Identity Crisis in Baseball's Labor Dispute

The New York Times has an analysis of the labor negotiations that explains that the roles of the owners and the union have been reversed.

Making a demand that would be anathema to most labor unions, the Major League Baseball Players Association wants to let salaries rise and fall as market forces dictate.
And in a demand that flies in the face of notions of free enterprise, the club owners are pushing a proposal that smacks of socialism. They want to soak the richest owners and redistribute income to poorer teams to level off team payrolls.

The basic premise, that the players "to let salaries rise and fall as market forces dictate," is flawed, however. The players want nothing of the sort. They want to let certain salaries rise and fall with the salary market. Those certain salaries are of arbitration-eligible players and of free-agency-eligible players whose contracts are expiring. Free agency controls the supply of players upon which teams may bid, driving up the demand. Arbitration uses, in part, the salaries set by free agency to drive up salaries for players who are not yet eligible for free agency. This is essential to the goal of free agency for the union.

The players do not want a totally free market, one in which all of the players are free agents at the end of each year. This would cause a glut in the market and lessen the supply, suppressing salaries. Marvin Miller in his epiphanic baseball autobiography, A Whole Different Ballgame explains why. Note that this after the arbitration decision to make Andy Messersmith and Dave McNally the first true free agents (that is by letting their contract expire-Catfish Hunter had became a free agent earlier because of the A's owner Charlie O. Finley not fulfilling the terms of his contract) and the owners locked out the players in protest:

By flexing their muscles with a lockout, the owners hoped to negate the impact of the Messersmith decision, which meant that no players would become free agents, whether they had signed 1976 contracts or not. Throughout the winter, we had advised players wanting to become free agents not to sign. By the time spring training was scheduled to start, almost 350 players had followed Messersmith's lead. This led to two sets of nightmares: the owners' and mine. The owners', for obvious reasons-a potential "loss" of so many valuable players. To me, a large supply of free agents each year would defeat one of the purposes of free agency, namely, the bidding up of salaries. Luckily, Oakland's owner, Charlie Finley-who generally was ignored-seemed to be the only one smart enough to recognize that opening the floodgates by making all players free agents would work to the owners advantage (by holding salaries down); the rest screamed bloody murder: "This SOB, Miller, said there'd only be a handful of free agents. Now I'm going to lose my entire infield, outfield, and pitching staff!" Instead of negotiating realistically, management insisted that a player be required to have ten years (nine years plus option year) of major league service (something few players achieved) in order to become a free agent and then hedged that with a provision that the player still could be held by his club if it offered him at least $30,000 a year.

Owners want the luxury tax and revenue sharing plan to retard salary growth by lessening their fellow owners' demand. Players want to ensure that there is enough demand so that salaries continue to keep pace with revenues. This is a new approach in that the owners have always considered altering the supply side by setting the criteria high enough (service time usually) that only a handful of upper-echelon players would be affected. The players have always wanted to lower those criteria so that there would be large enough supply of players to drive up salaries through arbitration while still adhering to favorable supply-and-demand principles. Free Agency cannot fully achieve the union's goals without arbitration.

Though this is a new collective bargaining approach, it is basically a continuation of the reserve clause that was in effect for the first hundred years of organized ball and of collusion, which the owners tried in the mid-1980s and paid for dearly in the courts. The thinking being that if your lessen the demand that all of the owners have for certain players, then salaries in general will be less or will grow less rapidly. This is a revolutionary approach in that the owners are bargaining with the players so that they become compictious participants in the process for the first time.