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A Season in Flux Due to COVID-19: Major League Baseball Players and Owners Reach Agreement on Player Service-Time and Salary Terms.

Like every other professional sports league, Major League Baseball has been forced to postpone its games due to COVID-19.  Rather than beginning the season as scheduled on March 26, MLB franchise owners and the MLB Players Association were busy negotiating player service-time and salary issues, as well as a framework for a hopeful return to play this year. The deal finalized on March 27 carries important implications for players, teams and fans alike.

On the service-time front, the players and owners agreed that even if the season were abbreviated or altogether cancelled because of the virus, the 2020 season will still count for purposes of calculating players’ service time. By way of background, service-time determines when players are eligible for salary arbitration and free agency.  Basically, each day on an MLB roster earns a player one day of service time.  A player on a roster (or a team’s injured list) for at least 172 days in a given year is entitled to a year of service time.  After six years of Major League service, a player becomes eligible for free agency, which means that he can be signed by any team in the league for any amount of money.  During the first six years, salaries are largely regulated by the Collective Bargaining Agreement, subject to potential salary increases through arbitration after Year 3 or re-negotiation of player contracts at the discretion of the team and the player.   In the case of young star players, the CBA minimum salaries based on seniority are well-below what they would make on the open market, so there is every incentive to hit free agency as soon as possible.  As smaller market teams are frequently unable to afford a star player that hits free agency, they often keep a player in the minor leagues for a year or two longer just to postpone the triggering of the service-time clock.

The deal that was just reached means that players will not lose a year of service time, meaning they will still be eligible for free agency on the same timeline.  While a lost or shortened season will impact all teams with young players who have yet to hit free agency, smaller market teams may be particularly impacted based on the economic realities outlined above.

As for the deal’s salary provisions, the players agreed to forego any potential suit against the league for full salaries in the event that the 2020 season does not take place.  Instead, MLB will advance players $170 million over the next two months, which the Players Association will divide among its members.  MLB salaries are paid on a per game basis, so to the extent that games are missed due to COVID-19, there is a legitimate argument that players would not be owed their contractually-agreed upon salaries.  Perhaps recognizing the uncertain legal landscape at play here and the bad optics of litigating over millions in salaries at this time of mass unemployment, it would appear that both sides determined that a swift resolution to the matter was in everyone’s best interests.

Finally, as far as actually getting back on the field, owners and players both want to play as many games as possible, subject to various conditions.  These conditions include no travel restrictions throughout the U.S. and Canada, no bans on mass gatherings that would limit the ability to hold games, and medical experts’ determination that there would be no health risks for players, staff or fans.  In the event that the season does go forward, it will be unlike any that has ever occurred.  If games were to somehow start by mid-Summer, the regular season would need to be cut down to a much shorter amount of games than the standard 162-game schedule, and many doubleheaders will likely be played to fit in as many games as possible.  Additionally, the Playoffs would likely occur in November instead of the traditional October.  This could also entail playing some or all of the Playoffs at warm weather neutral-sites to avoid inclement conditions in East Coast and Midwest cities.

At this point though, with most of North America on lock-down, any baseball that can be played this year will undoubtedly be met with great enthusiasm by fans, players and franchises alike.

© Copyright 2020 Squire Patton Boggs (US) LLP

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About this Author

Nicholas Zalany Commercial Litigation Attorney
Associate

Nicholas P. Zalany focuses his practice on general and complex commercial litigation matters, including in the areas of commercial contract disputes, business torts and insurance coverage disputes. Nick also provides legal counsel to insurance companies, trade associations and healthcare systems in matters involving insurance law and regulatory compliance.

Prior to joining the firm, Nick worked in both the private and public sectors, including as an associate in the Columbus office of a national boutique litigation firm and as a staff attorney for two Ohio state court judges. Before...

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