Soaring Profits Spark First Bump in the PEBA’s Road to Success
Nate Manuel for American Baseball Perspective
Saturday, February 15, 2014

From the decay of MLB’s financial excesses, the PEBA was born.  For seven seasons, the new professional home of our nation’s pastime thrived beyond the hopes of the most optimistic observers.  That success was built on a foundation of mutual respect between players and owners, fiscal restraint and judicious application of resources.  This formula quickly vaulted the league into the #4 spot amongst the world’s most profitable professional sports leagues, trailing only the German Bundesliga and English Premier League soccer powerhouses, and rapidly closing in on the flagging National Football League.

As PEBA teams prepare for their eighth season of play, however, the league’s unprecedented and unexpected success faces its first serious challenge.  The Collective Bargaining Agreement signed by PEBA owners and the Planetary Extreme Baseball Players’ Guild (PEBPG) during the league’s 2006 formation period is due to expire at the end of the 2014 season, and early indications point to a contentious battle ahead.

The league’s first CBA was drafted as Major League Baseball’s demise was fresh in the minds of owners and players.  They had just watched teams “eat themselves out of house and home”, gobbling up revenue and failing to present a compelling product.  By 2006, only a few teams – the Yankees, the Red Sox, the Mets – could afford to keep up with the Joneses.  A systemic lack of restraint had turned the free agent market into an untamed Wild West.

Baseball owners are traditionally willing to accept a certain level of loss on what is essentially a vanity asset, but as the market for players’ services exploded, more and more owners felt compelled to pocket revenue rather than funneling it back into the team.  While some have blamed the malaise of fan apathy that did in MLB on widespread suspicion of rampant steroids abuse by players, many insiders believe that apathy really centered on a product diminished by a glut of teams consistently unwilling or unable to field competitive rosters.

Wisely recognizing these errors, the PEBA’s first (and only) CBA accounted for the need to compensate players fairly while simultaneously controlling team costs and providing owners incentive to return revenue to the field.  That formula of mutual respect has carried the league far.  For instance, when players voiced their desire in 2011 for a modification to the CBA allowing draftees to negotiate bonuses with teams, a compromise permitting owners to restructure revenue sharing and allowing only players drafted in the first five rounds to negotiate bonuses was quickly struck.

But a new tone is being struck at the latest Owners’ Meetings held this week in Asheville, NC, and it may signal an end to halcyon days of labor peace.  Trouble began last year when PEBPG Executive Director Frank Parks voiced his suspicion of collusion by owners to delay free agent signings in an effort to depress the market during the 2011 and 2012 off-seasons, an accusation loudly rejected by the league.  This off-season, several owners have complained that some players failed to negotiate extensions in good faith, stringing teams along before exiting via free agency.  The implication is this was retribution for the perceived misdeeds of owners from the previous two seasons.

After an off-season that witnessed major deals for free agents like Conan McCullough, Pedro Barrón and Octávio “El Chupacabra” Pexego – not to mention the extension that made Markus “Fireworks” Hancock the wealthiest 27-year-old in league history – PEBA’s average salary sits at an all-time high of $3,227,519.  That figure will come down before Opening Day as prospects and non-roster invitees sign contracts at or near league minimum.  And while it’s higher than MLB’s final Opening Day average player salary of $2,866,544, PEBA’s current average salary still only matches MLB’s inflation-adjusted 2009 average salary estimate.

Still, it’s clear from the tenor of discussions at Asheville’s Grand Bohemian hotel that owners are nervous about the future.  The Owners’ Meetings were closed to reporters, but sources with access to team owners have shared details from the conversations and shed light on demands that owners may present the PEBPG in the next round of CBA negotiations.

One possible demand: limiting all free agent contracts to one year in length once the season starts, a move that would place pressure on players to sign before Opening Day.  An even more contentious change would be the removal of the CBA-mandated “10/20 escalator” rule, which mandates year-to-year salary increases for players signed to contracts of four or more years in length.  This would surely draw howls of protest from the PEBPG, who fought vehemently for escalator guarantees in the original CBA.

Meanwhile, players are readying demands of their own.  Having recently won the right for draftees to negotiate bonuses and major league contracts, the PEBPG has expressed its desire to see current escalator and salary floor rules that govern contracts to players starting with their arbitration years also apply to big league contracts signed by draftees.  This would prevent teams from locking draftees into long-term, low salary contracts in exchange for a large bonus, a tactic Director Parks has called “predatory”.  The PEBPG also wants an end to the allowance for teams to house overflow of the CBA-mandated cash limit in interest-bearing “ballpark funds”, which the Guild has derisively termed “slush funds”.

There are still eight and a half months before the CBA is set to expire, plenty of time for to work out these differences.  The track record of unanimity between players and owners has led to impressive gains for the PEBA.  As the Owners’ Meetings wind down, though, it seems the league’s first big battle may be looming on the horizon.  The coming months will tell if the mutual respect that fueled the league’s rampant growth can be recaptured or if each side will draw battle lines for a fight that threatens both the 2015 season and the league’s prosperity.