A Look at the Gains and Losses by Team of a Season Without Fans

On the heels of another weak offer by team owners, it’s worth re-examining their claims of losses on a per game basis in the regular season. While most of the discussions about MLB’s gains and losses in 2020 have been on a more global scale, individual teams are going to have vastly different financial outlooks this season. Those outlooks could be shaping the negotiations among the owners as they continue to present proposals to the players that try to satisfy all the owners at once.

It’s possible you’ve heard the claim that owners will lose $640,000 on every regular season game played. While there are a lot of issues with that claim given that national television money as well as other revenue from MLB’s central office like MLB.TV is not included, we can use the data from that assertion as a starting point in examining MLB’s finances. MLB’s claim of losses comes from taking a pro-rated share of local television money and then subtracting player pay based on the March agreement that dictated pro-rated pay. Then, around $55,000 is added per game for other revenue minus the cost to put on a game. For the television estimates, I used the data from this piece, added the MLB average for Toronto, and then made a 2% adjustment based on the figures in this Jeff Passan piece. That same piece also provided the salary rate of $1,674,800 per game. Based solely on that data, here’s the team-by-team look at gains and losses per game:

MLB would very much prefer we stop here and not include national television money for the regular season or the huge boon to owners playoff revenue would be. We will get to those issues in a bit, but first, I want to touch on how Passan went about looking at a possible next step in negotiations prior to the last ownership proposal. He starts with the following:

Still, a 48-games-per-team schedule would leave a 72-game season. At MLB’s self-reported loss of $640,000 per game, a 48-game season means the league would be willing to lose $460,800,000.

If we assume that the 48-game season is baseball’s failsafe and that owners would agree to pay pro-rated salaries under the March agreement in order to get fulfill some of their regular season television obligations and receive at least a portion of that money and then get that $787 million in playoff money, then the $460 million figure serves as the starting point for MLB’s preference to withstand losses. Passan notes that playing another 34 games to get to 82, a number closer to the players’ preference, would mean another $326 million in claimed losses. There are several ways to get rid of that $326 million for owners, like expanded playoffs, salary deferrals, or even a slight pay cut from pro-rated pay.

Here is the same graph from above, except instead of using pro-rated pay, I will use the 50% pay cut from the pro-rated amounts that the owners recently proposed:

Passan wondered how the owners and players might bridge that $326 million gap. The owners proposed a plan where they clawed back that $326 million entirely and then took another $665 million to ensure regular season games would be profitable for two-thirds of teams before even considering the hundreds of million of dollars in MLB regular season revenue or the significant sum that awaits in the postseason. The owners’ proposal does include around $440 million in postseason bonuses, though roughly half of that amount is likely created from the players agreeing to an additional round of playoff games. The other half represents only about a quarter to a third of MLB’s already existing rights deals, which equal $787 million. In their proposal, the owners took away a billion dollars of regular season salaries compared to an 82-game schedule with pro-rated pay, then gave back only around $200 million in postseason money that was theirs to give away.

When we started this exercise, the only revenue used was local team money. Using the pro-rated pay system from the March agreement and adding in national regular season revenue from television contracts and MLB’s central office on a pro-rated basis, this is how much each team makes or loses per game before the playoffs:

It’s worth noting that a few of the bigger losers in the above scenario, particularly the Mets and Yankees, own significant portions of their RSN, which tends to shield revenues not included above. It’s also worth mentioning that the players gave MLB latitude to adjust revenue sharing this year to accommodate for this year’s unusual revenue landscape. Running the regular season game profits at 76 games instead of 82 yields a total of $209 million instead of $225 million. What we see above shows that it is worthwhile and profitable to play regular season games, but there’s a $90 million difference between the Dodgers at the top and the Astros at the bottom. Postseason money would put nearly every team on the plus side of the ledger and an expanded postseason would put all but the Astros in the black when it comes to playing games.

The owners might not care about an $80 million difference in regular season profits and losses if every team was doing very well as in a typical season, but with a third of the league below zero per game above, there is more likely to be fighting among the owners on how to divide up revenue. An alternative to having that fight is to keep making proposals like the owners’ latest. Here’s what the last graph looks like under the owners’ current proposal:

Get every team above zero and there’s less arguing between owners, but the ask also means a decrease in player salaries by a billion dollars from what was agreed to in March. When talking about profits above, this isn’t to say these are teams’ overall profits and losses. There are considerable fixed costs that owners are dealing with at the moment. But the analysis above is useful for comparing the revenue generated beyond player salaries and whether teams are making or losing money per game depending on the plan. Under the owners’ proposal, all teams make a good chunk of money on the regular season and then split less in the postseason as some of that money goes to players. Under the March agreement, MLB still makes money beyond what they are paying the players, but the amounts vary greatly by team and some teams might not make money by playing the regular season games, instead needing to rely on postseason money to turn a profit on playing this season.

Ultimately, the owners might have lost about a billion dollars in expected revenue from a half season’ worth of games coming off the pandemic compared to what they could arguably expect in the March agreement. They’ve now made two proposals that place nearly the entirety of that burden on the players and the most recent offer asks the players to assume the risk of no postseason so that the owners can turn a billion dollar profit in the regular season. The players can continue to offer an expanded postseason or potentially more salary deferrals, but there is little compelling the players to move from the expectations of a 48-game season making pro-rated salaries. There looked to be a $325 million gap that needed closing before the last offer, but the owners took it a billion dollars in the opposite direction with this offer.