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.

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MikeS
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MikeS

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.

Shalesh
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Shalesh

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.

channelclemente
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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.

martyvan90
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martyvan90

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…