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.
Craig Edwards can be found on twitter @craigjedwards.
Thank you! This confirms my longstanding theory that not every owner is going to make money per game, but some are, and that the differences by team could become very large.
I don’t necessarily this changes a lot about what we know about the owners–presumably, they’re unified around the idea that they don’t want anyone to lose money, and at least in one case where the team makes money (the Angels) we know the owner is a hardliner for cutting pay. But, what I do think this shows is that the league is, in fact, going to make money per game in the regular season and that there is no reason for the owners to fight the number of games except that more of them delays getting to the playoffs (where the profit margin is far higher). Some teams are probably going to take a loss no matter what happens because of their fixed costs, and more games is worse for a number of teams, but the owners collectively don’t lose money per game.
FWIW, for those of you who wonder about the numbers here–I’ve been fighting with spreadsheets ever since this started trying to make the numbers add up but I couldn’t, and the reason why is because of the $55K cost per game. I am really glad someone got it right and I can see the results.
Great write up craig.
Oh what do you know….the teams leveraged to their eyeballs have huge expenses they have to pay so now they won’t make any money. As pointed out several of those teams shown losing money will make a huge amount on the rsn they own thats tied to the game but rev not disclosed.
Also the players should be seen as individual businesses too. Trout is set to lose 25$MM in revenue give or take. That leaves him with 5-10$MM in revenue, what if he has 15$MM in yearly expenses?……hed be seen in the chart above as having -10$MM in revenue too.
Everyone cares about the Owners Ebitda, but no one cares about the players EBITDA.
Should be straight up pro ration on per game basis. I could care less about the owners high expenses. Shouldve had stronger balance sheets.
Put it this way: in the midst of the crisis, Boeing was able to raise $25B of debt. And they still can’t even sell their best (?) product!
Macy’s just raised $4.5B. Macy’s.
The owners would rather *not* raise their debt, but if I were the PA, I’d say tough sh&t. If you don’t want to sell debt, sell equity. If you don’t want to do either, thats your choice, and you better have the capital to eat that loss. You shouldn’t go to employees and claw back salary because you don’t want to give up equity.
Public companies floating bond issuance right now are very, very different than private businesses. Also, in the Boeing deal, the collateral has value. I mean, sure, less so than it did before their troubles, but the planes and the parts still have value. Macy’s has inventory. Service businesses don’t have quality collateral for bond issuances. The majority of MLB’s assets are the player contracts, and all of MLB’s revenue streams are contingent on games being played. Service businesses have to pay a very, VERY high interest rate to get debt right now.
But more importantly, loans have covenants, and security terms. No one is going to come in as a “junior lender” right now, subordinate to the other loans already in place, in a business model where the possibility of revenue seems more remote by the day, for any terms other than near-usury. In addition, virtually all debt covenants in place are going to contain a condition that if new debt is issued and that debt is graded poorly, then the existing debt might be downgraded – and, again, interest costs and payments rise, etc.
Raising debt right now is really hard.
That’s only true if you limit “the team” to the on-field part of the organization which is what the owners are arguing. If they used their stakes (or outright ownership) of their RSN, the free real estate they own/manage/develop, the tech infrastructure of MLB.tv they have plenty of assets to use. To say they don’t have any collateral is as disingenuous as the financial picture they’ve tried to paint to the public.
Very few teams own 100% of the RSN. The RSN’s have other owners who may not want to be creditors right now. Real estate often has existing debt on it, meaning new debt would be junior debt and behind the line in collateral terms. These are very, very different times. This is why the Fed had to step in to preserve lending for the economy overall. Even good businesses are having trouble getting credit on historically reasonable terms.
I can’t find the original Fangraphs post, but I think Fangraphs stated in 2016 that only 5 teams owned more than 30% of their RSN. I don’t know current data but found this post here:
https://forum.orioleshangout.com/forums/index.php?/topic/24671-estimated-tv-revenues-for-all-mlb-teams/
Here is the most recent version:
https://blogs.fangraphs.com/lets-update-the-estimated-local-tv-revenue-for-mlb-teams/
You can break it down into a few different groups.
As of last year, the Red Sox, Mariners, Orioles, Blue Jays, D-Backs, and Mets own a huge amount of their network.
The Dodgers own 50% of their network.
The Padres, Giants, Cards, Phillies, Nationals, Angels, White Sox, Yankees, and Phillies own between 20%-30%.
Cubs, D-Backs, Reds unknown, but they have at least some stake.
Its hard to raise $….but not that hard for business with revenue streams of 10 billion dollars a year. its actualy quiet the opposite, fairly easy. If mlb wanted to raise some $ they could get it done with only having to make 1 phone call. More money out there than places to park it for the right asset.
The Blue Jays don’t own their network; their network owns them.
I won’t argue in favor of more debt for really any individual or business, but the point remains there is a difference between ‘can’t raise debt’ and ‘won’t raise debt.’ Without open books we can’t know the amount of debt each team carries, but I feel comfortable saying every team is carrying some level of debt and that for some orgs it appears to be their preferred method of ops.
Until the books are open we don’t know the full picture, but remember Loria’s racket where the team paid he and his son-in-law $50M a year to ‘manage’ the organization. That was considered debt on the franchise. It seems (conjecture!) the Cubs have a similar situation for the Ricketts, but without seeing the books we can’t know.
So sell equity.
i at least understand why the owners don’t want to divide up the revenue themselves at the pro-rated deal. The Dodgers by far stand to make the most profits, and the Astros to take the biggest loss, so if the owners agreed to a more even distribution, the Dodgers would in effect by giving money to the Astros.
Where I live, the Pirates always say they don’t have money for free agents but the graphs show otherwise.
The Mets don’t own their RSN…. they own like 30% of it. Some unholy alliance of DB, Barclays, and a bunch of not very nice PE firms (I think Elliott is in there somewhere but naturally that’s a little harder to find) own the other 70%. Also, they have a 250 million loan due next year, according to google.
It’s almost as if having poor ownership groups lessens the quality of the league.
I understand where you’re getting TV revenue and salaries from.
Then, around $55,000 is added per game for other revenue minus the cost to put on a game.
What does this mean? Are you saying that, setting aside TV revenues and player salaries, the rest of the costs incurred in playing a MLB game is a loss of $55,000 per game? I.E. is this the cost of security, COVID testing, and all other ballpark costs on a game day? Does this include rent for those teams who don’t own their own stadiums?
I don’t know whether or not your analysis of revenues is in the ballpark, but limiting expenses to player salaries and this $55,000 per-game number seems incredibly understated.
Where are you considering interest on debt? People sometimes decry debt but plenty of debt has been used for stadium improvements and bettering the game-day experience for fans. Those expenses still have to be paid even though there aren’t fans in the stands. (This is why Ben’s scoreboard analogy last week was such a fallacy.) And in any event, the debt is there. The cost of that debt doesn’t suddenly get excluded from “net profit and loss” even if someone finds its presence offensive.
Where in your analysis have you accounted for non-player salaries – coaching staff, front office, scouting (though much smaller), administrative, trainers & medical, etc.? Obviously those numbers are way less than player costs but they have to get paid from somewhere. And the teams also have to pay a cut of the league’s central office expenses, etc. Are these costs embedded in the $55k number above?
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.
I literally can’t reconcile the logic of those first two sentences with the last one. Either way, you can’t ignore fixed costs or debt service from an analysis of “profit” and “loss,” What you’ve done throughout this post is compare TV revenue to player contracts, not “profit” and “loss.” That distinction can and should have been made much earlier than the second to last paragraph of your post.
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…
Well, maybe, if you ignore virtually all other costs besides player salaries. Can you imagine if someone trying to analyze the profitability of any other business in America said “here’s the profit and loss of this business based on its revenue and its workers’ salaries… but we haven’t included rent, utilities, interest on debt, etc.” That doesn’t tell me anything about profitability – it’s meaningless. And I say again, you’re being flippant with well established business and financial terms and concepts, and Fangraphs would absolutely excoriate anyone who played as fast and loose with statistical analysis as you are with posting about the business side of baseball.
I’m pissed now, because my entire impression of my favorite website has gone down the drain over the course of the last few weeks based on the way you all have handled this. It’s truly a damn shame.
You are fundamentally misreading this. Those costs happen regardless of how many games are played. This is a per-game analysis.
This is especially important because one of the core questions is whether they actually lose money on a per-game basis. If they play more games, do they make more (or lose less) money?
The 55k is from the owners’ presentation to the players from the original AP piece:
“Player salaries under the March 26 deal average $1.67 million per game for both clubs. MLB projects overall local revenue at $1.23 million a game for both teams and cost at $1.87 million.”
Given 980K for tv revenue from that piece, there’s 250k in local revenue and 200k in costs. That comes out to 50k with rounding, but Passan’s piece does the math and comes up with 54,800, which I noted was 55k.
I put the disclaimer in just in case it wasn’t clear exactly which numbers I was using, though I tried my best to say exactly where the numbers were coming from. All of the revenues and player costs come from putting on games and go away without games. That’s the most relevant discussion right now given the options the players and owners have.
Re: data, how does that square with this:
https://media.sportbusiness.com/2019/12/mlb-data-report-2019/
Also, sometimes the national TV contract revenue as stated includes the postseason take. Example – the $700M ESPN deal in a normal, full season includes playoffs. So does the $525M Fox deal (includes the World Series).
I won’t repeat the point about per-game vs. fixed costs, which has been made. However, I want to address the bloc of commenters that’s very concerned with the owners’ collective debt and overall profit situation. I get that some of these articles could give a more complete picture of the owners’ finances. People in the comments have made some very good points about EBIDTA and debt covenants and how that plays into the owners’ position here.
However, it’s worth remembering that the players aren’t just workers, they have fully guaranteed contracts and rights under the CBA. The owners are responsible for honoring those contracts and paying the players just like they’re responsible for paying back what they owe to lenders. The payments to the players are conditional on games being played, but if games are played, the players have just as much of a contractual claim on the owners as any other creditor.
Many people seem to assume that the players have to renegotiate their contracts for 2020 so that the owners can meet their other obligations, and that’s what I don’t get. Would any other creditor renegotiate if it wasn’t in their best interest to do so? If not, why should the players? In a billion-dollar business, it’s just foolish to sign a contract then not hold the other party to it unless you stand to gain more by renegotiating. Whether the *owners* will make money shouldn’t factor into the players’ decision at all, except to the extent that it affects what will benefit the players.
That said, there are a number of reasons it might be in the players’ collective interest to renegotiate here. Off the top of my head: 1) the owners will actually be better off not playing games at all and paying the players nothing (or playing a minimal number of games), so the players need to come to the table to get paid at all; 2) there’s room for a compromise that benefits both sides by playing more games for more total money but less per-game money (if the players agree that’s preferable, which they may not); or 3) not working with the owners on this will have serious repercussions for the state of the game that will harm the players significantly in the long run. I’m sure there are other reasons I’m not thinking of right now as well.
Any of those are possible, and maybe even likely. I suspect part of the friction in the comments on these articles is that some people take it as a given that one or more of those applies and the players need to make a deal, and others think the owners are just out to screw the players. But knowing which, if any, are true requires more knowledge of the teams’ finances than we have (assuming none of you guys are Bill DeWitt on a burner account, which I’m not ruling out).
But as the party asking to be relieved of a contractual obligation, it’s the owners’ job to convince the players that it’s in their best interest to renegotiate, not the other way around. Which is why it’s ridiculous that the owners are making one-sided proposals, leaking misleading numbers, and trying to spin this as the players’ fault. Everything we’ve seen from them just reeks of arrogance and disrespect for the players, which strikes me as a poor way to treat people that you do billions of dollars of business with each year.
The players, meanwhile, are free to tell the owners that they’re not willing to negotiate, so go talk to one of their other creditors. Or they can demand short-term or long-term concessions in exchange for giving the owners what they want. Or they can accept this proposal or something like it, if they think that will benefit them more. They’ve bargained for those rights, as reflected in the CBA and the individual player contracts, and they would be foolish to give up what they’re owed unless they come out ahead by doing so.
I agree with virtually every word you wrote as regards the players. My main problem is with their Union, which is different. I don’t see many folks that are pro-Owner, but rather folks that believe the Union should honor the March agreement and negotiate. Otherwise, if you had no intention of giving up another dollar of salary beyond pro-rata under any circumstances, the March agreement was in bad faith. I agree with all of the financial reasons that brought the owners to that point; I believe the Union is now acting in bad faith. They’re not required to give an inch. But saying “we’ll negotiate further modifications” in order to secure the March deal when you actually have a hard-line stance to not negotiate further is the definition of bad-faith, and the Union has now poisoned the Labor well as much as Owners have in their egregious past.
Many people seem to assume that the players have to renegotiate their contracts for 2020 so that the owners can meet their other obligations, and that’s what I don’t get.
This is the key for me. I don’t think the players have to renegotiate their contracts. I think the Owners signed the March agreement based on the understanding that contracts WOULD be further renegotiated if there are no fans in the stands, and that the Owners now believe the Union acted in bad faith since they had no intention of ever giving up another dollar of salary. That’s the argument. The Union has major culpability here, even if the players are absolutely not obligated in any way to give up another dollar. Both of those statements can be, and are (in my opinion), true.
Which is why it’s ridiculous that the owners are making one-sided proposals, leaking misleading numbers, and trying to spin this as the players’ fault.
I am an anachronism that believes your word matters, especially on a legal document. The players aren’t required to negotiate. But they said they would, and they should. I believe strongly in the players’ positions that you so eloquently and fairly noted. But I also believe in honoring the deal you signed, and I don’t believe the Union is honoring the terms, much less the spirit, of the March agreement. I don’t believe the players have to accept concessions, but I do believe they indicated in March that they would. To make their May/June position “No negotiations on salary whatsoever” violates the spirit of the agreement if not the terms and is in bad faith.
This is why the Owners posit it is the Union’s fault, and I agree with the Owners in that specific context. The owners knew in March that playing a fan-less season would be untenable for their finances. If the Owners knew the Union wouldn’t uphold their promise to come back to the negotiating table, the owners never would have signed the March deal. Full stop. They would have waited and/or kept negotiating. And that’s about as far as I’ve seen most commenters go, and I believe it’s inherently reasonable.
(I also don’t believe that pro rata salary is any real kind of salary modification. It’s the only common sense answer. When a season is interrupted like this, players should get paid their pro rata salary. That is pure common sense. So when I see people write that the players have already made salary concessions, I roll my eyes at that. The only concession they’ve made is the same concession that most workers in America have made, and it’s common sense.)
In “real life,” I find that most business owners I know (and I am a business owner myself, who worked hard enough to be able to ultimately own my firm) agree with the Owners’ position. Probably because we all have been in situations where someone didn’t honor a contract (here, in the MLB setting, the promise to renegotiate) only to ultimately find the other side intransigent. That’s not to say that I empathize with the owners. But I understand very clearly the financial situation that led them to require the March agreement to contain language to negotiate again, and their resultant baffling reaction to a Union that never had any intention to do so.
I have posted frequently in these threads because I feel that the hard-line player stance is over-represented, some of which is by posters who simply want to either decry capitalism, shame “greedy billionaires,” or generally just post a pro-labor view without any real degree of understanding or care of the actual facts at hand. I have also posted frequently because I feel Fangraphs is promoting those views through incomplete, inaccurate, and/or misleading takes. We get it; you’re pro-Labor. State your point fairly. Posts that start from an answer and build support for it make me question the veracity of the statistical analysis that is your hallmark, because similar approaches applied there would invalidate the work for which this site is known.
I agree with some of what you wrote, but here’s what we know about the agreement to renegotiate: “The Office of the Commissioner and Players Association will discuss in good faith the economic feasibility of playing games in the absence of spectators or at the appropriate neutral sites.”
I agree that looks a lot like an agreement to negotiate. However, it’s ambiguous about what aspects of “economic feasibility” are to be discussed. Is the agreement simply to discuss whether it makes sense to play without fans, or to negotiate whatever is necessary for it to make sense? The owners claim the latter, while the union says it’s closer to the former and that provision was about negotiating playing under non-standard conditions, not for less money. I don’t think it’s a slam-dunk either way, but I can see where you’re coming from.
Where’s the “good faith” from the league on this, though? That implies a certain level of openness, no? Instead, the owners started things off by floating a per-game loss number that, as far as we can tell, ignored a major source of revenue and asked the union and the public to take them at their word that salaries needed to be reduced. From what we’ve heard, they haven’t started a good faith discussion about what’s actually economically feasible, just offered misleading numbers and one-sided proposals. Refusing to take the owners at face value isn’t bad faith by the union, it’s just good judgment.
I think if the owners actually went to the union and had a serious and open discussion about revenues, costs, debts, and what that meant for the game, the owners, and the players in 2020 and beyond (i.e., a good faith discussion about economic feasibility), we would be watching spring training games by now. Probably for less than full pro-rated salaries, even. But that’s got to start with the owners treating the players with some respect and actually having good-faith discussions.
And yes, I’m putting a lot of burden on the owners to start the good-faith discussions here. That’s because their finances are, by design, a closed book. Everybody knows how much the players make and for the most part what they want. If the owners want a good faith discussion, it’s on them to start by stating their position in good faith so the union has enough information to discuss something.
And this is where we’re going to have to agree to disagree. The Union fired the first cannonball – to me, that is fact. Back in April, NY Governor Cuomo made his statement that the Union would have to agree to lower salaries if games are played without fans (based on what the Wilpons told him, so I’m not saying it’s fact, but rather than it’s the incident that brought all this to the surface). And the Union immediately responded with the following quote:
“Players recently reached an agreement with Major League Baseball that outlines economic terms for resumption of play, which included significant salary adjustments and a number of other compromises. That negotiation is over,” union head Tony Clark said in a statement Monday.
And the owners responded with a loud, confused, “WTF?”
“In the agreement reached earlier this spring, the commissioner’s office and the MLBPA agreed that the season would not commence until normal operations — including fans in our home stadiums — were possible,” deputy commissioner Dan Halem said in a statement, going on to cite the provision for future talks. “If circumstances require, we will, consistent with our agreement with the union, negotiate in good faith over a framework to resume play without fans that is economically feasible for the sport.”
And the Union responded to that with a statement that they were not willing to negotiate on salary under any terms. In other words, we don’t believe you that it’s not feasible to play games without fans, AND we’re not willing to renegotiate salary.
If the Union’s position had been “prove the lack of economic viability, and, if you do, we’ll renegotiate,” I think we’d be in a different spot. But we’re not. The Union said “prove the lack of economic viability, but no matter what you show us, we’re not giving up another dollar of salary.”
I’m sorry, but I will always believe – unless new or different information comes to light – that the Union created the stalemate through unreasonable obstinance and unwillingness to negotiate despite the March agreement that they signed. In a negotiation, you don’t give information to a party who requests it but also says they’re not actually willing to negotiate regardless.
I’m willing to agree to disagree on this. Your interpretation is fair, although I think I’ve seen some players call on MLB to justify their position. But I’d agree the union’s proposals have also been one-sided, and it does take two parties to negotiate. Still, the owners haven’t made any effort either. When they could have gone to the players and said, “look, that won’t work, here’s why, let’s talk,” they decided to try to be bullies about it (maybe the players “started it,” but they’re not in kindergarten here). Since the owners are the party with the information that could frame a more productive discussion, I tend to put more blame on them.
I mean, there’s a time and a place for being adversarial, playing your cards close to the vest, and taking a hardline negotiating stance. There’s also a time and a place for acknowledging that you’re in this together and actively looking for a middle ground. It’s clear that both the league and union don’t know how to do anything except the former, which is what makes this extremely frustrating to watch.
There is also a non-zero chance that Tony Clark had no idea what that language meant back in March and has been backpedaling frantically ever since. That would actually explain a lot.
There is also a non-zero chance that Tony Clark had no idea what that language meant back in March and has been backpedaling frantically ever since. That would actually explain a lot.
Bingo.
(And, again, anyone involved with writing or negotiating that horrible excuse of an Agreement should be sacked, or at the very least not allowed near the table again.)
BTW thank you for being thoughtful, reasonable and willing to discuss a difference of opinion. I greatly appreciate it.
Likewise.
“However, it’s worth remembering that the players aren’t just workers, they have fully guaranteed contracts and rights under the CBA. The owners are responsible for honoring those contracts and paying the players just like they’re responsible for paying back what they owe to lenders. The payments to the players are conditional on games being played, but if games are played, the players have just as much of a contractual claim on the owners as any other creditor.”
Right, so they *aren’t* fully guaranteed. They are contingent. Hence this entire negotiation.
Thanks for the updated info. Much appreciated! I think part of issue i have is looking at progress being made in NBA, soccer, etc. towards playing, and then looking at MLB….it just seems like there should not be such a big contrast with MLB vs. other sports. On surface, it would seem owners in other sports are just more willing to lose money than MLB owners to get a season done…but are there more fundamental differences in how the profit math works for other sports than MLB?
I think this is a really interesting question. Why are things so different? Are baseball owners who own a team in these other leagues more willing to “deal”? What would that mean?
The biggest difference in MLB was that the season hadn’t started yet. NBA and NHL players, for example, had already collected a significant part of their salary. If the virus had arrived in August, on the cusp of their seasons, this would have been a very different thing.
For example, if MLB had played its regular season (or 80% thereof) with fans in the stands and was just trying to figure out how to hold a postseason, this would be in a very different place.
The NBA, NHL and many European soccer leagues already had over half of their games played in front of paying fans before COVID-19, so they’ve generated revenue that baseball won’t. MLB owners are trying to recoup a season without paying customers (or keep losses to a minimum). The one thing that still bugs me is the insistance that the performers (players, coaches, trainers, supprt staff) are on the hook of 100% of the health risk, if which we’re still unclear. Maybe it’s because I’m at the highest level of risk from COVID-19, but so are most of the owners.
Good points and other leagues who have already started are much closer to the big payoffs…err… playoffs! A more appropriate comp might be MLS, which seems to be getting much closer to restart and has same timing issue as baseball- summer sport. I wonder what percent of health risks MLS players are taking- or what it is for any of the other leagues. It seems like only place hear this topic come up is in regards to MLB, and not really sure why.
The MLS players are *incredibly* disempowered relative to MLB players, and they got a crappy deal to resume play. But yeah: they’re starting back, with much less to profit from than MLB.
The owners have been trying to divide the players, but I wouldn’t be surprised if the owners were much less unified than MLBPA.
It seems, in a healthy league, they’d just divide the tv revenue such that all teams absorb losses equally. That’s not ideal, but it’s better than not playing.
Really good work. The thing about the owner’s position I find so troubling is I’ll take then at their word, they are going to lose money, but so what? I live in NYC, and a lot of small businesses here are making do with what they can…takeout, curbside delivery, ad hoc bars, limited hours, special services, etc. Most of these places can’t possibly be making anything, but they are staying in touch with their customers, being connected, trying to keep together their staffs with partial hours and wages, even at a loss The Owners don’t seem to care…they are leaning on their TV contracts and sponsorships, slicing employees (even low paid ones) and expecting us to come right back to the bar when they are good and ready to reopen, paying top dollar for what will likely be a watered-down product and a cheapened playoff system.. Owners have no problem putting their hands out, palms up, when it comes to taxpayer-financed goodies and favorable legislative treatment. How about they bridge some of the gap with their players and let us see a little baseball?
Imagine your local small business that you refer to had a deal with its workers. Everyone sat down in March and said, “We don’t know how long this situation is going to last or what reopening is going to look like. So, if we reopen as normal, we agree to pay you the same amount but only for the amount of hours worked. If we have to ask everyone to only work half-time, we’ll pay everyone half their wage. But, if something happens where customers can’t come in the store – which drives our earnings way down – we’re going to have to talk about it further because we’d need further modifications to the deal. Is that fair?” And the workers say, “Sure – that’s fair. We’ll agree to those terms.” Because at that point in time, the concept of not reopening the store to customers feels like such a remote possibility… who can imagine our Country shutting down that way?
And then you get to May and the owner says “OK… that contingency is real… customers won’t be in the store” and the workers say “Screw you! We’re not giving up another dollar of our salary! You’re a rich business owner, and you should have had enough to cover your cash flow regardless!”
And the owner says, “But you said you’d renegotiate if this contingency came to pass!” And the workers say, “You haven’t shown us that we need to, and in any event, there’s nothing you could show us that would lead us to give up another dollar – but please give us the information anyway so we have it handy for future negotiations.”
The workers were never required to give back another dollar. But they shouldn’t have promised to talk about it again if they had no intention to do so. And the Owner would have every right to feel baffled, confused, etc.
Except that the workers in your analogy didn’t agree to “further modifications.” They agreed to a “good faith discussion” about the “economic feasibility” of opening without customers. Which is so vague as to mean whatever you want it to mean.
More importantly, the owner has started this “good faith discussion” by offering numbers that apparently ignore a major revenue stream. I don’t see why he should be baffled at the workers not wanting to engage with that.
You’re being quite obtuse about that phrasing. It’s not at all ambiguous.
Good Faith Discussion = Negotiate
Economic Feasibility = Money
I know what words mean, thank you.
I prefer to believe that “negotiate” can actually mean “discuss like adults” and not “stake out an extreme position, dismiss any other viewpoint, force concessions for every inch you give up, and generally try to bully the other guy into the most lopsided outcome possible.” I acknowledge that it often does mean that, though, and that those tactics can be extremely effective.
But in an ongoing relationship, that kind of “negotiating,” while it might get you good results in the short term, forces to other side to respond in kind. You end up in a situation where each side uses the other side’s scorched earth tactics to justify its own, rational compromise is a sign of weakness, and reaching even the simplest common-sense outcome takes either divine intervention or a lengthy process of posturing and brinksmanship.
I’m sure there’s a parallel in some other aspect of American life, but I can’t think of what it is right now.
They are separate sentences.
“will discuss in good faith the economic feasibility of playing games in the absence of spectators”
and
“the parties will meet regularly to bargain over application of, and any appropriate modification”
The first phrase means that the owners don’t have to commence the season at all if good faith discussions yield an understanding that it isn’t feasible.
The second means that the parties agreed to “bargain” (negotiate) if there are not fans in the stands.
They’re not two requirements of the same setting.
Except in your example this humble shop doesn’t derive the bulk of its revenue without customers coming through the door.
Does anyone know for sure if the owners must be unanimous before submitting a proposal such as this? Could this really be 1 or 2 owners preventing any proposal that would remotely be acceptable to players? This data seems to support that. Also, this really does not provide much hope for the coming CBA negotiations.
Alternatively, is the strategy here to sabotage the negotiations for this year, banking on the players being blamed and providing a better PR platform for the CBA?
It does not have to be unanimous.
I can’t shake that there are a few teams, probably the Mets and Marlins, maybe A’s and possibly a few others, that don’t have the liquidity to play the season as proposed by the players. Then you have the teams that are leveraged (Cubs come to mind) and they’re probably throwing a bit of a wrench in all this too. And thus you get this garbage proposals by the owners.
The, we’ll say, other 22 owners are willing to go along with this because a) they’re a cartel and b) why not because it could mean bigger profits in a few years. All because the Mets are inept and the Cubs are extremely leveraged because they bought up Wrigleyville in order to some how make it less interesting.
I’m spitballing here, so there’s a decent chance I’m totally wrong. But the owners seemingly and actively trying to tank the season doesn’t make sense unless a few teams are in such bad financial shape that not having a season somehow makes sense.
Sorry folks, but I think the season is gone. Learn to enjoy soccer on TV.
I look at how much team value have been appreciating in recent years and can’t help but feel disgust that teams can’t absorb a rough year.
What makes the Dodgers so different from the Yankees, Astros, Mets, Cubs and Red Sox (their big money, big salary peers)? Is it that they don’t own their RSN and instead receive market rate annual payments?
If I understand it, the Astros are going to lose the most under any circumstance so there’s a silver lining.
In my opinion, the FIRST thing the players should do is give up money for this season in order to win it back when they negotiate the next CBA next year.
To clarify: the players should agree to most of the owners demands right now in exchange for FULL TRANSPARENCY; that’s the only way a fair deal gets done. If the players can’t prove what the owners make or lose, their arguments will always be fodder against baseball owners’ financial ramparts.
Once they – and the American public – know how much rope the other side has, they can figure out how tall to make the gallows.