Players Take Big Step Toward Compromise With Latest Offer

On Monday, the owners presented their second economic proposal to the Major League Baseball Players Association, offering to pay players 50% of their pro-rated salaries from the March agreement for 76 regular season games, and 75% of their pro-rated salaries over 76 games if they played the postseason. That proposal was similar to the previous one the owners had made, shifting around roughly the same amount of money and ultimately offering the players less in guaranteed salary. While the players waited eight days for that proposal, it took them just a single day to respond with Jeff Passan first reporting the MLBPA’s response last night.

The players’ proposal includes an 89-game season beginning July 10 and lasting through October 11, a 94-day period. Players would receive full pro-rated pay for those games. The proposal includes expanded playoffs in both 2020 and 2021, and a player bonus pool of $50 million for the playoffs if there are no fans. Players who are considered high-risk for complications related to the coronavirus or who live with someone considered high-risk could opt-out of the season and receive service time and salary, though others who opt out would receive neither. In analyzing this deal, we have several different comparisons to make when it comes to other offers or potential proposals.

The Players’ Prior Offer

The previous offer made by the players included a 114-game season ending at the end of October, expanded playoffs in 2020 and 2021, a provision allowing high-risk individuals and those living with high-risk individuals to opt-out and receive service time and salary, and all other players to opt out and receive service time. The new proposal addresses some significant issues raised by the owners. Owners want to pay players less. Moving to 89 games decreases player pay by roughly $630 million. Owners have expressed concern about playing late into the year. Ending the season on October 11 moves up the end of the regular season by three weeks. Owners want expanded playoffs; that bargaining chip was kept in the recent offer. Owners didn’t want all players to be able to opt out and accrue service time (service time was a huge issue when the sides negotiated the March agreement), and the union response acceded to those wishes. That doesn’t mean the offer is palatable to the owners, however.

The Last MLB Proposal

When it made its last proposal, MLB offered just 50% of the pro-rated salaries from the March deal for 76 regular season games, and up to 75% for completing the playoffs. A 76-game regular season would pay the players $957 million in game salaries, with the playoffs pushing the total to $1.435 billion. The 89-game proposal at full pro-rated pay would give the players $2.24 billion, with another $50 million for the playoffs. This is where the gulf between the players and owners lies. The difference in regular season pay between the two plans is $1.283 billion; after the postseason is accounted for, the difference drops to $855 million. And when we consider the league’s failsafe, we can begin to appreciate just how bad MLB’s last offer was.

A Short Season With No Deal

There seems to be something of a consensus that MLB’s last resort will be to play a season of around 50 games and pay the players their full pro-rated pay from the March agreement. Evan Drellich and Ken Rosenthal reported the season would likely be 54 games or so. Under a 54-game proposal using pro-rated pay, players would receive $1.36 billion in game salary. That guaranteed regular season figure is $400 million higher than the owner’s last proposal and just $75 million short of the total amount with playoffs. This backstop is a significantly better option for players than the previous offer made by the owners, and it leaves open the option for the players to file a grievance asserting that the owners did not make a good faith effort to play as many games as possible as required under the March agreement. It also lacks any sharing of risk should the playoffs not happen and includes no provision for expanded playoffs and the potentially hundreds of millions of dollars in television rights that come with them. There’s still an $880 million disparity between the two sides, but expanded playoffs in two seasons might provide anywhere from $300 million to $500 million to the owners, and going from 89 games to 78 games would lop off $277 million in salaries. Then the owners barely have to move at all to reach an agreement, particularly when weighing the risk of an expensive player grievance.

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How much money expanded playoffs might be worth is speculative, but consider that ESPN pays $27 million for a single Wild Card game, MLB Network provides $30 million for two division series games, and TBS pays $310 million for between 11 and 18 games, while FOX pays $370 million for 12-22 games. An extra round of three-game series provides an extra 14-22 games, while five-game sets would add 22-38 games. If MLB is going to field 16 postseason teams the next two years, they are going to have a huge inventory of playoff games worth hundreds of millions of dollars. In order to get access to that money, owners must strike a deal with the players.

As for what MLB might respond with, Andy Martino of SNY has reported that owners were willing to offer 75% pro-rated pay. That would be significantly better than the last offer, but it’s not clear the players will move off of the pro-rated pay they negotiated in March.

One thing to keep in mind when discussing the amount the owners are offering, and what made the last deal a step backward, is tying a significant amount of pay to the playoffs on a contingent basis. If the owners are concerned about not being able to stage the playoffs and take in the attendant television money, it makes every dollar offered that is contingent on completing the playoffs worth less. If there’s a 25% chance the playoffs don’t happen, the owners’ last offer making $480 million contingent on completing the postseason isn’t worth $480 million today, it is worth just $360 million. If the odds are 50/50, that knocks off another $120 million in actual value today. If the owners are going to make an offer with money contingent on the postseason because they are reasonably concerned it won’t happen, those dollars should be offered at a discount.

The players made a significant move towards compromise with their offer yesterday. It’s now up to the owners to make an offer that reflects that compromise rather than just making the same offer with the numbers rearranged that still results in a billion dollar pay cut for the players. There might cause some difficulty within the ownership ranks given the financial disparity between teams, but it is clear owners aren’t going to be able to make a deal that makes all the owners happy. The supposed 54-game backstop for the owners is significantly better than any offer they’ve made thus far, and the next step forward needs to reflect that reality.