With the news that the members of the MLS Players Association and MLS both ratified a revised Collective Bargaining Agreement (CBA) on Monday, MLS has guaranteed itself labor peace, at least for this season.
It wasn't easy.
The just-concluded talks marked the third time in roughly a year that the two sides have hammered out a CBA, due primarily to the impact of the coronavirus pandemic. What started out as significant gains by players last February devolved into $150 million in concessions over the life of the deal last June. Neither side offered up a dollar figure in the latest CBA, but the league had been seeking upwards of $110m in concessions over the life of the deal from the players, while the MLSPA offered up $53m. To reach an agreement, the league had to use the threat of a lockout. Again.
So what did the league gain?
The biggest gain for MLS was their ability to extend the length of the CBA for an additional two years through the end of the 2027 season. This has the effect of doing two things. One, the extension delays the jump in compensation that typically comes with a new CBA. Second, such an extension provides the league with considerable distance from the 2026 World Cup -- co-hosted by the U.S., Canada and Mexico -- and takes away leverage from the MLSPA to negotiate improved terms in the run-up to the tournament and its immediate aftermath.
MLS also succeeded in limiting the growth of the total roster spend (not including Designated Players) between the 2021 and 2022 seasons to $100,000, an increase of just 1.1%. This is on top of a freeze negotiated last June that froze the budget between 2020 and 2021. This will have a ripple effect into future seasons.
The share of incremental media revenues -- which will kick in when a new media rights deal is negotiated starting with the 2023 season -- was decreased from 25% to 12.5% in 2024.
Lastly, the dreaded force majeure clause remains in place, but with restrictions. It was this clause -- invoked because fans aren't likely to be allowed back into stadiums any time soon -- that allowed the league to reopen negotiations in late December and bring the MLSPA back to the bargaining table. With a deal now done, the clause cannot be invoked again until Dec. 1, 2021. This means that if MLS is still struggling financially into the summer, it can't come back to the MLSPA and try to reopen negotiations again. After Dec. 1, anything goes.
What did the MLSPA gain?
This deal wasn't so much about what the MLSPA gained, but what it didn't lose. Preservation of present salaries has been a consistent goal of the MLSPA throughout the two most recent CBA negotiations. A source with knowledge of the situation said the union made direct payments to players last year in a bid to ease the sting of the 5% annualized cut in salaries, which resulted in the average annualized pay cut being reduced to 2.5%.
With that in mind, the union maintains that it had three goals entering these negotiations. The first was no cuts to 2021 salaries. The second was any current contracts for 2022 and beyond must be honored. (In other words, no coming back to the MLSPA and insisting on a salary cut, as was done in 2020.) The third was that minimum salaries and player bonuses would increase each year through 2027.
All of these goals were reached. According to details published by the league, the senior minimum will rise from $81,375 in 2021 to $125,875 in 2027, and the reserve minimum will rise from $63,547 in 2021 to $97,700 in 2027. Team win bonuses and contributions to players' 401(k) will remain as they were in the previous CBA. The MLSPA also secured accelerated growth rates in terms of spending on salary toward the back end of the deal, with the year-over-year growth rate increasing to 7.5% in 2026 and 10% in 2027.
The MLSPA also made modest gains in free agency for 2026 and 2027, with the eligibility requirements going from 24 years of age and five years in MLS to 24 and four. The MLSPA says this will have the effect of making a third of the entire MLS player pool eligible for free agency, compared to zero prior to 2015. Keep in mind, though, that there are limits to what players can make via free agency based on their previous salary.
So who 'won' in all of this?
At first glance, you'd have to say the league and its owners, who used their leverage to good effect. They asked for concessions from the players and got what they wanted in terms of both the salary cap freeze and two-year extension. The force majeure remains in place as well, though with short-term limitations, and any "givebacks" are far down the road toward the end of the deal.
Was it a total loss for the players? No. They're still getting paid their full salaries for 2021, and in some cases beyond. That was their stated aim all along. But the MLSPA was playing defense from the beginning, and with the threat of a lockout hanging over the union's collective head, the players had to give plenty. The growth of the spending on salaries is essentially frozen for two years, including the current season. The delay in the expiration of the CBA -- and the bump that usually comes with the next deal -- is considerable. The total player spend per team of $9.225m in 2020 represented a 13.1% increase from 2019, the last year of the 2015-19 CBA. Such a bump is now pushed out into the future.
If any group among the players "won," it was those at the lower end of the pay scale. Unlike their higher-paid colleagues, there's no freeze for reserve minimum or senior minimum players, which means their pay will rise over each year of the deal. The "losers" are the low- to mid-range players who will be entering the league in the coming years, as well as existing MLS players who sign new contracts. There will simply be less money to go around than the union anticipated a year ago.
The big unknowns in all of this are what dollar amount the new media rights deal will fetch starting in 2023, along with the aforementioned loss of leverage around the 2026 World Cup. The MLSPA maintains that momentum from the World Cup isn't likely to go away by 2027, but the reality is that the percentage of the media rights deal the MLSPA would get went down again in 2024. And the timing of the CBA's expiration date means it will have less leverage than it had before.
What was the broad reaction to the deal on both sides?
The league is no doubt pleased at the outcome. They got what they wanted, especially in terms of cost certainty surrounding the World Cup, without having to give much of anything away.
"I think the basic framework of this two-year extension, with the improvements that the players negotiated in free agency and some other things, increased economics and 2026 and 2027, but also not having pay reductions in in this year, I think it's a fair deal," said one source with knowledge of the situation. "I think it's good for the league, because it provides some long-term stability, and I think that's good for everybody. It's great that we have this period of time for everybody to focus in on building league and making investments that are needed.
The general consensus among the players was summed up by one Western Conference player who said "We did the best we could" given the pandemic and threat of a lockout. The players didn't want to be in the position of renegotiating the deal, but that was the reality they faced.
San Jose Earthquakes forward Chris Wondolowski added, "[It was a] mixed bag. I think this was probably the closest the two sides have come to some sort of work stoppage. That being said, the players finally had a major bargaining chip [in the World Cup]. I think it's going to hurt the younger player pool in a couple of years. All in all, I'm relieved there wasn't a stoppage."
Not everyone was so positive. One MLS player agent who asked not to be identified called it "unconscionable" that the union agreed to a force majeure clause last June that made the union vulnerable to the league reopening negotiations.
The agent added that the MLSPA "further failed its members by losing perhaps the 2020 CBA's most significant component -- minimizing the CBA length to five years to set up reassessment on a new media rights deal, expected full expansion and two years ahead of a hosted World Cup. MLS and its owners are laughing to the bank how the league turned a five-year CBA into an eight-year stranglehold that includes a domestic World Cup without any major concessions in return."
So has the union been weakened by three rounds of CBA talks? Certainly, the players are in a less advantageous position than they were a year ago. Based on the June CBA as well as in recent talks, the players have given up anywhere from $203m to $260m in concessions over the life of the deal. Not surprisingly, MLSPA executive director Bob Foose opted for a more positive viewpoint.
"By every measure I can think of -- player engagement and involvement, resources, staffing -- the PA is stronger now than it has ever been," said Foose. "Our Bargaining Committee, which consisted of 13% of the player pool, was engaged, clear on their own priorities, clear on the priorities of their teammates, and prepared to make thoughtful decisions when they needed to be made. They stayed sharply focused on those priorities throughout. This pandemic has weakened all of us economically, but as an organization, I am extremely bullish about the PA's continued growth and development."
The league took some hits as well, but they are more easily absorbed given its sheer financial heft compared to the players.
How close were the players to getting locked out?
A source with knowledge of the talks said the threat from the owners was serious. Given that the league extended its own deadline twice, it's easy to take such pronouncements with a grain of salt, but the players certainly took the league at its word.
Asked at what point he was confident a deal would get done, Colorado Rapids goalkeeper and MLSPA executive board member Clint Irwin said, "Really at no point. When management repeatedly threatens a lockout via press release, it's difficult to have confidence in any part of the negotiations that a deal can get done. That said, I'm proud of our player and executive leader for navigating this process, again, while subjected to management tactics that echoed those this past summer."
What's to stop this from happening again?
Nothing, really. The players are safe from seeing the force majeure invoked again, but only until Dec. 1, 2021. At that point, the league is free to what it did last December, though if it comes to that, then that will be a reflection of how the pandemic is still dominating life in the U.S. a year on.
"I think the pandemic obviously continues to be a big concern for everyone," said Foose. "But I believe the odds of there being a force majeure event in place in a year are extremely low."
So what's next?
The union will continue to do what it does: advocate for players away from the glare of a CBA negotiation. But Foose senses something has changed in the relationship between the league and the union. Neither Garber nor anyone else on the labor committee were involved in the face-to-face talks; it was all handled by MLS attorneys and outside counsel.
"It's not good," said Foose about the league/union relationship. "I would characterize it as entirely transactional. To me, that's far from the ideal way to conduct those relations, so that's something that they're gonna have to make a decision on moving forward."
Irwin added that the relationship between players and ownership is worse than it was last June, which was another time the owners threatened the players with a lockout.
"It doesn't have to be this way," he said. "There are other ways for the league and its owners to approach these issues, issues that are challenging to both sides. We've seen collaboration in other North American sports leagues, between management and union, where a working relationship exists amid identical circumstances. We have a long way to go to get there now."
The reality however is that memories fade while players come and go. When Jan. 31, 2028 -- the revised CBA's expiration date -- rolls around, few of those involved in the just concluded talks will be around. And MLS will likely continue to have the upper hand in its relationship with its players.