Once you get that collective bargaining then you have within the union, there’s gonna be a fractured of free agents. You know, like lower level, you know, three four year duration guys, you know pre arb guys, there’s gonna be a bunch of fracturing over there potentially in terms of economic interest and you have the same thing on the owner side. And somehow you’ve got to coalesce all of these moving parts and heard all the cats together do a deal that everybody signs off on. When it comes in, and it ties into the tanking stuff, right? Like, how much that revenue sharing, how should that revenue sharing be spent? Shouldn’t go to payroll? Should it be used just to improve the quality I forget exact language right now. But just more nebulous, like improving the quality of the organization generally, right? Like–
BOBBY: Yeah.
NATHANIEL: –those are all the plates that all get tied into this. And again, there’s so many different strings you can pull on here, it makes it really hard to, unless you’re really in the weeds on it to have a good sense of, if you tweak this one little piece here, what happens because it’s just there’s so much going on, and so many moving parts.
ALEX: So it sounds like they should be able to clean this up quite easily in the coming in the coming weeks. Very straightforward stuff.
NATHANIEL: Couple–couple hours yeah.
BOBBY: Just get out the table and hammer it out, right? Uhh, I wanted to ask you something, though, that you hit on at the end there, where the the idea of where the revenue sharing money goes, once it gets delivered to smaller market teams? I think that, you know, at the time, it was messaged as by Bud Selig, and other smaller market owners as if we get this money from revenue sharing, we can reinvest it onto the field. And then that way we can compete with the bigger markets that will be better for everybody, primarily fans of the smaller market teams, they will have a chance. Bud Selig obviously came as being an owner with the Brewers a smaller market team. Let’s set aside the fact that like smaller markets are sort of a sort of a myth these days with the way the TV, regional sports networks work and regional cable deals work. Let’s just say, you know, that that was the agreement at the time, on on principle, if not necessarily on paper. And it seems like the smaller market owners have sort of gone away from that. We see ridiculously low payrolls for teams that do not want to win in this whatever competitive window that they’re, you know, arbitrarily deciding. What is the actual ability of the players to grieve something like that? If it’s not actually written in into the CBA? I know that there is a lot of like, it is up for interpretation, when you grieve something to the arbitrator who actually looks into it and and determines via like, what was actually passed across the table during negotiations? And what was the intent of these different clauses? Do you think that they would have compelling cases to say this money is this revenue sharing plan is actually not being executed the way that it was? And would that give them leverage in this current negotiation?
NATHANIEL: Yeah, so it’s what as soon as he started saying that I was thinking back there is a grievance, I think it’s still pending about against the murmur at the Marlins and Pirates. Just Googling it really quickly to see if that has been, I did not see any recent updates. So I think that that’s still pending, Pirates, Rays and Marlins over so the Union did make basically the exact argument that you were kind of, you know, promising there of that the team had some low market, some low revenue, small market teams are not spending that money in accordance with the terms of the CBA. But they’re not actually using it to improve the Major League team sufficiently. And I think, you know, this isn’t anything stupid. I mean, especially to your audience, probably this is particularly insightful, but the $64,000 question is, you know, are they or not right? Like, you could make an argument that the Rays are actually probably investing that money in ways that are allowing them to be more competitive on the playing field, and just throwing it at, you know, ageing, 30, something plus middle relievers, right? And so, I think that you’re right, that ultimately an arbitrator is going to have to decide that like, what does that language mean? What should it mean? Should it just mean player salary? Or should it mean investing in, you know, industry leading, you know, IP and tech and and all the, you know, all the quants and all that stuff in the backside? Does it include, you know, the Minor League system, you know, investing in the best player development system, rather than spending it at the Major League level? So again, you can have a whole you know, everybody who’s listening to this probably has their own opinion on, you know, whether that’s being used appropriately or not. But that’s ultimately where that fights gonna come down to, again, not to ramble too long, but it does tie back to this CBA again. Because there are going to be big market owners who are going to be pissed at why are the Pirates and the Rays spending so little right now? Whatever it is, you know, the Max Scherzer is making more per year than the Orioles collectively or whatever currently, right? Like, that’s a bad look for if you’re the Yankees again and writing 100 million dollar checks all the time to cover this stuff. So it it it’s definitely a pressure point, I think, within the ownership, you know, negotiating side and then collectively once you bring the players into the mix too.
ALEX: What do you think it would look like to actually have a more transparent revenue sharing system? You know, like, is there a, I again, this is the like, this is the question, but how do you actually actually compel teams to, to spend that money in ways that are deemed as being a, you know, improving that product? Does it really just come down to whoever happens to be sitting at the you know, in the arbitrage chair that day? Or are there ways to you think, link them to to win team performance or something like that, right? Like encourage those, those teams that are kind of in the middle, maybe on the verge of being competitive to say, well, you can actually get more revenue sharing money, if you actually show that you’re making a good faith push to win baseball games.
NATHANIEL: Yeah, it’s a good question. I think there’s a lot of different ways. I mean, it’s it’s innumerable different ways you could try to crack the nut, right? So you can say, in the CBA, any revenue sharing, I mean, they’re never going to say this. But any revenue sharing dollar that a team receives has to go to player payroll, and then as long I mean, I guess, then you still get to a fight at well, I’m still making 60 million in revenue sharing, and I’m spending 60 million on payroll. So it all is, and I’m probably, you know, you would quibble with the formula, you know. That also, you have to spend at least x percent or something, but the players aren’t going to want to go for anything that sets like salary floors. Because they’re worried that that’s going to be a precursor to a cap, the owners aren’t going to want to really tie it to directly because yeah, the Yankees might be pissed at the Pirates aren’t spending very much their money on patriotic payroll. But on the other hand, if you start having the bottom 10, or 12 teams, increase their payrolls by 10s of millions of dollars a year, that’s going to increase, you know, upward salary inflation, that’s going to affect the large market teams, right? So it’s again, there’s this balancing and delicate ballet of we want them to do this, but we don’t want them to do too much. And, you know, there’s, there’s, again, so many different ways to look at it, it becomes complicated, I think your idea, you know, you could tweak it in terms of draft, you know, people, a lot of people talking about draft order and trying to fix, you know, some of this that way, you could tweak it with more revenue sharing for the closer you get to 500. Or the closer you make it to the playoffs, you get more, you there’s a bunch of different ways you could go at it. Again, I I’m I’m sure that both sides have economists who’ve modeled all that, like a thousand different times. But from the outside, you know, I think that there’s more efficient ways that there’s profit those, those passages of the CBA could be written if the concern is really to drive the small market teams to spend more money on Major League payroll.
ALEX: Which may be up for debate [47:23].
BOBBY: Yes, exactly.
ALEX: [47:25] the jury’s still out on that one.
NATHANIEL: Exactly.
BOBBY: Do you think this is a losing battle for the players? Because, as we’ve talked about so far, it’s very unwieldy. The way that these teams bring their revenues in, it’s it’s very hard to decide what pressing one lever might do to another lever. And whether that might just crop up a completely different problem that they had never foreseen. Do you think that they are just chasing the players are just chasing their own tail by trying to perfect the revenue sharing formula? Because Major League Baseball has proven that the owners are always going to find revenue streams. If it’s not TV, this time, it’s going to be sports betting or whatever, or it’s going to be streaming if they ever actually iron that out in a way that becomes profitable for them in the long term by partnering up with the NBA and NHL or whatever they decide to do there. So do you think that the players are wasting some of their capital at the table trying to solve a system that the owners are going to give them the runaround eventually, anyway?
NATHANIEL: [48:10] question. My instinct is to say no, because I don’t know what choice they have, like. What’s the the proble–the players problem is that they’ve agreed to all this stuff. And it’s really hard to claw that back now, right? Like, I mean, I I know this isn’t the CBT luxury tax episode, but like, you know, once they go down that road, and then once they repeatedly failed, or raise those thresholds high enough, and just ignore it, it’s a lot harder to fix that down the road, right? Same thing with revenue sharing, if you let it, you can’t just say no, we’re never they could, the players could say we’re gonna sit out until there’s no more revenue share, right? Good luck with that. I think from PR optic standpoint, the public, that’s one easy way to get the public to turn. Cuz I think the average fan is gonna think, Oh, this is helping competitive balances what the NFL does is good for sports. And again, you’re reasonable minds can differ on that. But I don’t think that that’s a PR position, I’d necessarily want to take from the players that we’re going to torpedo the entire 2022 season, because we want to undo all revenue sharing, right? So once you’re down that road, that you have to deal with it, I think you got to deal with it and just try to do your best guess at what’s going to be most beneficial for your for your membership on this. I mean, there’s also then just the pragmatic reality of from the players, you know, from the player’s perspective. Again, without being in the room, it’s hard to know exactly how all these pieces are fitting together. But hey, maybe we take Bobby’s point that this revenue sharing stuff, it’s all kind of a wash anyway. If there’s something that we get the sense the owners really want to tweak about it. Let’s just fight that a little bit to get leverage for the thing we you know, maybe we can bump the minimum salary up from their proposal. I don’t know what the current proposals are. But 700,000, we can get it to 850 if we just cave on this revenue sharing thing that we think is kind of a wash at the end of the day. So it’s a central enough to the economics of the league. I would say that I wouldn’t just punt on it if I were the players. But I don’t know, I don’t know, if they’re gonna meaningfully, you know, affects, you know, in a huge way their their current financial position by getting the realistic compromise on a on a different solution.
ALEX: You mentioned the the NFL having revenue sharing do are you able to kind of illuminate what the differences between baseball’s revenue sharing model? And kind of I mean, when I when I think of it, I don’t believe that these arguments are happening among NFL players and fans and owners, right? I mean, the the, the, the top and the bottom of the league are so more closer together that it almost doesn’t feel like an issue, right? So like, why is baseball so uniquely, I guess, unable to really come through with a with a system that actually, that actually works for the players for the teams for the for the fans, you know.
NATHANIEL: It’s because of the lack of a salary cap. So in the NBA, the NFL, the NHL, there’s a set formula of what the cap is going to be, there’s going to be a floor, right? And so I I don’t remember off the top my head is that I think most of them are on 50/50, right? Now players and owners share the revenue, right? So in a different league, the CBA negotiation unfolds very differently, because there’s a debate about okay, what’s going to be basketball related income? Quote unquote, “BRI”, right? And then once they agree, oh, this new gambling revenue is part of that right? The jersey patch is but the hotel that the team just opened next to the arena is not, right? Once you have that fight about what is basketball money, what’s outside basketball money, then it’s just a second fight about what percentage of that basketball related money is going to be guaranteed to go to the players via the salary cap in the salary floor? And so and if the second part of it is, these of the NFL versus MLB. NFL, I mean, the television contracts $10 billion, right? I mean, it’s just, they don’t even have to sell a ticket, and they’re going to make a profit every single year just from the television contract. And whereas in baseball, it’s so much more ticket sales driven and local television revenue driven that you have this fight more because there is just an air. I mean, yeah, sure, the New York Jets and Giants might be at some advantage over the Cincinnati Bengals in terms of local you know, merchandising, and parking and all that stuff. But the bass, you know, it’s more minor incremental differences, where compared to the Yankees versus the Marlins, or the Yankees versus the Royals or something like that. So, you know, from the player’s standpoint, again, I don’t need to keep rambling. But they’ve always said, we don’t want a salary cap, we want this quote unquote, “free market”, it’s not a real free market, because there’s all these rules about when you become a free agent, all that stuff, right? But we want the free market to decide player salaries. The downside of that, then is once you start opening up those roads where we’re going to have a luxury tax, we’re gonna have revenue sharing, that now affects that it’s manipulating that free market. And now you’ve got to wade into all these battles that the other sports don’t really have to worry about as much of how the owners share their revenue. They don’t, the NFL players don’t care how the NFL owners share their 50% of the revenues, because they’re guaranteed they’re half of the of the pot.
BOBBY: Yeah, I mean, in discussing this, it just, it strikes me how, how ironic it is that the owners are so aligned, in in comparison to the much larger bargaining unit of the players in in whatever league not even just specifically about MLB, and how we conceive of the owners as being the sort of, you know, billionaires being divisive, and trying to break it up so that they can, you know, get their slice, get, you know, exorbitant profits when it comes to these sports leagues or whatever industry that they’re in. But they are extremely aligned, and that has given them such power in these collective bargaining sessions. And when the CBA is run out. I think the last thing that we wanted to ask you about really quickly was, do you think, is the MLBs antitrust exemption? Does that come into play at all with something like revenue sharing? Or does that come in, how does that come into play with the way that these teams are? Or are not allowed to play that card when players are saying, you know, like, you’re illegally colluding against us? For lack of–
NATHANIEL: Yeah.
BOBBY: –a better word.
NATHANIEL: Yes. So short, so the short answer is yes and no, which [54:24] answer. So I’ll try to give you like the the 50,000 foot like 32nd, elevator pitch version of it. So the short answer is, theoretically, it comes into play, but not really. So once the CBA has been entered that so up until December 1st, the players could not sue the owners because they were involved and under the antitrust law because they are involved in a Collective Bargaining Agreement and collective bargaining relationship, any grievance that they had had to go through the channels that were specified in the CBA, which is what MLBPA did last year with the whole COVID You know, resumption issue. And when they’re upset about the Marlins and the Rays and all that. Once the once the CBA has expired and the owners have locked players out. Now at this point the players have a choice of how do we want to respond to that the players can continue to negotiate which they have for reasons we can discuss if you want to for right now. Or the players could say, let’s file an antitrust lawsuit against the owners in this case, they wouldn’t necessarily be challenging the the revenue sharing, they’d agree to that in the CBA. So it’s kind of sanction and exempted from antitrust law once the players agree to it. Now they can say the whole lockouts are legal. If you continue to try to share revenue without an active CBA in place, once we’ve dissolved our players union, then they could file a lawsuit on that grounds. But again, as I just hinted at that would require the players say we’re dissolving the MLBPA. We are going to go out without a unionized relationship anymore. And at once there’s no union, the league 30 teams cannot work together to set all these policies are going to be anti competitive and affect the players. And then you get into a whole big nasty antitrust lawsuit.
BOBBY: So this anti, does MLBs antitrust exemption not exempt them from a lawsuit like that? I’m guess I’m just a little bit confused as to how and in MLB when where they have the antitrust exemption versus other leagues. Like we’ve seen the NFL Players Association, do this dissolve their union to great success in the late 80s. And similarly, the NBA used the threat of doing this against the owners in 2010. To get, you know, a slight slightly better CBA. You can reasonable minds could disagree about how good the NBA CBA is for certain players, but does the antitrust exemption not prevent something like this from from working or being received in a court?
NATHANIEL: So yeah, so there is an antitrust exemption that the courts have made throughout your supreme court from 22 to 72, reaffirmed in 1998. Following the 94 players strike, once the players in the owners agreed to a new deal in 95. Part of that deal was that the two sides agreed they would lobby Congress to file or to pass it was a piece of legislation that would partially repeal baseball’s antitrust exemption to allow the players to file an antitrust lawsuit in the future should they want to do so. So there’s this thing called the Curt Flood Act was enacted in 1998.
BOBBY: Uh-hmm.
NATHANIEL: It’s the most, if if you look at if you want to like it’s just like there’s so many special interests were involved in it. So if you read it’s just the most convoluted thing, but basically what it says is–
BOBBY: It’s America, baby.
NATHANIEL: Exactly if you’re a current Major League Baseball player, you and you alone have the legal ability to file an antitrust lawsuit against the owners. The reasoning owners were willing to go along with it is they knew that the players would have to dissolve their players union, there’s a hole in the NFL context of Supreme Court decision in 1996. It said as much and I think the owners just said yeah, what like the odds of that really being game, you know, game determinative in any future what labor’s be whatever, yeah, we we’ll sign off on that. And so because of that Curt Flood Act now baseball players are in the same position. They’ve never done it before, but that the NFL and NBA and NHL guys are that they could be certified. They want to, to file that antitrust lawsuit against the owners.
BOBBY: I see. So Max Scherzer consumed Major League Baseball for antitrust purposes. But the city of of San Jose cannot, when they want to move the A’s to San Jose and they lose that because of MLBs antitrust lawsuit. That, that I that I understand now. Okay.
NATHANIEL: Exactly. And that means, yeah, Scherzer could if the union is dissolved Scherzer could not right now, as long as the MLBPA remains an active labor union. Yeah, right.
ALEX: Do you think that the players would actually consider that sort of thing, right? Because it feels like I mean, it opens up a lot of possibilities to, you know, for potential recourse and some of these issues that we’re talking about, but it’s also a little risky, right? I mean, that the MLBPA is a relatively strong union, and you’re sacrificing a lot if you if you dissolve that and decide to go through the courts instead.
NATHANIEL: The MLBPA thinks it’s a strong union, right? Like, so there’s [59:04] that I don’t mean to say it’s not but I think that if you look at the last few, the 2006 I don’t know what you guys personal opinions are on the 2016 deals. They did, I think, in hindsight, they would almost unanimously agree was a bad deal, right? And so like, with the strongest union sports would agree to such a bad deal that went haywire so quickly. I, you know, reasonable minds can disagree, historically, has been considered the strongest players union, I think they still very much have that view of themselves, right? So I think that that just in and of itself makes them less likely to say, let’s dissolve the union and go out on this different path. There’s other factors right now, they do have some of these active grievances, like the revenue or the revenue sharing one, like the COVID resumption one. If they dissolve the union, those kind of go away. And so part of the–
BOBBY: Yeah.
NATHANIEL: –the inside baseball leverage calculations is do we think that the COVID presumption grievance is so strong that you know what our probabilities of winning that is worth $500 million. Let’s say we think it’s we’ve got an 80% chance of winning that we value that $400 million. What’s the antitrust lawsuit going to be valued at? What do we think our odds are of winning that, right? You can just do some back of the envelope calculations pretty quickly and at some point, the one will out surpass the other. Basically the the value of the antitrust lawsuit with a there’s a slight chance it’s the NFL did not. The NFLPA was not able to successfully do this, but there is a chance that the court could enjoin the lockout. They could say owners you can’t do this, you have to let the players come back to work which shifts the leverage in the, you know bargaining posture and everything.
BOBBY: Yeah.
NATHANIEL: More likely as once paycheck stop, the players would argue that you owners are illegally group boycotting us, you’re refusing to pay us. McDonald’s, Wendy’s and Burger King could never just all agree to say, let’s not pay our french fry fryers until they agree to take you know, some low wage, right? And we’ll just don’t want to lose sales. Because we’re all just agree not to sell french fries. And as an industry until these workers come to, you know, acquiesce to our demands. It’s kind of the same logic, what’s going on in baseball, right? Long story short, every paycheck missed and would be tripled in value if they were ultimately successful in proving that the lockout was an illegal group boycott. And so at some point, April, May, June July, the value of a antitrust lawsuit times triple the amount of wages that have been lost is going to out surpass that the whatever the value of those grievances is. The union does lose a little bit of control over stuff to you know, if they feel like the players are really fractured, they cannot just say we speak as one voice anymore. Now, it’s a thousand different players who are all free to say whatever they want. And you could get the owners working with a group of players that are, you know, that they view is, hey, let’s woo these, you know, pre arb guys with a million dollar minimum salary and get them to sign off on something that, you know, is really disastrous for the rest of the membership. And if they can get to a 51, 50 plus 1% of the pool, that way, they can almost, you know, work around Tony Clark and company, because there–
BOBBY: Yeah.
NATHANIEL: –is no union anymore. They don’t have to do that. So from the union perspective, there’s upside and downside and NBA and NFL you saw that it didn’t, it it helped the players a little bit, within a couple of weeks or a couple of months, there is a deal those probably slightly more favorable, but I don’t unless the players are saying we’re taking this to the mat, you know, 2020 to be damn well, we’ll cancel the season over this. I don’t know if they’re really going to get to the point anytime soon that they think the risk is outweighs the reward on it.
BOBBY: So then in that circumstance, I know that we’re kind of taking this down the rabbit hole. But this is this is something that has not come up on the show, despite the fact that we talked about the union a lot. And that circumstance, then you just reformed the player’s Union after that, after the antitrust has kind of been heard by the courts and gone through, you would just presumably go back to an MLB Players Association, and you would file for a union the same way through the NLRB that you had to do it the first time around?
NATHANIEL: Yeah, as well, so it’s it’s even more complicated. So there’s two different ways they could do it. So there’s what’s called a decertification, which requires a formal vote of the players saying that we no longer want to be represented. And if you decertified, you can’t reform a union for 12 months, and then you have to do a new certification election. The alternative what the others players unions in the other leagues have done is what’s called a disclaimer interest, which is basically Tony Clark firing off a letter saying, hey, we no longer wish to represent our players, we are now ending the collective bargaining relationship. That immediately then in the players perspective, triggers the ability to file an antitrust lawsuit. At that point, once a deal is reached, two days, two months, whatever later, the same, you’d get a quick roll call vote of the players say we would now like to reform our union to sign this litigation settlement agreement that we’ve reached in the form of a new CBA and therefore reimplement the union. And so the players have always wanted to do that do that disclaimer of interest, because it’s like a light switch, you can um, unionized or not unionized and non unionized If not, right? They can go back and forth as it as it suits them. The owners say that’s complete bullshit. Like you should just be able to manipulate it like that. If you really want to do this decertify the union and then sue us, but show that you’re actually committed to it, not just using it as a negotiation tactic. No courts ever rule as far as I know, on that issue of, do you have to do the formal vote decertification? Can’t undo it for 12 months to be able to sue or is it disclaimer? All those cases settled before you ever get to a point where courts really been called on to answer that question,
ALEX: Nathaniel Grow helping us break down the–
BOBBY: Wait [1:04:38]–
ALEX: –the [1:04:38] part of this. Okay, okay, go go.
BOBBY: I’ve one more small question, because we have Nathaniel here. And because we’re talking about decertifying union and reforming, because we are Tipping Pitches and we are the unionize the Minor Leagues people, how would that play into this? If they decertified the union and then re formed it? Could you change the membership? Like if they wanted to do the knockdown drag out fight and try to get Minor Leaguers involved in the Major League Baseball Players Association? Or is there something that bars them from being able to change the recognition agreement of who is in the union?
NATHANIEL: That’s a good question. So hey let me pick care, let me preface this by saying I’m not a labor law scholar. So I do not know the ins and outs of every detail of that.
BOBBY: Uh-hmm.
NATHANIEL: Also preface by saying that MLB is never going to want the Minor Leaguers in there, because there’s no financial advantage to that they’re much better off screwing the Minor Leaguers and getting a larger share of the revenue for their members, right? But I think that they I I believe, but I’m not 100% sure that they could do that either way, if they wanted to reformulate. I mean, if they decertify, that might then come down to a part of that then litigation settlement agreement. So there’s now a lawsuit–
BOBBY: Yeah.
NATHANIEL: –now litigation councils negotiating with the Council for the owners, they kind of phrase the settlement as a new CBA. Will you agree to drop this lawsuit if we agree to a revenue sharing plan that looks like this, and I’m sorry, that looks like this, and arbitration and all yada, yada, yada. If the player said, Oh, by the way, we want every single professional player now to be in our union, the owners, my guess is would say, yeah, screw that we’re not bad changes everything, right? Like or then that deal looks totally different. And are, is that union still confident that it can get sign off from a majority of its members. The Union could always expand if it wanted to, I I think if the if the if a majority of the players said yes, we want to represent all the different Minor Leagues and have just a collective professional baseball player, you know, organized baseball union. I think they could do that, whether it’s after they dissolved or just reformulate, I believe. I mean, maybe not during a court currency. I mean, but one way or the other, I think they could do that if they wanted to, there’s just not really any incentive for the for the Major Leaguers beyond, you know, just out of the kindness of their hearts to to want to do that.
BOBBY: It would immediately become the only thing that they were bargaining over. [1:06:54] you’d have to do it once the CBA was expired, right? Because the recognition agreement dictates who is covered by that CBA. And what you know, job titles in this case is just a job title of Major League Baseball player, but what job titles are included in there? And that would, you know, that would be like the knockdown drag out fight. I guess they could do with that decertify the union but I was just curious from your perspective, if like, you know, decertifying the union, but give them more of a legal case to include them after recertifying it. But–
NATHANIEL: So I think I think that the difference I saw I guess I again, I’m speculating here might one read on that might be that the difference would be if it’s a formal decertification. You don’t have to have a whole new vote to form a brand new union. It would be probably easier to kind of reframe things versus if it’s a disclaimer. I believe that then the former union members would be the ones to vote and so the presumption would be would be the same–
BOBBY: Yeah.
NATHANIEL: –membership, right? I I can’t imagine an MLBPA with all the Minor League, and it would be I mean, we’re talking about you know, differences between Scherzer and you know, a pre arbitration guy and a mid level free agent, just imagine, you know, rookie level. You know, a ball guys in the mix to negotiate it would be a total disaster from getting a deal done perspective, even if it might help the Minor Leaguers themselves.
BOBBY: Yeah, we’re very far down the hypothetical sorry to–
NATHANIEL: Yeah.
BOBBY: –push us further down. But I was just I I occurred to me and I had to ask it. So Alex, I introdu–in interrupted your your outro there.
ALEX: No, not at all. Nathaniel, thank you for joining us, helping us break down the most glamorous part of of the sport we all know and love. Before we let you go, do you want to just plug where people can find you, find your work? Anything else before we let you get out of here?
NATHANIEL: I’m good. No, not really, I’m good.
ALEX: Thank you so much for joining us.
NATHANIEL: Yeah, thank you guys.
[1:08:43]
[Transition Music]
BOBBY: Thank you to Nathaniel Grow. Thank you to you, Alex, for all of your wonderful insight into the collective bargaining of Major League Baseball. Thank you to the listeners, for coming along with us on this CBA ABCs journey. I know that we get very in the weeds sometimes. And this series is an example of us going further into the weeds than we really ever ever have in this episode specifically. But I hope that it’s a good jumping off point. If you’re trying to get as much context about some of these labor fights as possible. We of course, only identified really three concepts in the last two interact a lot CBT and revenue sharing. But that’s because these are kind of the the ones that are most up for debate at the moment. There are a lot of other things about like player benefits and travel and like salary cap and salary floor which are not in the CBA. But of course are like these, this third rail that runs along all of these conversations that we didn’t focus a whole episode on. Because I don’t really anticipate them changing too much in the CBA. But if they do, we will of course talk about them in the course of news that trickles out about collective bargaining and what’s going on. Speaking of that, no news is trickling out how collective bargaining. Doesn’t seem like they’re doing that right now. See you in few years–
ALEX: [1:10:08] holidays, right? Rob Manfred visiting his family, what is he going to do negotiate through the end of December?
BOBBY: No. Well, you can’t just like lock them out and then just like keep negotiating the next week because then why did you lock them out?
ALEX: Right, what was the point of that.
BOBBY: It has to be a whole like, it has to be the whole show and everything. It has to be like this, this like, medieval jousting tournament, where you like touch spears in the middle and then walk through–
ALEX: Right.
BOBBY: –your corners. And then it has to be it’s all about pop and circumstance.
ALEX: Yeah, a billion dollar game of chicken, you know.
BOBBY: Basically. Anything else that we need to sound the Tipping Pitches listeners about, Alex? Anything coming up that you want to hint at?
ALEX: Yes, just a couple things. Before we get out of here. I’m really excited for our episode next week. We’re going to be talking about this this CBA fight and labor in baseball and sports. Taking a little bit of a different angle and talking about media. It’s it’s a the Tipping Pitches media criticism power hour, which we have not been able to to really get into as of late. But that’s kind of our bread and butter, you know, that’s–
BOBBY: That’s the sound of me blowing the dust off my journalism degree, bro. Let’s go.
ALEX: Yes, so we’re going to be bringing a guest on for that, I’m very excited. Also, we recently went on the Working People Podcast, which is, which is a podcast about labor that is in partnership with in these Time’s mag, and–
BOBBY: Real banner moment for me. I love the podcast.
ALEX: [1:11:41] it is, yeah.
BOBBY: And it supposed to like weird to be on a podcast that I listened to all the time.
ALEX: Right. So that was a, we did kind of a cursory look at what is at stake in the CBA fight and how it relates to the broader labor landscape in the country today. So we had a really great time going on there. Keep an eye out for that it should be out in the in the coming days. And–
BOBBY: And in the future, we’ll be doing a bonus episode with working people as well. Where we get into some of the more the wider concepts less about the here and now and more about the baseball labor landscape and what it means in the wider context of American capitalism. That’ll be a bonus episode that you can access if you’re a patreon member of working people go check out our our mini appearance that will be on their regular feed in the next day or two. And then decide if you want to come for the bonus pod as well. And as we said up top.
ALEX: Sangha shirt, they’re cool. I’m I’m excited about them. tiny.cc/nationalize, use that code for you listeners only. It’s nowhere else, this code has not been posted online, anywhere. It is just for you, the person listening to this right now. STRIKE–
BOBBY: [1:12:52] the fact that this podcast is distributed via online.
ALEX: Well, yes.
BOBBY: Basically saying it hasn’t been on Twitter.
ALEX: You know what, if someone makes the plunge to actually press play on one of these episodes–
BOBBY: That’s [1:13:08].
ALEX: –they they deserve those [1:13:00] that 15% off. So STRIKE, S-T-R-I-K-E hit that up, feel that cart.
BOBBY: Thanks for listening, everyone. We will talk to you next week.
[1:13:24]
[Music]
[1:13:29]
[Outro]
ALEX RODRIGUEZ: Hello everybody, I’m Alex Rodriguez, Tipping Pitches, Tipping Pitches. This is the one that I love the most Tipping Pitches. So we’ll see you next week. See ya.
Transcriptionist: Vernon Bryann Casil
Editor: Krizia Marrie Casil
Tipping Pitches 
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