MLB dodged a disaster by agreeing to end the lockout, but other risks remain

Major League Baseball Commissioner Rob Manfred flashed a massive smile on Thursday evening when he announced the return of baseball.

After nearly 100 days of an owner-imposed lockout, MLB agreed to a new five-year collective bargaining agreement with the MLB Players Association on Thursday. In the deal, players will see increased minimum salaries and a $50-million bonus pool for young players. Owners are get an expanded 12-team postseason and jersey patches that create new revenue.

But most importantly – MLB will play a full 162-game schedule after the Manfred, and team owners played the “deadline” strategy and initially threatened to cancel games and not pay players.

“The way the process of collective bargaining is designed to work under the stature – it’s really driven by two things,” Manfred said. “Time and economic leverage. No agreement comes together before those two things play on in a way that you find common ground. I think we made an agreement when it was possible to make an agreement.”

However, despite the agreement and the full season staying intact, MLB’s business may have suffered some damage.

Former MLB executive Marty Conway followed baseball’s ninth work stoppage since it commenced last December. He labeled talks a “vicious negotiating period” for MLB and players. Conway said the league would need to repair its image, especially in smaller markets.

“These periodic airing of the grievances weighs on that [MLB’s image],” Conway said. “For whatever reason, baseball has chosen to expose their inter-workings more than the NBA and NFL,” he added. “And it’s hurting.”

Conway, now a sports management professor at Georgetown University, said MLB clubs also missed its “selling season.” It’s when clubs promote new players, the 2022 schedule, ticket packages and stay engaged with season-ticketholders for renewals.  

During the pandemic, MLB said 40% of its $10 billion business is tied to attendance, which has been falling over the years. MLB drew a total of 45.3 million fans last season, partly due to restrictions around the pandemic. That was down from 68.5 million in the pre-pandemic 2019 season. MLB’s record high for attendance was 79.5 million fans in the 2007 season.

While MLB was wrapped up in in labor talks, the consumer price index increased, Russia started a war in Ukraine, and gas prices surged. That means small-market and non-competitive MLB clubs could especially be hurt if cash-strapped fans can’t pony up the money to pay for tickets.

The selling season might have helped alleviate this potential problem.

“It’s very important,” Conway said. “The day after the previous season, you want to message to your fans not only what the schedule is, ticket prices, and season-ticket packages. That selling season is essential.”

He added: “There’s going to be some markets where the bounce will be quick – Los Angeles, New York – but there are also a lot of markets – Baltimore, Tampa, Miami – they had a whole winter where they haven’t been able to capitalize on the selling of the season.”

On Thursday night, MLB apologized to fans.

“I know the last few months have been difficult. There was a lot of uncertainty at a point in time where there’s a lot of uncertainty in the world. Sort of like the way the process of collective bargaining works sometimes,” Manfred said. “But I do apologize for it.”

The commissioner’s apology came after Manfred said he’s “generally thrilled” MLB settled another labor dispute. And as a result, baseball once again avoided losing revenue under his commissioner’s watch.

On Wednesday evening, MLB threatened to miss games through April 14 after previously postponing the first two series of the 2022 season – roughly 90 games. Manfred then said players wouldn’t be paid for missed games.

“Let me say this about deadlines,” said Manfred on Thursday. “The use of deadlines, and extending deadlines, and figuring out when to set them and when to back up off them is part of the art of collective bargaining.

“And it is an art form that’s important in terms of making a deal,” Manfred added.

Asked whether MLB was outmaneuvered, as players still made up significant economic ground in the lockout, Manfred responded that it’s not about “who outflanked who.” He said: “My view is – there’s only one win, and that’s getting an agreement. We got one.”

Manfred said he would be more diligent about building relationships with players, some of whom called for his ouster. He then labeled terms of the deal – which include increasing minimum to $700,000 with $20,000 per year increases – an “olive branch” to players to repair the fractured relationship.

“One of the things I’m supposed to do is promote a good relationship with our players,” Manfred said. “I tried to do that. I have not been successful in that.”

Manfred said he called MLBPA executive director Tony Clark “and expressed my desire to work with him. And it’s going to be a priority of mine moving forward to try and make good on the commitment.”

With the lockout concluded, Conway suggested the league address fan displeasure by relying on national events, including the “Field of Dreams” game between the Chicago Cubs and Cincinnati Reds.

MLB makes it return to Dyersville, Iowa, in a ballpark built next to a cornfield, echoing the scene from the 1989 film starring Kevin Costner. Last year’s Field of Dreams game was a viewership success for Fox, bringing in an average of 5.9 million viewers.

In addition, Conway said MLB would use fan giveaways around the 2022 All-Star Game held in Los Angeles at Dodger Stadium. But player health will be critical in determining the success of those national events.

The lockout wiped out most of spring training, a time when players prepare their bodies for a 162-game campaign. Usually, players get nearly two months to prepare, but since MLB will start its year on April 7, players only have three weeks.

On Friday, Clark said player health is a concern heading into this season with another shortened spring training. He referenced MLB’s 2020 season when spring training was interrupted due to the pandemic.

After sports shut down in March 2020, MLB didn’t start again until July – weeks before it started a 60-game campaign. MLB returned to its 162-game schedule in 2021. But, coming off a year when player routines were affected by Covid, injures piled up.

Stan Conte, a former MLB head trainer, was cited last June in the New York Times after he noticed an increase in leg injuries, including hamstrings, during 2021 spring training. Also, during the 2020 season, stars, including New York Yankees’ Giancarlo Stanton and Aaron Judge, missed time due to leg injuries.  

“Those (injuries) are always a concern,” Clark said Friday, responding to a CNBC inquiry on the matter. He added MLB players are conditioned throughout the year, and “we take some solace in that, but we’re always paying attention to how the schedule and how the travel associate with it.”

There could be muscle overuse leading to injuries as MLB needs to make up roughly 90 games it postponed due to the lockout. In a regular-season – pre-Covid – that’s up from 39 games MLB rescheduled in 2019, 54 games in 2018, and more than 30 in 2017.

MLB will use doubleheaders to make up most of the games in 2022, though is still unclear how the league will reformat. But it could add three to five days to the season, which usually ends in early October.

Injuries aside, another concern for MLBPA: unvaccinated players. Restrictions in Canada don’t allow unvaccinated players to enter the country. Hence, players who miss games in Toronto due to vaccination status will not be paid and would lose service time.

MLB told CNBC that data from 2021 show that 81% “Tier 1 personnel,” including players and key staff who have access to players, were fully vaccinated.

As MLB repairs its image among fans and players want to avoid injuries, the parties will see more revenue streams.

MLB can start applying jersey patches and helmet decals immediately. The new uniform sponsorships are estimated to be worth $11 million per MLB team, according to measurement company Nielsen.   

MLBPA chief negotiator Bruce Meyer said players could now monetize from promotional endorsement deals with sports betting companies.

Under previous labor deals, MLB players were banned from promoting gambling companies, including casinos. In 1979, Hall of Famer Willie Mays was banned from MLB for accepting a promotional deal with Bally’s. MLB revoked the ban in 1985.

MLBPA didn’t provide specifics around the rules of the deals. Still, agreements will likely mimic other arrangements that allow players to use their intellectual property in ads using non-MLB logos and apparel.