MLB’s Latest Proposal to Players Hardly Looks Like a Winner
The clock is ticking on Major League Baseball’s return to play, at least under a proposed timeline that would allow for a three-week spring training in June, an Opening Day in early July, and an 82-game schedule that follows the rough outline of the typical baseball calendar, with the bulk (if not the entirety) of the postseason in October. Over the past couple of weeks, the league and the players have attempted to find common ground with respect to both health and safety issues related to the COVID-19 pandemic as well as the financial ones, the latter with considerably more acrimony — so much so that the threat of no baseball in 2020 still looms, even after the owners made a formal proposal to the union on Tuesday calling for the game’s highest-paid players to bear a disproportionate burden of the financial hit.
Via USA Today’s Bob Nightengale:
The plan, three people with knowledge of the proposal told USA TODAY Sports, does not include the same 50-50 revenue-sharing split the owners agreed on two weeks ago that was never submitted to the union…
The proposal instead includes a sliding scale of compensation, guaranteeing players a percentage of their salary during different intervals of the season, while also including a larger share of postseason money. The players earning the highest salaries would be taking the biggest cuts, while those earning the least amount of money would receive most of their guaranteed salaries, with the union determining the exact percentage splits.
Via the New York Post’s Joel Sherman:
One person who had been briefed on the proposal said the expectation is that players due to make $1 million or less in 2020 would be made close to whole on a prorated basis for games played. Thus, if someone were making the MLB 2020 minimum of $563,500 and 82 regular season games (almost exactly half a season) were played, they would receive roughly half their pay, about $282,000.
But players at the top of the pay chain such as Gerrit Cole and Mike Trout would get less. If that were in the 50 percent range — as an example — then Cole, who was due $36 million, this year would receive half of about the $18 million he would be due for half a season or roughly $9 million.
This sounds more like an attempt to divide the union between the wealthiest, most highly-visible players and the rank and file, and early indications are that it has not been well-received. The Major League Baseball Players Association has not formally commented (more on which below), but as Brewers pitcher Brett Anderson wrote via Twitter, “Interesting strategy of making the best most marketable players potentially look like the bad guys.”
Recall that two months ago, MLB and the Players Association announced an agreement that gave the league a great deal of flexibility in its attempt to salvage as much of the 2020 season as is feasible, while also protecting the players against the possibility that the season could be canceled entirely by addressing the question of service time. Under the plan, players were advanced about $170 million in salary — about 4% of the teams’ cumulative $4.27 billion payroll — for April and May. They also accepted an agreement that if the season did start, salaries would be prorated based upon the number of games played.
While some states have begun to reopen as some of their COVID-19-related restrictions have been lifted, the reality is that with no vaccine yet available for the highly contagious virus, any return to play will have to be done — or at least begin — without any fans in ballparks, as has been the case in leagues in Taiwan (which recently began admitting limited numbers of fans again) and South Korea (which is still playing in front of cardboard cutouts, noise-making robots, and cheerleaders), two countries that did much better jobs at containing the outbreak. For MLB, no fans in attendance means considerably less revenue for teams; commissioner Rob Manfred has said that about 40% of MLB’s operating revenue derives from gate and gate-related areas — tickets, concessions, program sales, parking, signage, luxury suites, and so on.
On May 11, MLB’s 30 owners approved a plan that included a 50-50 revenue split with players, something the union has historically fought against, tooth and nail. As The Athletic’s Evan Drellich explained:
Historically, the union has abhorred revenue-sharing arrangements between players and teams, because in every other sport a promise of a salary floor for players comes with a maximum, too — a salary cap. The union would note that owners never share in their profits from selling teams, among other arguments. The sport’s last work stoppage, the 1994 strike, centered on owner efforts to implement a salary cap.
But most germane right now might be the union’s position that player compensation for 2020 need not be reduced further following a March agreement in which the players agreed to prorate their salaries in a shortened schedule. The Players Association likely would see any attempt to adjust the economics this year — be it via revenue sharing or another method — as an attempt to help only owners’ bottom lines, not players’.
Despite the owners’ approval, the plan was never formally presented to the players because it was clearly a nonstarter. As MLBPA executive director Tony Clark told Drellich and Ken Rosenthal, “This is not the first salary-cap proposal our union has received. It probably won’t be the last… That the league is trying to take advantage of a global health crisis to get what they’ve failed to achieve in the past — and to anonymously negotiate through the media for the last several days — suggests they know exactly how this will be received.”
Shortly afterwards, MLB presented documents to the union regarding the financial implications of playing without fans, which according to a subsequent Associated Press report included a projection of $640,000 lost per game played without fans ($4 billion total) and 89% of all revenue going to players. But as our own Craig Edwards illustrated, those numbers weren’t all they were cracked up to be. The whole article is worth a read, but among other things, Edwards noted that the losses did not include MLB’s estimate of central revenues that get distributed to teams (around $1.35 billion), but did include deferred amateur draft bonus spending ($425 million). He also noted the potential for discounts to regional sports networks — nearly half of which are at least partially owned by teams — flowing back to clubs in a manner not considered baseball revenue. Baseball Prospectus’ Rob Mains, a former Wall Street analyst, poked many a hole in MLB’s presentation as well while noting that its various issues “portray MLB as sloppy, ignorant, and/or deceptive… You can get away with this sort of thing if you’re doing PR. It’s unacceptable in a negotiating document. The presentation that AP reported is full of omissions and misinformation. It’d be rejected by the professional investors I knew.”
(Additionally, here it’s worth remembering the words of former MLB CEO and president Paul Beeston, who in the late 1990s boasted, “Under generally accepted accounting principals, I can turn a $4 million profit into a $2 million loss and I can get every national accounting firm to agree with me.” In other words, even if all of the numbers are above board, it’s easy for the owners to conceal their profits and cry poor.)
While the union points to the March 26 agreement as having settled the matter regarding salary reductions, the AP report says that the deal “is contingent on playing in front of fans at regular-season ballparks.” Given that won’t be the case, the agreement committed both sides to “discuss in good faith the economic feasibility of playing games in the absence of spectators or at appropriate neutral sites.” It’s against that backdrop that MLB has presented this latest proposal. Along with his colleague Jesse Rogers, Jeff Passan laid out what the sliding scale would look like in a report yesterday for ESPN:
The formula the league offered, for example, would take a player scheduled to make the league minimum ($563,500), give him a prorated number based on 82 games ($285,228) and take a 10% cut from that figure, leaving him with a $256,706 salary.
The scale goes down as salaries go up, with every dollar:
- $563,501 to $1 million paid at 72.5%
- $1,000,001 to $5 million paid at 50%
- $5,000,001 to $10 million paid at 40%
- $10,000,001 to $20 million paid at 30%
- $20,000,001 and up paid at 20%
Under a schedule such as this, the top paid players, such as Trout ($37.7 million according to RosterResource) and Cole ($36 million) would be paid less than a quarter of their full-season salaries (or less than half of their prorated ones, though for clarity I’ll stick with the first construction). Trout, again per Passan and Rogers, who would “make $19,065,843 on a prorated basis over 82 games, would have a base salary of $5,748,577 — though players would be paid for only games played. Trout could make upward of $2.5 million more under the proposal if the league completes the World Series.” As Passan and Rogers noted, 65% of all major leaguers make less than $1 million, an imbalance that has the potential to set off infighting among the players.
While this proposal does bear some resemblance to a progressive taxation scheme, the question that needs to be asked is why it’s the millionaires, whose careers have limited windows, bearing the brunt of the economic impact instead of the billionaire owners for whom annual profits — and for MLB, which has seen revenues grow for 17 straight years, there have been a whole lot of those — and losses pale in comparison to escalating franchise values. That’s without even considering the disproportionate risk the players are assuming by returning to play amid the pandemic. It’s not just their livelihoods that are at risk, it’s their lives. They can’t write those losses off.
Per Sherman, MLB’s proposal does call for players “to receive a financial bump if the postseason were played to conclusion, since MLB receives its largest share of national TV money from the playoffs.” Per Passan and Rogers’ report, that amounts to a $200 million postseason bonus pool: “$25 million for the completion of the division series, $50 million for the league championship series and $125 million for the World Series. A significant amount of the postseason bonuses would go to higher-paid players, with minimum-salaried players receiving $5,512.” According to the AP report, the postseason brings in $787 million in additional money; via Nightengale, that “would be inflated to about $1 billion with the postseason format expanded to 14 teams instead of 10.”
This proposal hasn’t been greeted with enthusiasm by the union. Also via Sherman:
The MLBPA says the proposal involves massive additional pay cuts and the union is extremely disappointed. The union also says the sides are far apart on the health/safety protocols
— Joel Sherman (@Joelsherman1) May 26, 2020
The union is not commenting on if this is a dead end to negotiations on this concept or if there is room to bargain.
— Joel Sherman (@Joelsherman1) May 26, 2020
Unfortunately, the delay between the owners’ vote on the 50-50 scheme and the formal arrival of this much different looking proposal has run precious days off the clock, quite possibly by design in order to pressure the players into taking any deal that will get the season underway. The union, which will share the plan with the players, will quickly have to decide whether this is a framework that allows room for negotiation or whether it, too, is unworkable. It’s possible, for instance, that the players could counter by setting higher percentages than the above, ones that still represent reductions from the prorated salaries, but with a significant amount of the money deferred. Here it’s worth noting that for the amateur draft, the current plan calls for those who sign to receive a maximum of $100,000 this year, with 50% of the remainder payable on July 1, 2021 and the rest on July 1, 2022. For the players making higher salaries, the money could be deferred across longer timelines, perhaps even veering into Bobby Bonilla territory, as the New York Post’s Ken Davidoff suggested.
Beyond haggling over the prorated salaries, both sides could seek concessions in other areas. The latest AP report suggested, for example, that players could propose a longer season that would include more doubleheaders and thus a higher starting point for prorating; that they could propose suspending the luxury tax for 2020 and ’21 to give higher-revenue teams more money to spend; and that they could propose that lower-revenue teams receive additional competitive balance picks in the draft.
Right now, however, all of this has a very 1994 feel, with two entrenched sides playing chicken as the clock runs down. At the moment, even without considering the various needles that need to be threaded with regards to the health and safety protocols, the possibility of a 2020 season may be slipping away.
Brooklyn-based Jay Jaffe is a senior writer for FanGraphs, the author of The Cooperstown Casebook (Thomas Dunne Books, 2017) and the creator of the JAWS (Jaffe WAR Score) metric for Hall of Fame analysis. He founded the Futility Infielder website (2001), was a columnist for Baseball Prospectus (2005-2012) and a contributing writer for Sports Illustrated (2012-2018). He has been a recurring guest on MLB Network and a member of the BBWAA since 2011, and a Hall of Fame voter since 2021. Follow him on BlueSky @jayjaffe.bsky.social.
This was a dick move by the owners to try to divide the union. I hope the union holds together for nothing short of prorated salaries. “Please, risk your lives to enrich us…but please also take enough of a pay cut while doing so to ensure that our revenues are not too thin”
While I agree that was an attempt to divide the union, I’m not sure that straight proration is the right answer either.
The firm I’m at instituted a pay cut during these times, and we staggered it based on pay.
The lowest paid people at our firm saw no pay cuts at all, while the people at the partner level took substantial pay cuts. This was done in the interest of not creating even pain when it comes to dollars, but even pain when it comes to impact.
A pay cut for an administrative assistant who’s living paycheck to paycheck is significantly more painful than a paycut to one of the partners who will see approximately zero impact to their lifestyle.
Personally, I’m very happy that my firm chose this path.
My employer (federal gov’t) handled this perfectly. I (and my colleagues) have been paid full salary (including benefits – even accruing more vacation and sick leave) while we have been home not working at all since St. Patrick’s Day… with no end in sight.
Why can’t MLB do the same? Full salaries, full benefits, even if no games are played?
If it works for government employees, why not have everybody on the same plan???
Please tell me this is a joke.
The federal government has, for now, functionally unlimited resources. Private businesses cannot print money. They cannot borrow without limit. And they cannot tax the rest of the public, under pain of imprisonment.
Don’t worry Mr. Schill, the MLB is not your mom and pop private business and will gladly tax the public ASAP
I could totally see the current leaders of the executive branch of the US federal government redirecting covid-19 relief money towards professional sports leagues to cover any real or fictional losses. It seems to be the chief executive’s highest priority to get sports running again, and while it wouldn’t be legal, that doesn’t seem like an insurmountable obstacle.
Yes – meant for humor. But it is true.
There is going to be a split between government employees (full salary and benefits to stay home) and private sector (many people are completely out of luck) if the shut downs keep up much longer.
I am actually earning vacation time (1 full day every 2 weeks) and sick leave (same) plus full benefits and salary… And I have done no work in almost 3 months. This is absurd.
Wow, there are jobs with sick leave??
I’m skeptical that you aren’t trying to gently stoke some anti federal govt flames here. Specifically, the perceived private sector employee vs federal govt employee split. This would make more sense if there weren’t 40 million unemployment claims. If anything, the friction is people who have been working this whole time, sometimes at great risk to themselves/their families, against the rest. Perhaps ironically, many of these kinds of jobs simply do not have benefits.
While the teams don’t have unlimited resources, the owners absolutely can borrow extensively, and with extremely low interest rates. They just don’t want to.
Besides trying to divide the union, they’re trying to make public enemies out of their biggest stars. Another short-sighted move by MLB.
Way to uncritically adopt the author’s take.
Another way of looking at it is that it makes things easier for the guys who actually need it. Guys making 500K have only been making that for a year or two, and they’ve bought houses, etc. based on that. Guys making $5 million+ have already been in the league several years and (if they’re at all competent) have money put away.
The players are already divided, and they themselves choose to be. The guys who are REALLY hurting are the minor-leaguers, who were counting on making their 20 or 30K to survive. MLBPA could easily ask that the owners guarantee that MiLB players be taken care of as part of a deal. But that’s not even on their radar.
The owners are selfish. That doesn’t make the players not selfish.
Why the actual fuck, and I cannot emphasize this enough, would I take the side of the billionaire owners keeping money owed to the players who would be putting themselves at grave risk playing games while the owners take (checks notes) no risk at all?
This is not an issue of minor leaguers vs. major leaguers. It’s major leaguers vs. owners.
The MLBPA does not include minor leaguers, and that is a totally different problem than the one I addressed.
Perhaps it didn’t occur to you that I might agree with the author in addition to being able to think critically for myself? Go kick all the rocks
The fact that you feel the need to “take sides” is very telling.
A more realistic approach to life sees two parties in conflict and considers the possibility that they’re both assholes. Or maybe neither is, and they just have competing interests. A childish approach is to assume that one has to be the good guy and one has to be the bad guy.
There is nothing stopping the MLBPA from seeking protections for minor leaguers if they chose to, either in the current negotiation or in any other ones. Not saying they have to or should; just that it’s an option they’ve chosen. The owners benefit from minor-leaguers not being in the union. MLBPA has gone along with this, to the benefit of both owners and players already in the majors.
Ergo, “the players” are already divided, and always have been.
You have no idea what you’re talking about. A union can’t bargain on behalf of non-bargaining unit members. They can only bargain on behalf of the defined bargaining unit. In order to define the bargaining unit, there are laws that surround that selection process. Right now, it is literally illegal for the MLBPA to bargain on behalf of minor leaguers. Have a seat.
You think minor league baseball players make 20-30k per year? That degree of overstatement makes it clear you don’t really have any information on this subject, but do enjoy hearing yourself talk.
This proposal is a slap in the face to the players but also the American people. What a hypocritical proposal from these slimy, prooooobably not actually human pieces of scum…
The worst part is their schills will make sure the increasingly lost public stay on the owners’ sides – my favorite half assed tactic that works is painting billionaires v millionaires as a fair fight – and will continue to do so even as they rob cities blind for billions after this pandemic for private sports entertainment complexes (partially so they can claim the majority of revenue is not from baseball)
This is so insane to watch, no way these kind of actions or even possible actions are isolated to baseball under cover of COVID
I’m hoping there will be more news articles this time around portraying this for what it is, a shakedown by billionaires, being leaked to the media, and attempting to divide the players, rather than an honest effort to meet somewhere in the middle.
Problem is they own the news. If the media could be expected to help we’d neeeeeeever hear the end of public funds going into private sports enetertainment. At this point I’m pretty sure every team in the NFL has a free stadium for instance as does every daycare on up in many states. I guess some of that blame goes to the sated public not caring to be bothered because season 3 of Ozark is so good and Tiger Joe Guy is caaaraaazzzy zany during the downtime between the increased work hours plus the chilren love it and they’re leverage…
These are some wild ass times, where is it all going?!? Probably alot of people dead and the rest too terrified to do anything but prop up The Economy
GD I need some sunshine
Only issue with your take is that the players have not made any kind of offer. I know the players don’t want to negotiate against themselves but there is little reason for the owners to operate a season if they truly are going to have substantial losses by doing so. They own the assets with a much longer time-frame/career than the players involved. They can wait until next season (or longer) if it financially is in their best interest. The union being so steadfast against a cap for this season will probably have to go if there is going to be a season. If the players are willing to have a revenue share agreement for this season it will work out. The owners will have to/should give more than they are offering now with a lot of upside to the players if revenues are better. Another problem is not all ownership situations are the same and the owners will need to solve that on their end. Some or many of the stars will not play for pennies on the dollar. They value their health and family too much to do that.
My guess, to get it done the players will have to agree to a revenue sharing proposal. The owners will have to give more of the revenues than they are currently proposing plus most all of the upside. Owners are going to have to guarantee that no owner gets hurt more than any other owner. Players will have to decide how to split the revenues.
“there is little reason for the owners to operate a season if they truly are going to have substantial losses by doing so.”
How did revenues look in between the ‘94 strike and McGwire/Sosa in ‘98? You’re overstating owners’ position because fans will penalize the league if there’s no season due to dollars and cents, which in turn weakens franchise valuation over a longer term.
Now it could be argued the owners are negotiating in bad faith. If i was the players union, first off i wouldn’t even respond to this as it isn’t even a workable deal. Secondly, id walk back the first agreement of 50/50 pay where if they play half the games the players will take half the pay, that deal is no longer available.
That agreement is no longer on the table, regardless if it was already agreed upon. I would say fair enough, we will just keep owners on the hook for the full amount that they are contractually obligated to play or we just won’t play at all this year.
50/50 deal that the MLBPA agree to, frankly they didn’t even have to agree to do anything contractually, that deal is already agreed upon is a fair deal….take it or leave it owners. Its on the owners.
Easy call for the owners – no season with that stance. See you guys when it is safe and fans can come to the game. Free agents next year, good luck.
its amazing and really sad to see how many leaks to the press that the mlb owners and commissioners office let out to paint the players in bad light. kind of disgusting to watch in real time and see things first on twitter before the MLBPA has ever even seen them. Like watching a movie to see this played out in public!
So, we, the public, build these awful owners beautiful stadiums and are, by and large, willing to take elevated risks of outbreaks to have baseball. The players are willing to risk their health to play, but we might not have baseball because the owner’s want to milk more money from the players? I’m certainly not a lawyer, but If the players are willing to play and the governments are willing to let them play, aren’t the owners them in breach of contract?
So… the owners certainly look bad here. Though in their defense, this is one of the least-objectionable approaches they could have taken to reducing player salaries, in that it spares already-underpaid young players from further reductions. Which is akin to saying they’ve offered up a particularly well-prepared turd sandwich, I suppose.
Has anybody run the numbers yet to figure out how total player compensation under this proposal would compare to the 50/50 revenue sharing? I wouldn’t be at all surprised if the owners actually slashed salaries even further under the guise of “giving in” to the players.
Anyway, I agree the union should hold out for pro-rated salaries with no reduction. Given the health risks, the union might also want to negotiate a framework for players who feel unsafe to sit the season out.
If your goal is to make a mutually beneficial deal with another party, you look for areas of agreement. If your goal is to defeat them, you divide and conquer. When the owners chose the latter, they clearly revealed their endgame and intent.
That said, I’m sadly unsurprised that a bunch of debt-addicted rich guys who hired their aggressive union-busting lawyer (Manfred) as their mouthpiece chose the route of trying to break the players union rather than find common ground.
These F.U. proposals, to me, directly call into question whether the owners have any good faith desire to hold a 2020 season — maybe their plan all along has been to start the new CBA negotiations now and hope the players crack under the pressure.
Certainly this could be true. I am sure there are many owners who would push your scenario above. It is tough with 30 ownership groups in something this big and with so many moving parts. I could see where the ownership groups don’t think they can get agreement to play among the owners so lets bust the union. It could be.
Seems like the simplest solution is to agree to a split of revenue, and let the players union decide how progressive they want to be with how they split it up.
Were I the union, I’d point out that the owners should be indifferent to how the players divvy up their slice of the pie.
If I were the union and had any faith at all that the owners were accurately reporting income, I might agree to that. But without transparency, that just gives the owners license to give the players 50% of whatever they feel like.
Actually, it’s not so much that the owners are lying about revenue as that they’re structuring their businesses so that many revenue streams aren’t included in what they would split with the players. But it amounts to the same thing, in that “revenue” ends up being pretty much whatever the owners say it is and far less money than they actually earn from owning a team.
That is called a salary cap, and it will never happen.
Don’t scare Chris Davis like this! What if they divide it by WAR and he has to pay money in!?
This would be ideal. Revenues go up each year so would the players salaries would be a 50/50 split.
The issue though is revenue accounting scam methodologies that these teams employ to show more losses than they actually incurred and methods to keep MLB teams EBITDA low.
Several methods the deploy, but the obvious one is the owners have their MLB stadium in a different LLC than they have the MLB teams LLC in. From there, the MLB team LLC leases the stadium from themselves (same owner) in the diff LLC. This creates the effects in the books that shows the MLB team LLC look like it has a huge monthly lease expense lowering the MLB teams EBITDA drastically. Win win for the owner, but the players wouldn’t see that revenue as it hides it from them.
This is one of many ways they lower revenue on the books to keep it from the players. The other is in the benefits…they drasitcally over estimate the value of benefits.
I have said this every time a proposal like this has come out, and it remains true: If I’m the union, what this sounds like to me is that the owners are desperate. I would put a very, very high price on making any sort of concession beyond prorated salaries–they would have to give me (if I were the union negotiator/leadership) some really sweet financial concessions starting in 2021. Like doubling the minimum salary.
This is how you make a deal. You need help now? Okay, but you give up something later. Something really good.
No matter what comes of this, it is definitely going to have repercussions when they sit down to negotiate the next CBA in less than a year and a half.
We’d need to know how desperate the owners are. If Revenues are down 50% by halving the number of games and then another 40% with no audience and MLBPA takes 75% of the remainder, are owners better or worse off by playing a partial season? If they’re worse off as they say, then there won’t be any season unless MLBPA agrees to concessions to drive their 75% closer to 50% or to whatever number owners break-even plus earn enough profit to cover their cost of capital.
Fangraphs writers keep adding red herrings to these arguments — owners already enjoy substantial asset appreciation so they should absorb losses, or cities finance stadia so owners should absorb losses (owners already pay rent to these cities), and melodramatic hysteria about Covid’s effects on extremely athletic 25 yo’s (“It’s not just their livelihoods that are at risk, it’s their lives.” If that’s true, why play?).
The simple calculation here is are Owners better off by playing the season or not. Until the “not” is eliminated, there won’t be a season. Owners may be showing bad faith by negotiating through the media, but Fangraphs’ idea that MLBPA need make no concessions to make up for the 40% of foregone revenue resulting from no audience is ridiculous.
I have some real questions about whether the owners are at that point–the math doesn’t quite add up. In 2015, reports were that they made about $6 billion in revenue from media deals, although I’ve seen numbers as low as $4.2 billion. Player salaries would have totaled $3.55 billion had the season been played. And there are other expenses too if the season gets played that wouldn’t be done otherwise. The media deal would have to be at the low end and/or the other expenses would have to be extremely large for expenses to top revenues.
And on top of that, the emphasis the league has put on finding a way to play without fans suggests that this is not something that they’ve been worried about for a long time. The observed behavior doesn’t line up.
What the observed behavior *does* line up with is a few owners not making a profit either way. If the league has been pushing for reopening and then some owners start freaking out over losing money, that could push the league to try and extract some concessions for them. I don’t know what the sway of those owners is, but also that means other teams would definitely be making a substantial amount of money. Knowing those internal politics are probably the key to figuring out what their walk-away point is.
I get this, but that being said, in normal times, if a team looks to be in a position to lose money, they can’t just refuse to play and then refuse to pay their players. They are under contract regardless of whether or not their owner wants them to play. If a team’s stadium burned down and they had to forfeit all there home games, they’d still have to honor their contracts. The owners bear the risk. How is this any different? I think the players should be entitled to their entire contracts. (No idea what the law is, but this is what I’d make it say if I was king and I’d make Mike Trout and Mookie Betts Orioles). I think the owners should be ecstatic if they can get away with paying the players prorated salaries.
Insurance would cover the fire (or at least some large amount of it). Almost all insurance specifically rejects pandemic as a legitimate reason for a claim.
Really? There is definitely such a thing as event insurance, and a few do cover pandemic-like things. I wouldn’t know what sort of insurance MLB has but I would think it’s open question whether this is covered.
Most business interruption policies exclude pandemics as a cause. Normally, an organization would need to purchase a rider to cover specific issues like pandemics.
There’s a possibility that a court would view the events as a “force majure” that makes it impossible to fulfill the terms of a contract, especially since part of the losses are the direct result of government orders. I’m not sure how that would play out in court. And I really don’t want to find out — because there’s no way the case would be resolved this year, and then the 2021 season would be in jeopardy.
MLBPA already accepted $170M in lieu of their April & May salaries. Foley & Lardner adds the following:
In fact, words and phrases like “force majeure”, “act of god”, “pandemic”, “epidemic”, or “virus” are not included in the MLB CBA. However, paragraph 11 of the MLB’s Uniform Player’s Contract (UPC) provides:
“11. This contract is subject to federal or state legislation, regulations, executive or other official orders or other governmental action, now or hereafter in effect respecting military, naval, air or other governmental service, which may directly or indirectly affect the Player, Club or League and subject also to the right of the Commissioner to suspend the operation of this contract during any national emergency during which Major League Baseball is not played.” (emphasis added)
Thus, when President Trump declared a state of emergency on March 13, 2020 in connection with the COVID-19 pandemic, Commissioner Manfred effectively had the right to suspend immediately all player contracts, including any payment obligations of the clubs thereunder, indefinitely for the period of time during which the state of emergency was in effect and games were not being played.
https://www.foley.com/en/insights/publications/2020/05/collective-bargaining-sports-covid19-mlb-salaries
Fangraphs isn’t saying no concessions need to be made, in fact the article literally states: ‘Beyond haggling over the prorated salaries, both sides could seek concessions in other areas.’ The concessions being asked of the players currently are simply non-starters and it’s completely valid.
‘Owners already pay rent to these cities.’ This is laughable to bring up, not because it isn’t true, but because the rent pales in comparison to the actual cost of the stadium. Owners would just build their own stadiums if they weren’t absolutely jobbing local governments (and you and I the taxpayers).
Also, characterizing the health risk as ‘melodramatic hysteria’ is incredibly ignorant. How many players have young children or elderly parents living with them or how about individuals with elevated risk factors? It’s also not just athletic 25 year-olds either, plenty of players we both know of and don’t have existing health risks such as immunodeficiencies, asthma, and other conditions that lead to heightened risk.
‘If that’s true, why play?’ Uh because at a certain point the financial incentive outweighs the health risk. Would you jump off a bridge for $20? Probably not. What about for $200k? Guess it all depends on the risk and your tolerance doesn’t it?
The concessions mentioned here are deferrals. Over a short-period they amount to no concession and thus a non-starter for Owners and over a long-period they amount to cuts, so what’s the difference with what the Owners are proposing?
Do you know how rent works? It’s always low in comparison to the price of the asset. If you have some specific examples on stadia, go ahead and provide the numbers. I love the “jobbing local governments” line. Why are these governments doing that? Are they stupid? If you had a handle on the numbers, you could answer.
If players have risk factors or have people who live with them have risk factors, they should not play. Most don’t, coronavirus overwhelmingly kills older, obese/diabetic people. Nursing homes are 0.6% of the population and have experienced 43% of the deaths. (Good reason Gov Cuomo shouldn’t have sent infected people to nursing homes.)
So it’s worth it for Gerrit Cole to play for $18M, but not worth it to play for $9M? Want to show your math in the form of an algorithm that all players can use?
Fine I’ll bite just to prove a point.
Deferrals are one potential suggestion in the above piece. I’d be interested to hear why – in your opinion, this is not even something the owners have said mind you – short-term deferrals are a non-starter for owners. And while long-term deferrals would still be a cut, it would theoretically be less of a cut than the current offer, Potentially substantially less depending on the structure. This is how negotiations work, two sides go back and forth with offers and concessions until they find an agreeable middle ground or they walk away.
Deferrals also aren’t the only suggestion, there’s also: “The latest AP report suggested, for example, that players could propose a longer season that would include more doubleheaders and thus a higher starting point for prorating; that they could propose suspending the luxury tax for 2020 and ’21 to give higher-revenue teams more money to spend; and that they could propose that lower-revenue teams receive additional competitive balance picks in the draft.”
‘Do you know how rent works? It’s always low in comparison to the price of the asset.’ I’d like to think it’s clear I’m not comparing a season’s worth of rent to the price tag of a stadium but if that wasn’t clear, it should be now.
As a result, rent is in fact not always low in comparison to the price of an asset. There are renters markets and buyers markets for a reason. Depending on how long one plans to remain in a building rent can easily cost more during that period of time than a down payment plus mortgage and maintenance. That said, this particular point is irrelevant because cities are simply not making the money back on these stadiums in the rent they are charging teams.
Specific stadium examples? Okay here’s one. The Oakland Athletics pay $1.2M to play in the Coliseum for an entire year. The city and county are still paying more than $20 million dollars per year just for renovations made back in the 1990s. (Source is below)
If the city and county have been paying $20M a year and only collecting $1.2M in rent from the Athletics how are they coming out ahead here? The former Raiders tenancy? Concerts? I don’t think so. So you’re right, jobbed is laughable, its worse, cities and tax payers are essentially being lied to at this point and robbed blind.
https://sanfrancisco.cbslocal.com/2020/05/20/oakland-as-refusing-to-pay-coliseum-rent-because-of-mlb-alameda-county-covid-19-shutdowns/
And it’s because governments and elected officials are kind of stupid and certainly short-sighted. the US government is inarguably inefficient and, especially at the local level, unsophisticated relative to the private sector. So the taxpayers funnel all this money into stadiums on the promise of increased jobs and economic activity (the idea of which makes elected officials look good for the next voting cycle), but the reality is most of the benefit that was promised was simply a fun exercise in bad projections. Studies and logic have busted these mythical economic benefits from publicly funded stadiums.
https://www.theatlantic.com/technology/archive/2018/11/sports-stadiums-can-be-bad-cities/576334/
https://www.forbes.com/sites/jeffreydorfman/2015/01/31/publicly-financed-sports-stadiums-are-a-game-that-taxpayers-lose/
‘If players have risk factors or have people who live with them have risk factors, they should not play. Most don’t…’ Where are your numbers on this? Also your statistic on nursing homes is all well and good but that leaves 57% of deaths unaccounted for, that’s more than half! It’s also a pointless distraction from the core issue that a season in any form puts the players, staff, and their families at a greater risk than they otherwise would be. This is not necessarily true for owners who can just watch live feeds from their super yachts out on the ocean (or you know whichever mansion they decide to hole up in).
Gerritt Cole’s economic situation is something we’ll likely never be in a position to appreciate, so yes $18M versus $9M is a substantial consideration. You can put a price on safety and security like everything else and it differs for each individual. There’s no one size fits all ‘algorithm’ for such a personal decision. But hey if you want to take a crack by all means.
And chop a year off pre-arb.
Those would be my two biggest thing I would want to see in a revised CBA if I were the union–arbitration starts a year earlier, and minimum salary is doubled. It would be a tough haul though, so I’d definitely use whatever leverage I have now to get one of them.
Another thing they should do is make 45 days (25% of the season) the minimum amount of time required on the 26-man roster to count as a full year of service. This would prevent teams from manipulating service time to delay arbitration/free agency. Other sports leagues already follow this model, in the NFL if you’re active for four games you accrue a year of service and in the NBA it’s just for a single day!
I don’t understand this… Service time in baseball accrues according to the actual number of days on the roster (or the injured list). It is not done in year increments. What the players ought to propose is that no pre-arb player who does not make the club out of spring training can be called up earlier than June 1. Make clubs decide between not having the young phenom for a third of the season, and gaining another year of service.
Could a middle ground be found using the deferred money idea? Maybe do something like the percentages above, with players at lower end of salary getting full amounts, and then have the higher salaried players receive a percent this year and the difference later (timing of pay out dependent on MLB revenues reaching a certain point of profitability and/or 3 years, whichever is earlier). Could also add a small percent each year to the deferred money to be paid of say 3 % to account for time difference in money.
I think if they deferred it but paid out more that could do it. So it would (a) count against the cap this year but (b) you’d get more deferred money later based on the union’s valuation.
But given how the owners are behaving in this whole thing I wouldn’t suggest if I were the union. I’d suggest something a lot worse for them and let them come back to this.
I basically said the same thing, perhaps a little more confrontationally. Well said. Amazing what nuanced thinking can produce.
I believe the owners already know won’t be a 2020 season, and their real goals are: 1) to turn public Sentiment against the players, and 2) to break the Union by getting lower-$ players to fight against high-$ players.
Most labor unions have members who are all in roughly the same socio-economic group, so collective bargaining is easier. With MLBPA’s members being in such different income and wealth strata, there is a real chance to manipulate them into fighting each other internally more than they fight owners collectively.
I would offer MLBPA a deal where every player gets $1M upfront cash, and a % of profits at the end of the year. A lot of players would see that as a huge raise. But the mega-$ stars would revolt. It would turn them on each other.
There’s definitely still some potential that Covid makes the 2020 season impossible or forced cancellation of games once they resume. And while the owners’ claimed losses from playing without fans are laughable, I’m sure that empty stadiums do cost them something. Between those two factors, I’ve come around to thinking it’s very possible that the owners don’t really want to play the 2020 season unless it’s on very favorable terms.
On the one hand, the owners could play an unprofitable season that’s still at risk of being ruined by an outbreak of covid. On the other hand, they could accept the sunk costs of 2020 and see an opportunity to put a lot of pressure on union going into CBA negotiations. With the threat of a work stoppage in 2021 costing players two years of a very short career, the owners would have a LOT of leverage. And of course, they control the media and win on public opinion regardless.
I think it is narrow minded for the players to arbitrarily reject a salary cap or any intermediate steps but they do have to be very careful with what they accept. They would need to negotiate very hard on the cap, the floor, how those increase over time, the penalties for violating both of them, and (most importantly) how “all revenues” and “all expenses” is figured and who gets to audit the books.
On the other hand, if they believe that they can’t consistently and accurately do the last thing – trust the numbers they are given – then it is reasonable and prudent to make the topic a complete non-starter.
To ask the players to take a sliding scale pay decrease well beyond pro-rated salaries is disgusting. The owners clearly delayed submitting a plan officially to try and force the hand of the players with a “take this garbage or get nothing” solution. I hope the union stands firm and says as much publicly.
If this proposal had been floated for, say the doctors of New York City, and those who are working on the front lines in emergency rooms were proposed to get their salaries paid at the going rate, while dermatologists who do elective surgery were told you have to wait for those big pay checks until the crisis is over, one would say, absolutely. Makes all the sense in the world. That is in effect what the owners are saying. Granted, the owners are dicks. You will get no argument from me there. However, we don’t know how much the television revenues will be, nor can we know what percentage of the normal revenue stream flowing from games will be lost because of no fans in the stands. Four Billion? Maybe not but it has to be substantial. This proposal does not seem outlandish to me, and trying to pay the lesser among us more has appeal that might be applied more widely during this crisis–essential workers, for example, who are literally dying in their tracks to keep our economy going and the rest of us in our warm Wisconsin beds. But it is not surprising that jocks and their courtesans are blind to the logic. It is a battle of the dicks. Give them guns, put them in a room and lock the door. That is the best solution out there. And put the agents in there for damn sure, because they are the ones who will try hardest to sink the deal. They make their money on the big salares, not on the small ones. This hurts Boras more than the owners.
“We” don’t know how much TV revenues are/will be…but the OWNERS DO. Revenues are the whole point, my dude: The owners have been lying about that for decades, and now they want to lie some more and have us all tell the players to believe the voodoo revenue numbers MLB says are for realz this time! How gullible are you.
“Give them guns and put them in a locked room together…” OK, nevermind. You’re not a serious person.
Agree. Agents like Boras are doing a lot of harm to the future of MLB.
I am sure the family of Jose Fernandez wish he never signed with Boras.
The “millionaires vs. billionaires” concept is fake. Many players are not “millionaires” at all.
How many players are at league minimum? And although that is still great money, their careers are only a few years long – after which, they might have few options. Many of them are 1st or 2nd year players, and they have not yet saved a ton of money.
If those players lose a full year of their careers, they might regret it for decades.
Also – in a battle of attrition, the “billionaires” will beat the “millionaires” every time. Team owners have other sources of $ – they were able to afford to buy MLB teams, after all. How many players have viable secondary incomes? Maybe a handful.
A labor negotiation is not supposed to be friendly. MLB should try to break the Union. That is how labor negotiations work.
MLB owners know we will all still watch their games and buy their products when this is over. How many players know we will still throw our money at them in 5 or 10 years? Once they retire, we might still enjoy seeing them at old timers day, but we don’t throw money at them.
Owners know we will return, and ultimately we don’t care about individual players. Our loyalty is to the team. We root for clothing.
“The name on the front is a helluva lot more important than the name on the back.”
“A labor negotiation is not supposed to be friendly. MLB should try to break the Union. That is how labor negotiations work.”
Not always. There are some industries/companies that have a productive, working relationship with their labor union. However, it requires a level of transparency and *enlightened* self-interest that neither MLB nor MLBPA has usually exhibited. It also typically comes when the company/industry has been to the brink of collapse, and both sides face collapse.
The problem is that both MLB and MLBPA are confident that no matter what happens — even if 2020 is cancelled — there will be a season in 2021 and thereafter, and fan interest will return and the pie will soon be just as big.
There are more industries destroyed by unions than have benefitted from unions. Look at the UAW and the consequences on the auto industry in Detroit.
The MLPA should work on behalf of All the players, not the top 10% of earners. They should insist that minimum salary players get 100% Let Trout, Cole get 20% they can afford to take the hit this year
There seem to be two prevalent lenses through which to view this situation, beyond “greedy owners” vs. “selfish players.”
The first lens is a view that baseball management has not even been wholly forthcoming with labor and that all of the negative precedent creates an entrenched reaction of skepticism and mistrust. And that’s a fair lens given the volume of history here. It’s not just 1994-95; it’s collusion, and prior cartel behavior, etc.
But the second lens that others are incorporating is a view of what’s happening for business owners of all sizes right now in the midst of the greatest economic disruption of our lifetimes. Revenues and expenses don’t matter right now; CASH FLOW does and that’s not the same thing. Some don’t care to pick up this lens and look through, or think “screw the owners.” But no one planned for this. What’s happening in baseball is no different than what is happening across the entire economy. A broadened perspective for some might lead to a better understanding.
As far as the Paul Beeston quote, which is getting a lot of play these days, it’s true beyond baseball. So is public financing of business facilities, tax incentives for owners, etc. To look at this with baseball-eyes only is too narrow a lens.
So you just said a lot and came down on “shrug.” Thanks for nothing. Would you consider decades of owners lying about revenue to now be coming home to roost, or is it just “pandemic — shrug!” ? What a waste of a comment.
That’s not what I said, but if that’s what you read then it says way more about you than it does about me.
But the owners could almost certainly borrow a lot of money with very low interest. They have assets (stadiums, branding, ad revenue, etc.) that are easy collateral.
Credit is incredibly hard to obtain right now on reasonable terms, and almost impossible to refinance. This is what I mean when I speak of the broader business environment outside of baseball. Have no doubt, when I say that this is about “cash flow,” that also includes debt covenants and the risk of existing debt getting called.
(Example – those who are focusing on “revenue” and “income” are missing the fact that principal payments on debt can be a major cash flow item. No one is crying for the owners, nor should they be, but no one’s cash flow models assumed a season with no fans, concession or parking revenues either.)
Can we get Mark Lerner and Scott Boras in a room and work out a deferred payment structure that works for the whole league?
I know everyone here is saying the owners’ are terrible and should bear all the losses, and the players shouldn’t budge at all. That’s not a path to the season happening. The players’ main sticking point is that they want to be paid their entire pro-rated salary. Fine. Keep that stance, but be willing to budge on deferred payments.
The owners are cash-negative but asset-rich. We wouldn’t be seeing massive front office layoffs if owners weren’t cash-negative right now. On the whole, owners will lose money this year, but are sitting on assets that appreciate a ton over time, and will be able to make that money back, maybe not in 2021 or even 2022, but over the longer term, and then some.
I’d like to see a counter-proposal from the players where they say, “We want our full pro-rated salaries, but we’ll give the owners free-reign in how they want to defer salary.” Maybe minimum salary guys make full pro-rated salary this year, a certain level of arb/free agent gets deferrals for 1-3 years, high-earning free agents get deferred even longer. Pick an interest rate tied to an agreeable economic index.
Abolish owners. Seriously though, is there a reason sports teams can’t be publicly owned, or at least owned by player collectives? Maybe a split between the players and the municipality paying for the stadium. Sounds crazy but why not think big, especially since it’s become obvious that the owners have no interest in good faith negotiation.
Who would do the “abolishing”? What if owners don’t want to sell?
It’s not gonna happen to MLB but plenty of industries and companies have been nationalized, both in the USA and worldwide. It doesn’t matter if owners don’t want to sell, they don’t have an army and the government does.
The federal government running sports teams is the absolute last thing anyone should want to see. It would be about as interesting as most of PBS is.
Yeah, owners apparently view sports as just another magical money-printing machine. They can go suck eggs. There is a huge market demand for baseball right now and they literally are refusing to provide that because they want to pay their employees less, first. It’s a sick joke.
“…for working people to be free, they must seize control of the means of production.”
By any means necessary – including extreme violence.
Yeah, that’s Marx for you. But that quote is from duBois, and I’m pretty sure that’s not what he had in mind.
I can see the campaigns now. “My opponent will not sign Eric Hosmer or Jake Arrieta. Says we can’t afford it. I say YES, WE CAN!”
This explains the massive debt problems at all levels of government (with a few important exceptions).
“Seriously though, is there a reason sports teams can’t be publicly owned, or at least owned by player collectives?”
If something has no profit potential, it’s pointless. The system just plain works.
Also, be careful with that radical word, “collective”. Collective means communism, and communism is bad.
Brett Anderson’s tweet is maybe the best I’ve seen actually. He’s exactly right. The MLB is gonna turn the Trouts, the Harpers, the Coles into the enemy because a lot of fans wont feel empathetic to their situations at all. Theyre supposed to be the games biggest stars, and soon they’ll be turned into the enemy. Not smart MLB. MLB is not remembering 1994 and the effects of that at all. This is going be extremely ugly.
But – fans all came back after 1994. And we will come back again.
People need something to watch on television. Owners know we will come back and keep throwing money at them.
Some fans, especially young ones may drop the game in favor of the NBA and MLS.
The MLPA is playing with fire. It is stupid to destroy the game to satisfy less than 50 superstars
Part of that is the union’s own fault. In the past, they made it pretty clear that they primarily represented the superstars and their agents, and the minimum-salary players could go pound sand. Tony Clark has been turning that around, and good for him . But work remains to be done. The suggestion being made by others here of pro-rated salaries, where the highest paid players take a haircut, would be a good way to combat that.
If an owner can’t make money selling a popular product with a guarantee of no competition and massive investment returns, maybe it should try selling the team to someone competent.
One of us said this is not an issue between minor leaguers but between the union and owners. In framing it that way we are framing it between those whose salary is in the top 1/2 of 1 per cent of income in the US with those in an astronomically more elite percentage. With no regard to the pipeline that feeds it, those whose salaries are in the bottom 12% of US incomes. That’s perverse and speaks volumes about America’s past-time, its tolerance for PED’s, electronic sign-stealing and who knows what else while vilifying those who shine the light on its corruption. COVID death rates are twice as high in the Bronx versus Manhattan, so very much higher here in working class Chelsea in Boston than the Fenway and the minor leaguers make less than the essential workers who still ride crowded buses to gather our trash, feed us and so much more. Some ancient Chinese wrote about pandemics experiences brought on to restore balance in an unbalanced society. What is more unbalanced than baseball payrolls. Why shouldn’t there be a more livable pay scale for athletic talent that supports and celebrates it rather than sends many promising young players to essential, low-paying jobs, that however honorable eclipse what might have been for them and for us. Can we find a higher aspiration for a game we profess to honor? if not it’s just Ground Hog day, 2004.
Seems to me that the players made a mistake by entering into a good faith agreement to bring the season to a quick pause. By cutting players’ salaries in half up front, the MLB’s new position is that a 50% pay cut is equal to full pay and the players have yet to sacrifice.
I do think that maybe the prudent path for players is to counter-offer with a deal based on deferred payments to the highest-paid players.
Agreed…thats why i said earlier they should walk that deal back and take it off the table since the owners are negotiating in bad faith.
Manfred really is destroying the game.
Can we get that quote from Beeston printed and framed? It’s beyond me how anybody can take MLB at face value when it comes to talking about their own finances. “I can turn a $4 million profit into a $2 million loss” should preface every one of these articles about the owners crying poor.
The players need to get on Instagram and tiktok and start explaining their side to the kidz. Make the owners looks like the greedy turds they are. Grumpy old men will always grumble about players salaries, gets the kids on their side I say.
To me it is crazy to hear that players are going to be paid on games played. Assuming they have much larger rosters, and taxi squads, are teams going to simply not play higher salary players if their salary is more of a sunk cost?
Good piece. Money is fungible–the owners don’t care where it comes from. But here’s a rough illustration. 65% of players make $1M or less. Their starting point would be $500K or less, and let’s further reduce that to an average of $400K under the formula (I know, it’s generous, but go with it). That’s $40M per 100 players. Cole and Trout together earn $72M. Half of that from the previously bargained for concession would be $36M. But the owners are asking them to take roughly $12M total, saving $24M. That pays for 60 of the “65% players”. Expand that out to the 30 highest-paid players in the game, and you’ve probably had them effectively pay for the 65%. When you run a business, your people get paid first, and then you get paid later, if there’s anything left over. Baseball is very profitable in a normal season. Maybe it can’t be this year, but having the players absorbing much of the hit is unreasonable. Yes, there’s more they can give, and maybe they should to make things work, but the Owners ask is unreasonable. These players have limited-in-time careers and their earning power for the next few years will certainly be impacted.
ESPN is desperate enough to air KBO and accelerate airing of The Last Dance. National networks don’t have a lot of new programming on the way, much less live sports programming.
Seems like there’s a giant void there.
Perhaps this is an opportunity to push back against this behemoth. An independent league(s) with national exposure and no MLB/milb to compete with might actually be an attractive investment in this climate.
Maybe some players – at least ones playing out a one year contract – would consider bailing on the league that shut them out of the past few years of revenue growth. Apparently, MLB wants to gouge pay, which nullifies one of the main harms of playing Indy ball over MLB.
At some point, it’s respect over dollars and cents, and since you’re getting a severe pay cut one way or another, it’s about time to give this awful ownership class the finger. This league would get absolutely torched for letting some of its marquee players slip away and botching a 2020 season, all over bad faith negotiations through the press and attempting to gouge cost of labor for the second time in two months.
Baseball owners don’t owe baseball to the public or to players. It’s only fair that they should be able to make 50% of the revenue. Don’t let the fact they’re already billionaires distort the idea that people who own things are entitled to make money from them.
Also, baseball team owners don’t own baseball. They own a marketable brand with the highest caliber talent pool participating consensually/contractually. They don’t own the game. There were all kinds of leagues here, from miners’ leagues to all sorts of unaffiliated minor leagues in less of a centralized, developmental hierarchy structure.
It doesn’t get stated enough, that no one person or entity “owns” a game, and the league we have is a direct result of decades of legal anti-competitive behavior and the natural consolidation that occurs when one entity is given advantages that other competing entities never got to enjoy.
If you just enjoy watching the game of baseball being played there are still an almost unlimited number of options for that (in non covid Times).
For most people, what really makes it entertaining, is watching the best of the best do it. If there are 6 different professional leagues in the US operating under their own rules and schedules…..it’s impossible to get the best of the best on the same field regularly. That’s why we have MLB and no other major pro league.
If your beef is with billionaires in general or monopolies or something, pro sports isn’t a good place to make your case. Billionaires and monopolies are the only viable option (see NHL, NFL, NBA, etc)