The Athletic recently reported that two small market baseball clubs – the Athletics and the Miami Marlins – are in jeopardy of having grievances filed against them for spending insufficient money on their player payrolls.[1]  This article uses those examples to explain Major League Baseball’s Collective Bargaining Agreement’s grievance process and revenue sharing program.

Grievances under the Collective Bargaining Agreement

The Collective Bargaining Agreement (the “CBA”) is an agreement between the 30 Major League Baseball clubs (the “Clubs”) and the Major League Baseball Players Association (the “MLBPA”).  The CBA establishes the rights and responsibilities of the Clubs, the players, and the MLBPA, and “certain terms and conditions of employment” of all MLB players.[2]  

The current CBA came into effect on March 10, 2022, and expires on December 1, 2026.

The CBA allows MLB players and, in some instances, the MLBPA on behalf of players, to file grievances against the Clubs.  The CBA defines a grievance as “a complaint which involves the existence or interpretation of, or compliance with, any agreement . . . between the [MLBPA] and the Clubs or any of them, or between a Player and a Club[.]”[3]

Here are some notable examples of grievances filed under the CBA: 

· In 2021, the MLBPA filed a grievance against MLB for failing to schedule more games during the COVID-shortened 2020 season.[4] 

· In 2022, Trevor Bauer filed a grievance in connection with his suspension following allegations of sexual assault.[5] 

· And, in 2001, the MLPBA filed a grievance against Club owners for threatening to contract two Clubs from MLB.[6]

The grievance process begins when a player or the MLBPA provides notice of the grievance to a Club or the Clubs, after which the Club(s) responds to the grievance.  The parties to a grievance may resolve it on their own.  However, if a player or the MLBPA disagrees with a Club’s decision, the CBA also allows a player or the MLBPA to appeal the Club’s decision first to the Major League Baseball Labor Relations Department, and then, if necessary, to a panel of three arbitrators (the “Arbitration Panel”), headed by the panel chair. 

The Arbitration Panel has jurisdiction and authority “to determine the existence of or compliance with, or to interpret or apply agreements or provisions of agreements between the [MLBPA] and the Clubs or any of them, or between individual Players and the Clubs.  The Arbitration Panel shall not have jurisdiction or authority to add to, detract from, or alter in any way the provisions of such agreements.”[7]

The Arbitration Panel’s decision regarding a grievance is effectively final:  In Major League Baseball Assn. v. Garvey, the Supreme Court held that an arbitrator’s decision will only be overturned if it is the result of fraud.[8]

Revenue sharing and grievances for violations of the CBA’s revenue sharing policy

The CBA’s revenue sharing program is designed to improve on-field competition, and the MLBPA may file a grievance against a Club that misuses proceeds received from that program. 

Clubs receive revenues from nationally broadcast games and local sources like regional broadcast contracts, sponsorships, and sales of tickets, concessions, and merchandise.[9]  Obviously, Clubs in larger markets, like New York or Los Angeles, that have more lucrative television deals and bigger stadiums collect more local revenues than Clubs in smaller markets, like Milwaukee and Tampa Bay.  To attempt to even the playing field to some degree, the CBA’s revenue sharing plan redistributes a portion of those local revenues.[10]

The calculation of how much money Clubs pay or receive under the revenue sharing program is complex.  Essentially, the program pools 48% of each Club’s local revenues, and that pool is redistributed equally among all Clubs. [11]  As a result, a large market Club that generates a lot of local revenue ends up paying into the revenue sharing program more than it receives because 48% of its local revenues is greater than 48% of a smaller market Club’s revenues.  By contrast, a smaller market Club collects more from the revenue sharing program than it contributes.  Clubs that end up paying into the program are called revenue sharing payors, and Clubs that receive money from the program are called revenue sharing payees. 

The revenue sharing program was created for the limited purpose of giving smaller market Clubs additional resources to improve their on-field performance.  Without disincentives built into it, however, owners of revenue sharing payees could abuse the program by saving the proceeds of the revenue sharing program they receive rather than spending that money in ways designed to improve on-field performance.  As such, the CBA contains certain mechanisms to prevent that from happening. 

For example, in 2022, a change in the new CBA introduced a lottery to determine the MLB Rule 4 Draft order (the “Amateur Draft”).  To disincentivize teams from tanking for lottery picks in the draft, the definition of the Amateur Draft was amended to say that revenue sharing payees cannot receive a lottery pick inside the top six selections in the Amateur Draft in three consecutive years.[12]  This rule was applied recently:  The Athletics, a frequent revenue sharing payee, could not receive a top-six pick in this year’s Amateur Draft because they had been revenue sharing payees for three years in a row.[13]  Similarly, revenue sharing payors cannot receive a top-six lottery pick two years in a row, a provision that disincentivizes large market Clubs from tanking.[14]

Moreover, the CBA states that acceptable uses of the proceeds received from revenue sharing include extending current players’ contracts, signing free agents, purchasing training equipment, and investing in analytics that support player development.  Conversely, the CBA provides the following examples of uses of revenue sharing proceeds that are not consistent with this objective:

· Payments to service acquisition debt or any other debt that is unrelated to past or future efforts to improve performance on the field;

· Payments to individuals other than on-field personnel or personnel related to player development;

· Payments to entities that do not have a direct role in improving on-field performance; and

· Distributions to ownership that are not intended to offset tax obligations resulting from Club operations.[15]

Furthermore, the CBA allows the MLPBA to file a grievance against a Club it believes did not use its revenue sharing proceeds to improve its on-field performance. 

In any such grievance, the CBA requires the Arbitration Panel to consider the following:

· The Club’s expenditures on scouting, player development, and player payroll;

· The Club’s long-term strategy for improving competitiveness;

· The Club’s historical use of revenue sharing receipts;

· Any material adverse changes in local revenue; and

· The Club’s overall financial position. 

In this type of grievance, the MLBPA has the burden of demonstrating that the Club’s use of revenue sharing violates the CBA.  The burden flips to the Club, however, if the Club’s total player payroll is less than 150% of its revenue sharing receipts.[16] 

The MLB commissioner may impose penalties against a Club that violates this provision of the CBA, including requiring the Club to submit a plan for its financial performance and competitive effort for the next two years.[17]

Recent grievances related to the revenue sharing player payroll spending requirement

A Club’s payroll is determined at the end of the season for purposes of the burden-shifting provision of the CBA.  Even so, pre-season payroll numbers can signal which Clubs may find themselves receiving a grievance from the MLBPA at the end of the season.

For example, on December 9, 2024, Evan Drellich and Ken Rosenthal of The Athletic wrote an article warning that, even after signing Luis Severino to a three-year, $67 million contract in the offseason, the A’s needed to add more to their payroll to avoid receiving a grievance.[18]  The article estimated that the A’s needed to reach $105 million in payroll for competitive balance tax purposes to avoid tripping the burden-shifting provision of the CBA.  Since that article was published, the A’s signed free agents, including Gio Urshela, Jose Leclerc and Luis Urias; extended Brent Rooker and Lawrence Butler; and traded for Jeffrey Springs, increasing their payroll for competitive balance tax purposes in 2025 to approximately $115 million, according to Fangraphs.[19]

While the A’s appear to have addressed their payroll concerns, the Marlins have not.  The Athletic reported on March 18, 2025 that the Marlins were operating about $20 million below the CBA’s revenue sharing player payroll spending requirement.[20]  Since the article was published, the Marlins have made no significant changes to their 2025 payroll.  What’s worse, the article suggests that the Marlins are more likely to cut salary by the end of the season than add it.  For example, the article predicts that Sandy Alcantara, whose salary is approximately $11.2 million for 2025, will be traded by this season’s trade deadline.[21]

This is not the first time similar allegations have been made against the Marlins (or the A’s).  In 2018, the MLBPA filed a grievance against the Miami Marlins, Oakland Athletics, Pittsburgh Pirates, and Tampa Bay Rays, alleging that these four Clubs violated the CBA by misusing the money they received through MLB’s revenue sharing program. 

That grievance was filed pursuant to the then-operative CBA, which has since expired.  However, that CBA – like the current one – required Clubs to use the revenue sharing proceeds “in an effort to improve [their] performance on the field.”  That grievance remains pending, and the MLBPA filed another grievance against some of the same Clubs in 2019.[22]

Potential consequences for the Marlins

What will happen to the Marlins if they do not increase their payroll remains an open question.  As an initial matter, if the Marlins’ payroll does not exceed the 150% threshold by the end of the season, they can still show that they used their revenue sharing proceeds to improve their on-field performance.  Perhaps anticipating that their payroll would not exceed the 150% threshold, at the start of spring training, Marlins owner Bruce Sherman and president of baseball operations Peter Bendix discussed improvements the Marlins had made in the offseason, including hiring “one of the largest front-office staffs in baseball,” bulking up the Marlins weight room, renovating their spring training facility, and building a player development complex in the Dominican Republic.[23]  Notably, these are the exact types of improvements the Marlins would likely point to in a grievance hearing as evidence that they had used their revenue sharing proceeds to improve on-field performance. 

Even if the grievance is successful, however, it is unclear what penalties would be levied against the Marlins.  Perhaps Commissioner Rob Manfred would require the Marlins to submit a plan for its financial performance and competitive effort for the next two years as the CBA contemplates.  It is also possible that the MLBPA will use the grievance as leverage while negotiating the next CBA, which will happen in the not-too-distant future, as the current CBA is set to expire on December 1, 2026. 

Maybe even the Marlins don’t know what will happen if they don’t increase their payroll, and maybe they don’t care.  As one rival executive put it, “They’re sort of saying, ‘There’s no precedent here.  We don’t know what the punishment will be.  We’ll just find out’.”[24] 

So will we. 

John Kane is a lawyer and a sports fan.  His Twitter handle is @JKane_Sports.

Sources:

[1] “Even after Severino, A’s have to spend more this winter or risk fight with players’ union,” Evan Drellich and Ken Rosenthal, The Athletic, December 9, 2024, https://www.nytimes.com/athletic/5982452/2024/12/09/as-spending-union-grievance-severino/; “Once again, the Marlins’ lack of spending risks grievance from the players union,” Ken Rosenthal, The Athletic March 18, 2025,  https://www.nytimes.com/athletic/6211601/2025/03/18/miami-marlins-spending-payroll-luxury-tax/.

[2] CBA Article I. 

[3] CBA Article XI(A)(1)(a).

[4] “MLB players union seeking $500 million in grievance against league,” Jon Sherman, New York Post, May 13, 20201, https://nypost.com/2021/05/13/mlb-players-union-seeks-500-million-in-grievance-against-league/.

[5] “Los Angeles Dodgers pitcher Trevor Bauer’s grievance hearing against Major League Baseball to begin May 23, sources say,” Alden Gonzalez, ESPN, May 13, 2022, https://www.espn.com/mlb/story/_/id/33910887/los-angeles-dodgers-pitcher-trevor-bauer-grievance-hearing-major-league-baseball-begin-23-source-says.

[6] “Settling the dispute,” Darren Rovell, ESPN, November 14, 2001, https://www.espn.com/mlb/s/2001/1113/1277749.html.

[7] CBA Article XI(B).

[8] 532 U.S. 504 (2001).

[9] Revenues from nationally broadcast games are split equally among all Clubs.

[10] The revenue sharing program is not to be confused with the Competitive Balance Tax (the “CBT”), the tiered tax on Clubs who exceed certain payroll thresholds.  The proceeds of those taxes are used towards players’ benefits, retirement plans, and a fund that rewards local clubs for growing their non-media local revenue.  See CBA Article XXIII((H)(2)(b).

[11] CBA Article XXIV(A)(9)-(10).  

[12] “Rule 4 Draft,” https://www.mlb.com/glossary/transactions/rule-4-draft (“[R]evenue sharing payees are ineligible to receive lottery selections in three consecutive years[.]”).

[13] “A’s content with 11th pick, despite Draft Lottery ineligibility,” Martin Gallegos, MLB.com,  https://www.mlb.com/news/athletics-land-11th-pick-after-being-ineligible-for-draft-lottery.

[14] “Rule 4 Draft,” https://www.mlb.com/glossary/transactions/rule-4-draft (“[N]on-payees are ineligible to receive lottery selections in consecutive years.”).

[15] CBA Article XXIV(B)(5)(a).

[16] CBA Article XXIV(B)(5)(a).

[17] Id.

[18] “Even after Severino, A’s have to spend more this winter or risk fight with players’ union,” The Athletic, December 9, 2024, https://www.nytimes.com/athletic/5982452/2024/12/09/as-spending-union-grievance-severino/. 

[19] https://www.fangraphs.com/roster-resource/payroll/athletics.

[20] “Once again, the Marlins’ lack of spending risks grievance from the players union,” Ken Rosenthal, The Athletic March 18, 2025,  https://www.nytimes.com/athletic/6211601/2025/03/18/miami-marlins-spending-payroll-luxury-tax/.               

[21] Id.

[22] “Even after Severino, A’s have to spend more this winter or risk fight with players’ union,” The Athletic, December 9, 2024, https://www.nytimes.com/athletic/5982452/2024/12/09/as-spending-union-grievance-severino/. 

[23] “Once again, the Marlins’ lack of spending risks grievance from the players union,” Ken Rosenthal, The Athletic March 18, 2025,  https://www.nytimes.com/athletic/6211601/2025/03/18/miami-marlins-spending-payroll-luxury-tax/.

[24] Id.