MLB Owners’ Latest Offer Even Worse Than the Last One by Craig Edwards June 8, 2020 Prior to today, MLB owners had made one offer to the Major League Baseball Players Association to resume the season, one that included a renegotiation of the pro-rated player pay agreed to back in March. That proposal, made on May 26, was for 82 games and included about $1 billion in pay cuts from the March agreement. The offer seemed to unite the players rather than divide them, and five days later, the MLBPA proposed to play 114 games with expanded playoffs over the next two years. MLB has floated a 48-game schedule at full pro-rated pay, but never made that offer. Now, more than a week after the players made their proposal, the owners have responded with a proposal that’s somehow worse than their offer from two weeks ago. As Karl Ravech first reported, the owners made an offer for 75% of pro-rated salaries for 76 games. He noted that the deal came with playoff pool money and that draft compensation for free agents would be eliminated. Jared Diamond reported that players were only guaranteed 50% of their pro-rated pay and would need to complete the playoffs to receive the rest. Diamond further reported that 20% of the $170 million advance would be forgiven. While the free agent compensation issue isn’t nothing, given the likely market climate this winter and the potential reduction in qualifying offers to begin with, it’s not clear how much this will actually benefit players. Overall, this offer is likely to be another unfortunate setback in the negotiations between the players and the owners, as it guarantees players less money than the owners’ other offer and pays them no more money upon completion of the playoffs. Here’s a quick comparison of the 82-game offer with heavily decreased salaries compared to the 76-game plan with 75% pro-rated pay upon completion of the playoffs. The numbers include around $200 million in mostly fixed costs for player buyouts, pro-rated signing bonuses, and money still owed to players who have already been released; the per game amounts for pro-rated pay come from Jeff Passan’s piece last week: MLB’s Latest Proposal to Players Proposal 75% Pro-rated-76 G High-Salary Cut-82 No Playoffs $1.17 B $1.25 B With Playoffs $1.65 B $1.45 B On the one hand, the players have the opportunity to earn about 14% more in this proposal than the the first one. On the the other hand, the players are asked to assume more risk that the postseason gets played. They risk $80 million to get potentially $200 million. Whether it’s worth risking 6% of guaranteed pay to get a potential increase of 14% is up for debate, but given that the last offer was deemed a massive insult, it’s hard to see much progress here. The two proposals above aren’t the only ones we’ve heard about. Let’s include the proposed 50/50 split that was floated back in March, as well as the pro-rated pay option over 48 games. MLB Offers, Real and Rumored Proposal 75% Pro-rated-76 G High-Salary Cut-82 50/50 Split-82 G 48 G Pro-Rated No Playoffs $1.17 B $1.25 B $1.04 B $1.43 B With Playoffs $1.65 B $1.45 B $1.44 B $1.43 B It is worth noting that including an extra round of the playoffs increases the number of playoff games considerably. Under the current format, there are between 26 and 43 playoff games. Making the Wild Card round a best-of-three play-in series takes the number of games to somewhere between 36 and 59. That’s a significant number of games added and a potentially very large payday that would need to be negotiated with the union. In exchange for a lower guarantee, the owners have essentially offered the players the extra Wild Card television money that they wouldn’t be able to get in the first place unless the players agreed to it. A pro-rated pay, 48-game schedule guarantees players more money than the latest proposal and provides the owners with no extra playoff money. If that really is the owners’ base proposal, it’s hard to see the current proposal as better. Players are being asked to play 58% more games for under 20% more money. MLB’s own numbers show an estimated $980,000 in TV revenue per game, with an additional $55,000 in other revenue above what it costs to stage the games. For those 28 extra games, MLB owners will make $435 million in local revenue, $177 million in national television revenue (assuming it is pro-rated), and another $144 million from other central revenue sources. In exchange for that extra $756 million in revenue for the owners compared to a 48-game slate, the players would receive $250 million less in guaranteed regular season pay, and potentially $200 million more for playing an extra 28 regular season games and a full postseason with an extra round of the playoffs. Even in the best possible scenario for MLB and the players under this deal, the owners get an extra half-billion dollars in regular season game profits plus the three-quarters of a billion dollars in postseason money, while the players only get the value of the extra round of playoffs. And given that the extra round of playoffs is a bargaining chip in the negotiations, it essentially amounts to a giveaway by the owners of something they don’t even have to give. The owners hare taking multiple angles at achieving the same result, but every offer ends up with the players getting somewhere close to a billion dollars less than they would be entitled to in a “normal” half season of baseball with pro-rated pay. That the fallback is a 48-game season with pro-rated pay and standard playoffs is a somewhat good sign, but it also implies the lack of a further agreement and a potentially billion-dollar grievance by the players for MLB’s failure to play as many games as possible under the March agreement. About a week ago, there looked to be optimism when it was thought that the owners would offer pro-rated pay over 50 or so games, but that the offer never materialized. Instead, the deal that came in its place constitutes a significant step back in negotiations, after the players took a step forward.