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.

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.

We hoped you liked reading Players Take Big Step Toward Compromise With Latest Offer by Craig Edwards!

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Craig Edwards can be found on twitter @craigjedwards.

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circelli17
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circelli17

The players need to take a pay cut. Doesn’t matter if it’s as little as 10%. That’s the compromise gesture the owners are looking for. Any offer that doesn’t include that is a waste of everyone’s time. The MLBPA first offer for full pay in 114 games was comical which means this one is definitely much better, but let’s stop acting like are the ones in the right.

D-Wiz
Member
Member
D-Wiz

The problem of course being that everyone already agreed to prorated salaries and therefore it legally doesn’t have to be on the table for renegotiation if either side doesn’t want it to be. It’s the owners trying to renege on already negotiated points, not the players.

OddBall Herrera
Member
OddBall Herrera

This is an incorrect point I have seen being kicked around. The original contract stipulated that playing with no fans might affect the prorated salary agreement. For example:

https://www.forbes.com/sites/mikeozanian/2020/05/15/provision-in-mlb-deal-with-players-negates-guaranteed-prorated-salaries/#6b33202a6a84

sadtrombone
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Member
sadtrombone

The language is…ambiguous. Which makes it a disaster. But even then, I don’t blame the owners for interpreting it that way.

OddBall Herrera
Member
OddBall Herrera

Ownership especially really messed up by kicking the can down the road on this one. Now it seems like MLB double dipping into players’ salaries instead of one comprehensive deal. And it’s not like ‘no fans’ was unforeseeable (triple negative!)

D-Wiz
Member
Member
D-Wiz

I’d encourage you to check out Eugene Freedman’s Twitter, or listen to his interview on Effectively Wild a few episodes back. From people who have experience with this sort of thing and know what they’re talking about, it really sounds like there is no room for MLB to be negotiating off of the prorated salaries. That article you linked to essentially just says “actually there is a clause that lets the owners do what they want”, without offering any further evidence or explanation.

I’d also caution against taking anything on Forbes.com at face value. Despite its name, which ostensibly implies credibility, it really has astonishingly low publishing standards and has been known to publish blatantly false or misleading articles for a few bucks. Not saying this article necessarily falls into that category, but I also wouldn’t be surprised if it did.

CC AFC
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Member
CC AFC

Yes, the players should definitely take a pay cut to risk their lives. Sounds reasonable

AtomicDumpling
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Member

How are they risking their lives? Most of the people in this country and the world have returned to work. Teenagers are working at McDonalds for $10 an hour but pampered athletes would be “risking their lives” to play a baseball game in a sanitized, empty stadium?

circelli17
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Member
circelli17

Bingo Atomic! There is a freaking opt out in every offer. If any player doesn’t want to play, they don’t have to.

CC AFC
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Member
CC AFC

Then none of the players should play. Why do the owners get to sit at home and count their money and the players have to go out in the middle of a pandemic at less pay?

Spa City
Member
Spa City

The players are not being forced at gunpoint. They are free to sit at home and count their money just like the owners.

CC AFC
Member
Member
CC AFC

The people working at McDonalds are also risking their lives. They should be receiving hazard pay.

STFU about “pampered athletes.” No one can be forced to work for less than agree to work for in this country.

Scott
Member
Member
Scott

Should be but many are not…most health systems are cutting hours.

Spa City
Member
Spa City

“Hazard pay” for McDonald’s employees…

How much would you pay for a Big Mac? Probably not enough to cover Hazard Pay to the fry cook.

rosko3767
Member
rosko3767

Yeesh, labor at those types of places is ~14% of total costs. If you double salaries and you’re not going to get a hamburger because the price went from .99 to 1.13 you’re crazy.

D-Wiz
Member
Member
D-Wiz

They are still risking their lives. They will inevitably come in contact with dozens of people per day, who themselves are in contact with dozens of others… Exponential math still works for people making millions of dollars. Quibble with the macroeconomy for valuing professional athletes at what it does if you wish, but no employer should be forcing their employees to work in abnormally hazardous conditions while simultaneously trying to steal back money they already agreed to pay them. It’s just shitty human behavior, no matter the scale. (yes this also applies to Jeff Bezos and Amazon warehouse workers, and grocery store workers, and fast food workers, but that doesn’t mean it doesn’t apply to MLB owners and professional baseball players as well.)

Max Power
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Member
Max Power

‘Pampered athletes’ is a dumb phrase. But from all indications, the players are asking for LESS stringent safety protocols, which does not mesh with the idea that they are concerned about the health implications of playing.

Scott
Member
Member
Scott

As doctors and first responders and service workers are doing already

OddBall Herrera
Member
OddBall Herrera

Yes, MLB should definitely operate their business at a loss just because we say they should. Sounds reasonable.

CC AFC
Member
Member
CC AFC

Then they can not operate their business. This isn’t difficult.

sadtrombone
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Member
sadtrombone

I don’t want to get sucked into this whole thing again but since it’s inevitable…most owners will, at the minimum, lose less money if they operate (at least some will even make money). Others will not.

I don’t love how we wind up conflating the problems of teams losing money with the problems of teams collectively losing money per game. The players have every right to reject the premise that they are responsible for the first one, which is nearly inevitable, and the second one isn’t really the issue it’s been made out to be.

MCC1701
Member
Member
MCC1701

The owners are trying to use this as an opportunity to take money back from players because of longstanding differences in how each team makes money. That’s the issue the owners need to resolve

JD, Too
Member
JD, Too

Risk their lives? Come on. There’s enough data out there that you should be embarrassed to pretend to believe that. Or is data only relevant to baseball?

bglick4
Member
bglick4

Maybe they do, but they shouldn’t. The players under contract should be completely immune to the business risks.

circelli17
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Member
circelli17

No employee in America is immune to business risk

bglick4
Member
bglick4

Simply not true, at least not within the constraints I gave. When their contracts expire, they’re certainly affected, but while they remain under contract, they’re immune. If you’re a UAW member working working under contract and GM has a bad year, they can’t change the terms of your employment. If my business has a lawyer on a retainer contract, I can’t tell him I’m paying him less for services because sales are down. Players are under contract. If they keep up their end of it, the team needs to keep up theirs whether they make money or not. (To be clear, I’m not making a legal argument. I think their agreement allows for renegotiation if fans can’t attend. But, I don’t think the players should have agreed to that.).

The Guru
Member
The Guru

The players already have agreed to take a pay cut. They have legally binding contracts that the owners have to pay full price. Only way out of those contracts is if the owners file bankruptcy, or the players agree to take a pay cut. In this case, they are saying i’ll take pro rate/game of what you owe me because i want to play and i’m a nice guy.

Any other industry the person with the contract would tell the owners….tough luck and you have 2 options, you pay me my full contract or ill take you to court for much more.

TKDC
Member
Member
TKDC

The MLBPA’s first offer reflected the tenor that the owners established.

pepper69fun
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Member
pepper69fun

Isn’t agreeing to prorated salaries taking a giant pay cut? Isn’t agreeing to expanded playoffs a major revenue gain for the owners? Why can’t the owners simply accept what players are saying at face value and let’s make a deal? Given players want full prorated, it should be blindingly easy to determine season length. Set the number, owners. Let’s play ball.

MikeS
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Member
MikeS

In nearly a century and a half, there has never been a baseball game played without players, but I bet there are hundreds of them going on right this minute without owners.

Tulkas
Member
Member
Tulkas

They already agreed to a pay cut though amount to half their total salary. That’s a pretty big deal. If your boss gave you half pay for the rest of the year before covid and then came back and said you need bump that up to 67% cut, you’d balk too