COVID-19 Roundup: The Billion-Dollar Question
This is the latest installment of a series in which the FanGraphs staff rounds up the latest developments regarding the COVID-19 virus’ effect on baseball.
MLB Explores Revenue-Sharing
One of the trickiest aspects of opening the 2020 season may not be the direct effects of COVID-19 but instead how to divide up what will be a smaller-than-usual pile of cash. MLB and the MLBPA answered one question last month, coming to an agreement on the service time issues. While this decided some things in the event there is no 2020 season and no revenues to divide, the league is arguing this agreement didn’t conclusively answer what would happen if there actually is a season.
Perhaps the biggest unanswered question revolves around player salaries. While the initial agreement involved pro-rating normal salaries for however many games are actually played, there’s a disagreement between MLB and the MLBPA about whether this assumed normal games with fans in attendance rather than fan-free ones. This isn’t just obscure legalese but a serious roadblock.
In my opinion, teams have very real concerns about league revenues without fans in attendance, more real than the general complaints about revenue in normal seasons. The problem is, owners don’t exactly have a long history of good-faith negotiations with players. It’s not unreasonable for players to be suspicious given the games played by team owners over the years despite players seeing a declining share of the revenues while team valuations skyrocket.
Evan Drellich of The Athletic has reported that MLB is exploring a revenue-sharing agreement for the 2020 season. The contours of such a deal are not clear at this time, but I think that if teams expect players to agree to significant salary cuts, this kind of transparency is absolutely necessary. And that will require open books given the large differences that have come to light in the past between claimed finances and actual ones.
Will Players to Be Able to Opt-Out?
Another unanswered question surrounding the start of the season is what happens to the players who feel unsafe to participate in the 2020 campaign? As a group, young athletes are generally healthier than the overall populace with access to the best healthcare, but individual players don’t necessarily make these kinds of decisions. There are players fighting cancer, players who have had heart surgery, etc., and these things make playing riskier. Players have differing family situations and varying amounts of risk aversion.
Red Sox pitcher Collin McHugh doesn’t have a known medical history, but he does have a wife and two children and doesn’t wish to be isolated from them in order to play baseball in 2020.
“We’re in a situation right now where you can’t make this mandatory,” the right-hander told MassLive’s Chris Cotillo during an appearance on the “Fenway Rundown” podcast. “You can’t tell a guy, ‘You have to come play or else your roster spot is not going to be here when you come back.’ You can’t tell a guy to risk his life and the life of his family and the lives of anyone he chooses to be around to come play this game. There’s probably going to have to be some waivers signed and whatever else you need to have done to make guys feel comfortable coming back.”
With around 1,200 players on MLB rosters, it’s unlikely that McHugh is the only player who feels this way. Jameson Taillon, among others, has also expressed similar concerns.
The NFL Makes Additional COVID-19 Plans
Early on in the current pandemic, the NFL appeared to be insulated better than other sports leagues given that the Super Bowl had recently happened and games aren’t planned to start until September. But with a vaccine unlikely to be available before 2021 — there’s no guarantee there’s one in 2021 or ever — the league has had to leave themselves some schedule flexibility. If the start of the NFL season is delayed, the first four games could happen at the end of the season rather than the start, giving the league until October if necessary to actually begin. The league still envisions a season of normal length — though possibly a shorter preseason — but this could change depending on how things look in three months.
Dan Szymborski is a senior writer for FanGraphs and the developer of the ZiPS projection system. He was a writer for ESPN.com from 2010-2018, a regular guest on a number of radio shows and podcasts, and a voting BBWAA member. He also maintains a terrible Twitter account at @DSzymborski.
I bet some teams would love to get a look at everybody else’s finances. My first thought was that the big market teams that pay the revenue sharing would want to get a look at the small market team’s books to confirm that their revenues are as small as they claim and that they are using the payments in approved ways. But I also think it’s possible that a high revenue team or two may be really good at cooking the books in a way that the A’s, for instance, might find very illuminating. I think teams hide revenue from each other with almost as much zeal as they hide it from the players.
Without an actual baseball season so far, looks like you and Szymborski are knee-deep in conspiracy season. Dan cites an article about Wayne Huizenga’s reporting a loss in operating income after the Marlins’ World Series in 1998 (22 years ago!) to say that Owners can’t be trusted by the MLBPA. Unfortunately for Dan, the MLBPA already trusts the MLB. From Ben Lindbergh’s 2/21/18 article in The Ringer, “Baseball’s Economics Aren’t as Skewed as they seem”:
The figures are provided by MLB and conclude that the Players (including player benefits) comprise about 56% of revenues (MLB players 50% and minors leaguers 6%. “An MLBPA spokesman—after running the numbers by the union’s economists—confirmed that they’re ‘basically accurate.’”
So if the MLBPA has an accurate tally of team revenues (and is working with MLB on what share of remaining revenues to split after attendance revenues vanish), why wouldn’t all teams have accurate tallies of other teams? If you can prove that teams are “cooking the books”, provide a recent (since the 2016 CBA) example as proof. Show your work, show the numbers, be data-driven. Let’s not go through the dumb collusion allegations that Fangraphs was writing about so vehemently 2 years ago again.
MLB has already been found guilty of conspiring and cooking the books to undercut free agency. It’s not like they aren’t practiced at it.
Interesting point. A lot of our mindsets operate on the idea that MLB teams are public companies and should be subject to transparency and public reporting. But the reality is for the most part they aren’t. I’ve worked in corporate America for 35 years all but two for publically traded companies. The privately held company operated with a lot of integrity but wasn’t subject to public accounting rules, was much less transparent, and fewer people in the organization had a firm sense whether we were making money or not.
What would it look like if MLB clubs were public companies? My cocktail napkin thoughts. The leagues ability to gain consensus on rules would be diminished, lawsuits would govern everything, large teams would be less willing to protect the shield, if publically traded, shareholders would focus on returns, and we’d need CPAs to be able to interpret the notes section of the Company Earnings Report. Just some top of mind thoughts, some probably way off base…
With all the precautions that i think will take place I think McHugh will be just as safe if not safer playing baseball than he would doing what he does at home.
As for being separated from his family, I think for the most part players are separated from their family 3 months every year. It looks like they would be separated 3 – 3.5 months in this scenario. Not a big difference. But players should be given the option. If a player decides not to play baseball he gives up his pay and service time for 2020. My guess is McHugh given this option McHugh will be playing baseball this summer.
Interesting, health care workers risk their lives every day and are isolated from their families because they don’t want to infect them and make far less than a ML baseball player. They don’t complain. They suck it up. There is no way ML baseball can require McHugh to play this year.
Thanks for sharing your thoughts. You raised three interesting points. Would he be safer? IDK, opinion aside, none of us know… I think the point is if he doesn’t feel safe he has the ability to opt out. Whether he should have protections is also an interesting question. The seperation from family question is interesting. There is the added burden of playing during a time of pandemic. Should the league implement a rule? Should Congress implement a law regarding seperation from family as a condition of employment during pandemic? The final point you raise is one I haven’t thought about. During normal times, many fans have a sense of resentment toward “pampered, entitled, overpaid, blah, blah, blah” what happens to those opinions as athletes decide what level of risk they’ll assume. My two cents, I think we should be patient as they process what’s going on. They always have a microphone in front of their face ready to capture whatever stoopid thing comes out of their mouth, thank God I didn’t have that in my twenties and thirties… I’m sure Lebron regretted his “not playing in an empty arena” comment, but he made it on March 6, 2020.
Assuming you can get past the verification issues, isn’t the larger question how much it is reasonable to ask the players to bear? What percentage of revenues come from gate receipts and concessions? What reductions, if any are coming from TV money, and how do you adjust for RSNs that are partially team-owned and don’t pay fair-market value? How much of revenues go to overhead and executive salaries? And finally, if the players are going to be responsible for declines in attendance, will there be sweeteners for them in other ways. You can’t start out with the idea that the players should accept dollar for dollar reductions for each ticket, beer, and hotdog not sold. And, how much risk should the players have to assume personally? Do we insist they play, under any circumstances, to make a fraction of their regular pay? What will baseball do if players get sick? I assume they will get paid, but how about the others who were exposed. Finally, what happens if it’s serious? It’s true the young and healthy don’t seem to run a lot of risk, but it’s not zero.
To cover the risk to players , if infected by Covid19, MLB could consider insurance similar to Long term Disability.
We still don’t know the long term effects to the career of a player if infected, so this could address these concerns. If a player wants to stay with his family instead of playing he should forfeit his whole salary for 2020 and the league should add a roster spot to compensate.
Have you read the uniform player contract, especially paragraph 11?
MLB’s authority to suspend operation of players’ contracts is limited to “national emergencies during which Major League Baseball is not played.”
How does MLB suspend or cancel contractual obligations to pay full contracts once baseball is being played?
The contracts say nothing about MLB having authority to add conditions like mandatory isolation in restricted hotels in Arizona. Can MLB legally make isolation a condition for paying on contracts?
If MLB tries this, litigation will immediately commence. Injunctions will be issued. Worst of all for MLB… Civil Discovery rules will require them to open their books to the plaintiffs, and possibly in public trials.
MLB might be better off skipping the entire year than trying to cobble together a 2020 season.
Interesting points. It’s clear that MLB can’t unilaterally impose anything here, which is why they’re making a proposal to the MLBPA. Presumably, many of the “working conditions” issues like testing, quarantine, schedule, playoffs, etc. can be bargained.
I would very much like to hear from a labor lawyer about the MLBPA’s ability to bargain away compensation of individual players, though. As you say, the players have each signed a contract to be paid $X for playing baseball. Even if the union agrees to reduced pay, does that override the player contracts?
I also hope a labor lawyer will weigh in. It would be interesting to know:
Whether MLBPA would need to give members a vote, or whether union leaders can act without a majority vote.
Whether players can opt out of MLBPA membership, and whether individual players can enforce contracts without MLBPA support.
Whether players can have their contracts terminated if they do not adhere to agreements between MLB and MLBPA.
Whether a challenge to MLBPA’s invocation of paragraph 11 can be challenged in court, or whether arbitration is mandated. And whether there is a way to appeal arbitration.
Can MLB and MLBPA add new conditions on player contracts (e.g. isolated hotel living, reduced salaries) under the CBA, or under the MLBPA bylaws and charter. Or would such a thing need to be handled player by player?