With Health and Safety Protocols Agreed To, Major League Baseball Is a Go
On Monday, the cautious optimist in all of us got to hope there would be major league baseball in 2020, with Rob Manfred implementing a 60-game season contingent on the players confirming that they would report to team camps on July 1 and agree to the health and safety protocols required to move the season forward. Although the 5 PM deadline for the players to respond passed without word on Tuesday, the MLBPA later confirmed that “All remaining issues have been resolved and Players are reporting to training camps.” While there is still a pandemic to contend with, one that will alter the game and could still cause it to stall out, it appears the disagreements between the players and the owners over economic questions will not further impede a 2020 baseball season.
MLB also made its own announcement, revealing a July 23 or 24 Opening Day, with some additional information about the potential schedule:
MLB has submitted a 60-game regular season schedule for review by the Players Association. The proposed schedule will largely feature divisional play, with the remaining portion of each Club’s games against their opposite league’s corresponding geographical division (i.e., East vs. East, Central vs. Central and West vs. West), in order to mitigate travel. The vast majority of Major League Clubs are expected to conduct training at the ballparks in their primary home cities.
The full schedule is expected within 72 hours, though Jon Heyman has reported there will be 40 games in-division (10 games vs. each division opponent) and 20 games against teams in the opposite league’s corresponding geographic division. Ronald Blum of the Associated Press reports that teams will play four games each against their interleague opponents and will make just one visit to all of their opponents during the season.
Along with the schedule, there’s been a steady flow of information on new in-game rules, the trade deadline, and perhaps the issue causing a delay — whether players living with individuals at high risk of complication from COVID-19 can opt out of the season and receive service time and salary. It was a known issue of contention as recently as Monday, with the league unwilling to accommodate the players’ request. There are conflicting reports on the resolution to this matter, as Bob Nightengale reported the league relented but Evan Drellich and Ken Rosenthal reported no exceptions were made. The operations manual itself contains a section on players deemed to be at high-risk and allows them to go on the injured list, where they would receive pay and service time. There is a section immediately following that covering high-risk family members, but given that similar provisions are not included in that section, it’s fair to conclude a similar injured list mechanism is not available to players in that circumstance.
The trade deadline will be August 31, per Jayson Stark. He also added the following:
Here come more adjusted rules for 2020:
*Transactions freeze ends this Friday at noon ET
*Teams must submit 60-man player pool names by Sunday at 3 ET
*In-person scouting will be allowed.
*Teams can take up to 3 taxi squad players on road (but if 3, one must be a catcher) https://t.co/Og6Ix7TBeE— Jayson Stark (@jaysonst) June 23, 2020
Here’s Jeff Passan on the injured list:
While the regular injured list will be for 10 days in 2020, MLB is expected to institute a special COVID-19-related injured list for players who test positive, have confirmed exposure or are exhibiting symptoms. Players would not have a specific number of days to spend on it.
— Jeff Passan (@JeffPassan) June 23, 2020
Passan also passed along this expectoration — er, I mean, expectation:
Genuinely curious to see how this is enforced. Will there be spitspensions? pic.twitter.com/19820xNODr
— Jeff Passan (@JeffPassan) June 24, 2020
And here we thought the three batter minimum rule was what would get rid of LOOGY’s.
If you haven’t heard about a wet rag, get ready to hear about a wet rag:
Proposed MLB rule changes for 2020:
* Implementation of DH in both leagues
* Extra innings start with runner on second base
* No limits on position players pitching
* Pitchers can have wet rag in pocket as substitute for licking fingers
* Three-batter minimum still stands— Chris Cotillo (@ChrisCotillo) June 23, 2020
And if necessary, games will be moved for health and safety reasons:
MLB has the right to relocate teams during the regular season to neutral sites for health and safety reasons, including the postseason
— Bob Nightengale (@BNightengale) June 24, 2020
More details will trickle out over the next few hours and days, but the most important news is that players are expected to report on July 1, the season will start three weeks later, and if all goes well, we’ll have a 60-game regular season and a postseason that has its usual format.
There is going to be a lot of discussion of the past few months of acrimony between the players and the owners, about what did happen and what might have been. It’s fair to call the last month or so a lost opportunity for the sport, one that both delayed the return of baseball and pulled focus from the more urgent question of whether it is safe to play in the midst of a pandemic at all. There was a lot of talk about an expanded postseason, economic feasibility, doubleheaders, regular season games in October, and neutral sites. Ultimately, the parties came to an agreement back in March and opted to abide by that agreement.
It’s fair to criticize the owners for dragging their feet. They raised the specter of renegotiating the March agreement with a pay cut, but were never fully forthcoming regarding the necessity to do so, and waited more than a month to even make an offer. Their first two offers slashed guaranteed pay by around 50% from the pro-rated March figures, and they didn’t offer a guarantee above 50 pro-rated games until one week ago. It’s possible the plan was a delay tactic, but as I posited last week, it seems the owners wanted either a great deal or a short schedule:
For the owners, this mode of negotiation appeared to be a win-win. Either run out the clock and pay less, or hope the union agreed to a deal with huge cuts that would provide more money to the owners. MLBPA’s response — to a shortened schedule and to any offers not significantly better than the threatened pro-rated 50-game slate — has thrown a wrench in those plans. Demanding more discussion or that the players agree not to proceed with a grievance gets the owners slightly back on track, but they are clearly still concerned about the potential for a grievance, which might provide more transparency into the owners’ finances and comes with the threat of hundreds of million of dollars in awards to the players.
The threat of a grievance likely helped bring about the 60-game schedule as opposed to a schedule with as few as 48 games, as was floated earlier in the month. A 12-game difference in the 2020 slate means $300 million more for the players. By voting down the league’s proposal, the players did not give up their rights to a grievance and held on to valuable expanded postseason rights. As pointed out in MLB’s press release, the league was offering just $58 million for expanded postseason over the next two years for a waiver of that grievance. It still seems shortsighted for the owners not to have responded to the players’ offer of 70 games, which included two years of expanded postseason, two years of advertising on jerseys, and the waiver of a grievance. Adding six games would have cost under $2 million per team, without even factoring in national television revenue. There’s still the possibility that the two sides agree on expanded postseason in the next month, but it seems likely to cost the owners a lot more than $58 million.
But how we got here is not as important as what happens next. The players and teams are going to try their best to get a baseball season in, and for fans, that is a very welcome development. The pandemic that has affected all of our lives will still make playing difficult, if not impossible, but the players and the league have a plan. After the last two months, cautious optimism feels pretty good.
Craig Edwards can be found on twitter @craigjedwards.
Crossing fingers that we get 60 games and no significant health issues for those involved 🙂
I doubt it. As soon as an active player tests positive you’d have to quarantine the whole team and recent opponents, another surge or wave would shut down gatherings in cities and states with teams, this is going to be an impossible logistical nightmare where no one feels it was done fairly or evenly. Unless we just throw all medical guidelines out the door.
This is some bs “I don’t want to be the bad guy” posturing between owners and players who both know the season should be cancelled.
I don’t know if that’s the plan–someone told me yesterday on another article that it wasn’t–but even if they’re just quarantining positives, you’re going to have half the roster on the DL sometimes. Games are going to get canceled. I think we’ll be lucky to get to 30-40 games, much less to 60.
Disagree. I think you keep playing. I think it is one of the reasons to have expanded rosters. Just keep testing others while quarantine player or players that test positive until they don’t test positive for two consecutive tests. Work at mfg plant in So Cal. 100 employees. Had two people come down with it over the past 3 months. One front office, one in the plant. Sent them home with pay and had people around them tested. All came back negative. Sick employees come back to work once they are well, released by doctor, and test negative. We stay open. As do most other companies.
Agreed, this is the reason they have 60 players on the roster. If soccer in Europe can function, baseball should also be able to work.
soccer in Europe had the advantage of being in Europe where people took the lockdown seriously and actually got this thing to a point where contact tracing works. If we moved MLB to Europe that would probably work.
The phillies have already had an outbreak at their spring training facilty. 7 players (and 5 non player staff) have tested positive. That is 28% of their 25 man roster. News broke this afternoon that the jays also had a player show symptoms at their ST facility last week and now “several” people in the org have tested positive.
I think you are being naive. I hope I’m wrong.
NWSL already had one team withdraw because of too many positives, and they haven’t even started playing yet.
As Craig says its fair to criticize the owners, its also fair to hold the players accountable for fighting the last war.
What this has shown is that baseball needs an NHL type deal. It would require major changes for the owners revenue arrangement between themselves and with players, and huge changes for MLBPA, how it treats membership, and how it values agents.
I would expect balanced reporting on this topic and I think it might help get through to needed changes. Players and owners need to be partners in promoting, protecting and growing their sport.
Owners must think that giving the PA 10 more games and $250M more outweighs the benefit of waiving a potential grievance claim and getting 2 years of expanded playoffs. Even if expanded playoffs costs them double the $58M they were hoping to pay players for a total of $116M, they must think that the value of the PA’s chance of winning a grievance claim is less than the remaining $134M. Which is what I think since I think the “open books” will be very close to Forbes’ estimates, so this will be much ado about very little.
I know the NHL, like the NBA and NFL, base their PA’s take as a %age of revenue (in the NFL, the cap is set at 48% of last year’s revenue). Please say more about the “huge changes for MLBPA, how it treats membership, and how it values agents.” I don’t think any writer at Fangraphs has any interest in this topic.
I am pretty well convinced that the owners believe that the extra 8-12 games gives the owners much stronger ground to stand on. Eugene Freedman also seems to think so (he called it “likely moot, because now that negotiations have been concluded, 60 games is best efforts.” Essentially, those extra 8-12 games “pays off” the rest.
Given that the owners themselves proposed 60 games, this makes sense. It would have been pretty likely that the owners would have had to pay the salary for those 8-12 games one way or another (possibly more, but we don’t know for sure); might as well get a bit more tv money as part of it.
I meant 10 additional games from 60 to 70, as the MLBPA offered in its final proposal. I should have been more clear that I was responding to Craig saying that the Owners essentially shot themselves in the foot by not taking MLBPA’s offer.
They kind of did, though. The expanded playoffs is a huge get as the baseline for the next CBA.
I think the problem for the owners is the grievance would look at the entire scenario and not just the end game. It’s possible that they could be on the hook for 80+ games based on starting the 30th of June.
For the players it’s really what 25 million for playoffs and 32 million for loan forgiveness. Even if the odds of winning are only 40%- with that little money involved, it’s a good risk to take.
Forbes’ estimates of team profitability are dramatically different from the figures MLB has presented, so if those estimates are indeed “very close” to reality I am curious as to why you think that isn’t a big deal. We started having this conversation in another comment section, but it fizzled. I’ll cite again a couple of points I made there. From Jeff Passan:
“The past five years together: More than $5 billion in profit, according to Forbes.
Now, the league has long disputed these numbers, and maybe they are high. But 400% high? At MLB’s no-EBITDA-over-$250 million claim that would mean the maximum number for the past five years was $1.25 billion. The gap there is simply too large to believe that Forbes is overshooting when it’s so spot on with so much of its other math, including its team valuations that have, if anything, undervalued franchises.”
From Forbes directly, citing profits of $1.5 billion last year:
“The teams are also riding a wave of profitability that will help offset any downturn from the delayed season. MLB profits are at record highs, with the average team operating profit—earnings before interest, taxes, depreciation and amortization (Ebitda)—rising 25% to $50 million last year, thanks to flat player costs and increased revenue of $16 million per team on average.”
Owners have repeatedly and publicly claimed that the sport isn’t very profitable (see, most recently, Tom Ricketts, and especially Bill Dewitt Jr.:“The industry isn’t very profitable, to be quite honest”). If it is demonstrated that these claims are just a negotiating tactic, does that not strengthen the bargaining position of the players? Or is there some other reason you don’t think access to the books matters?
I think both of those statements can be true. 12.5% pre-tax profit is well short of a software firm or even a movie studio in good years. Ben Clemens wrote a piece saying that a 27% net profit would result in 7.5% annual cash-on-cash growth of the business, which would be really good. But MLB is doing half that, so the cash-on-cash growth is slightly better than real estate over a long-term. In fairness, owners who bought 10 or more years ago may feel they bought in a neighborhood before it gentrified, since they’ve seen some explosive gains in the value of the team. But that’s due to the explosion in popularity of the sport particularly as television content and not due to somehow cheating the PA.
For a counterpoint, look at these two BP links from a former equities trader:
https://www.baseballprospectus.com/news/article/38051/flu-like-symptoms-following-money/
https://www.baseballprospectus.com/news/article/59421/veteran-presence-thats-rich/
My favorite snippets from the first (2018):
“There’s a lot that goes into that 12 percent average franchise valuation appreciation since 2003. But that’s a really, really large number. That’s way better than the 8.7 percent annualized return on the S&P 500 Index over the same time frame, for example. Keep in mind that private companies aren’t shielded from competition via an antitrust exemption, don’t get to pay their lowest-compensated workers less than the minimum wage, and (usually) don’t get municipalities to build structures for them, pay for infrastructure, and grant them tax abatements. All of those favorable conditions that reduce risk should suggest lower returns for baseball franchises compared to most corporations, not higher.
Maybe the share of MLB team revenues going to players hasn’t declined in recent years. That’s not the same as saying players are getting a commensurate share. Perhaps baseball in 2003 was skating on thin ice, so paying players 63 percent of revenues isn’t viable in the long term. But if one’s going to accept that the percentage of revenues going to labor in lean years is unsustainably high, it also follows that the percentage of revenues going to labor in flush years is unsustainably low. Or, put another way, if the investors in a crony capitalistic, quasi-state-supported industry generate growth rates superior to those of other investors, there’s something screwed up in the economic model, and it’s not the amount of money Scott Boras is trying to get for Jake Arrieta.”
And from the second (2020):
“If I were to tell somebody, “This is an investment that will give you a 12-percent-plus return over 24 years,” the best-case scenario is that I lose my license. The worst-case is that I wear orange, which is really not my color. Because here’s a pro tip, from somebody that was an actual pro: If anyone tells you about an investment that’s going to yield you 12 percent, year after year, run away. I mean, Bernie Madoff—architect of the greatest Ponzi scheme in history—said he could generate consistent returns of 10 to 12 percent. We know how that worked out.
…
But for crying out loud, be honest. The baseball industry is off-the-charts profitable. You’re a very rich man, and baseball has made you far richer. Claiming anything otherwise is frankly insulting. And I’m being, in your words, ‘quite honest.'”
This is ex post analysis. No one knows that the house they bought in a bland neighborhood would explode in value as that neighborhood gentrifies. Similarly, previous owners wouldn’t have sold had they know 12% returns over 17 years were possible.
Who wrote this, a former intern? “Pay their lowest-compensated workers less than the minimum wage” — is this referring to interns?
Anyway, the debate is about “open books”? How much greater do you suppose revenues and incomes will be then Forbes estimates? Or are you still hung up on this $250M EBITDA figure?
As I mentioned, both pieces are written by a former Wall Street equities trader, not someone with an axe to grind (and not someone morally opposed to huge profits, as he states). The “lowest-compensated workers” line refers, I presume, to minor leaguers? Anyhow, neither objection particularly troubles me. The only point I was trying to make in this instance is that your claim MLB profits are normal is at the very least debatable.
But as you suggest, lets get back to the open books. I’m not arguing that even the Forbes estimates are low. In fact, I’m in no position to judge the validity of those numbers. I don’t have access to information that others lack, and I have no economic training. My point is a simple one: the very _possibility_ that owners are hiding huge profits is going to fundamentally shape negotiations. Even bracketing the question of whether it is or is not accurate to say that the league makes “crazy” profits, there must be a reason both owners and the Union feel it is important to make their case publicly. Owners want the public to think that most profits go directly back into the team, so the demands of players are unreasonable. Players want the public to think that greedy owners hide profits and then cry poverty to maintain an incredibly lucrative status quo. Opening the books settles the question. That’s important whether or not I am right that the numbers will show huge profits. Certainly, the vindicated side would try to leverage the newly public information, right?
So I guess that leaves me more or less where I started, because you never directly answered my question: am I understanding correctly that 1) you think open books would reveal profits in line with the Forbes estimates, meaning much greater than those MLB represents and 2) you think such a disclosure would warrant a shrug, and not much more? I’m genuinely interested in your answer. Most people in these comments arguing the ownership side have said that they don’t believe the Forbes numbers, but you seem to be saying that you do trust the estimates but think the discrepancy is no big deal. I’d like to understand why. How do you think things would change, if at all, if those numbers were made public?
Dave, I already wrote this in my original comment: “I think the “open books” will be very close to Forbes’ estimates, so this will be much ado about very little. ”
I don’t think people arguing the ownership side reject the Forbes numbers. What else would we have to go on? It’s people, including Craig, arguing the Players’ side, who throw up their hands and say “the Forbes numbers can’t be accurate, since the owners are cooking the books.” I’ve asked these folks repeatedly to give more than a notional example or a quote by a Union Official of off-the-books revenue and no one can. Granted, it would take a bit of work to look at the 5 or so teams’ owned network TV revenues and compare them to some baseline (like local TV revenues before the team bought its own network with an applied growth rate), but people alleging “hidden revenues” should do this work.
Tell me what argument is advanced by people arguing the Owners’ side that rejects the Forbes numbers?
Thanks for answering, Shalesh. I’ve finally figured out our misunderstanding: we are citing the Forbes numbers in diametrically opposed ways. You are suggesting that some people are using the Forbes numbers as a floor, that is, arguing that MLB profits are _at least_ what Forbes indicates. I have not seen this claim anywhere, and would appreciate it if you could point me to such an instance. I have seen, and have quoted, people posting the Forbes numbers as a ceiling. (For instance, Jeff Passan saying that baseball would have us believe roughly $1 billion in profits over the last 5 years, versus Forbes citing quintuple that. Passan says the Forbes numbers may be high, but are closer to reality than what the owners claim.)
So I can say to you more clearly now, no, I am not arguing for profitability _even greater_ than what Forbes cites. We both accept those numbers as our baseline, it seems. In light of this, I think I am safe in assuming that the reason you don’t think opening the books would matter much is because you think everyone more or less knows that the claims the owners are making about profits are pure theater, and therefore not taken seriously for negotiating purposes. This would square with the first comment you made in response to me, on the other article, which I did not fully understand. Presumably, the indignation of the Union/players is equally theatrical. Your point seems to be that everyone knows what they are really haggling over, even if publicly they present themselves as far apart on what constitutes financial reality.
With that said, some people arguing the owners’ side absolutely _have_ disputed the Forbes numbers when I have posted them. I mistakenly included you among them. Their argument is simple enough: the profitability numbers the owners cite are more or less accurate, so of course they can’t give up more of the pie to the players.
Again, thanks for responding. One last note, again something I mentioned last time we wrote, about hidden revenues. Andrew Zimbalist, who appears in the oft-cited Ben Lindbergh article and has consulted for both MLB and the MLBPA in the past, and who once was part of an effort to challenge MLB’s presumed antitrust exemption and start a rival baseball league, has a chapter in his book devoted to precisely the kind of hidden revenues you mention. “May the Best Team Win,” though a bit dated at this point, gives specific examples of the kind you ask for, where related party transactions between teams and sports networks turn 35 million dollar profits into losses. But of course now that I understand you better I can’t double count such creative accounting–I am not arguing for profits hidden above and beyond Forbes, just pointing out that the specific mechanisms of hiding profits have been discussed. Cheers.
Forbes numbers aren’t great when it comes to personal wealth nor private company valuations. There are scant few sources that offer high quality private company data and most information that does exist requires one to accept or interpret what may be vague or misleading figures (i.e. a CEO discussing their company’s Q3 run rate) without audited evidence.
I’m not arguing either way as to whether the owners’ figures are high or low, but this whole ‘show me the work’ schtick is pointless when you yourself blindly choose to believe information presented to you (that supports your position) without bothering to question the source/validity of that information.
The owners don’t have to ‘cook the books’ which implies nefarious or illegal behavior. I’ve pointed out time and again to you examples of revenue which teams legally exclude from their team revenue figures and Craig wrote an entire piece on ways in which profit can be hidden in value building endeavors (if you want actual figures then show me the books). Yet you come back and comment on each new Craig Edwards piece that no one can prove you incorrect.
It’s just wild that you claim to be so factually driven but don’t explore the source of these so called ‘facts.’
@Dave: spot on, we understand each other. I used to have a copy of “May the Best Team Win” but never got around to reading it. Maybe I’ll look for it to see what Zimbalist is talking about.
@average, Since when did allegations and hypotheticals become “facts”? I could play this game on any organization I didn’t like: “You’re hiding money!” What? “Well, you just are, I know it.”
Prove it or STFU.
We’ve been on this carousel before. It’s not an allegation or hypothetical that team owned cable network revenue is not part of revenue sharing nor does it have to be disclosed to the MLBPA, it’s fact. Fact that you continue to ignore.
The allegation part comes in as it relates to hiding additional money via channels such as the cable network. I’m not commenting on that since neither of us have proof either way. But please continue asking for proof that we won’t get until this grievance is underway.
You’ve mentioned “opening the books” several times – so I’d like to ask you a couple questions on that.
1. What books do you think are already opened to the MLBPA? I.E., what do you think they already see?
2. What other books do you think should be opened to the MLBPA? What do you think they should see that they are not getting?
Actually I think it’s a comment on salaries in the minor leagues.
But you can call them “interns” if it somehow makes you happier.
I know in advance that my comment here will not be popular. But I think two statements can be simultaneously true – baseball can be very profitable in absolute terms while also being “not very profitable” in terms of comparable investment opportunities. Comparing MLB to the S&P 500 is a bit of a false equivalency. Sophisticated investors expect an “illiquidity premium” for private investments – venture capital, private equity, growth equity, etc. An investor can sell their public stock holdings on demand. Owning an illiquid asset is a more restrictive and longer-term proposition, and partial owners often don’t control their own exits.
Numerous studies have shown that investors typically expect (or demand) a 3-5% per-year premium for the average private equity investment compared to public market equivalents. The expected premium in riskier investments (venture capital, earlier-stage angel investing, etc.) is higher to compensate for the greater bust risk as compared to more mature private equity investments. Private equity return streams is a much more apt comparison for MLB franchises than public equity markets.
It was stupid of Bill DeWitt to open his mouth. Just stupid. But I suspect his point was that – in pure investment terms – if owners compare the IRR of their investment in their franchise to the IRR of their investments in other private, illiquid assets, the other private, illiquid assets are more profitable. To be sure, no one should cry for an owner who made 8-12% per year in baseball compared to 9% in the stock market or 13-15% in private equity. But the roots of the comment are in underlying investment expectations, and not in the common stock market investor’s day-to-day reality.
But Rob Mains accounts for this, in one of the (admittedly long) sections I quoted:
“Keep in mind that private companies aren’t shielded from competition via an antitrust exemption, don’t get to pay their lowest-compensated workers less than the minimum wage, and (usually) don’t get municipalities to build structures for them, pay for infrastructure, and grant them tax abatements. All of those favorable conditions that reduce risk should suggest lower returns for baseball franchises compared to most corporations, not higher.”
If 12% return is the baseline, and then risk is significantly reduced, then MLB is at the very least in line with the private equity numbers you cite. Even applying your extraordinarily generous relative measure of profitability, it doesn’t seem to be true that MLB isn’t profitable.
I fear that my comment is going to come off as arguing for the owners- which it’s not. As I noted above: “To be sure, no one should cry for an owner who made 8-12% per year in baseball compared to 9% in the stock market or 13-15% in private equity.”
The anti-trust example is very valuable. No way around that.
However, I don’t agree with some of the rest of Rob’s comments in terms of comparing them to actual real-world investment decisions.
First: “(usually) don’t get municipalities to build structures for them, pay for infrastructure, and grant them tax abatements.” This is patently and absurdly false. Businesses of all kinds, and of all shapes and sizes, have played the tax-incentives game for the better part of the last decade as state and municipal governments have doled out incentives for business expansion or relocation… or to keep businesses from moving. Amazon’s busted deal with New York City got a ton of press last year, but the truth is that this happens in virtually all jurisdictions, all of the time. Personally, I think it’s absurd and I wish local governments would stop the practice… I live near a state border and watch two states fight to give incentives to businesses to incent them to move 10-15 miles which doesn’t actually create jobs. But to claim that only baseball, or only pro sports, benefits from these kinds of incentives deals is patently false.
Second, re: pay and less than minimum wage… I assume he’s referring to the minor league pay scale… and I do think it’s terrible what minor leaguers get paid, and I can’t believe no team has struck on that competitive imbalance and offered to pay them materially more… much less give them quality nutrition, housing, etc. that could enhance their on-field performance… but this is also a bit of a misleading data point to look just at their annual (pittance) wage. You have to factor in signing bonuses, etc. as well. They’re still underpaid, to be sure, but most non-baseball workers don’t get that up-front money. Now, obviously, the 2020 five-round draft and signing money has completely changed the equation right now, but that doesn’t factor into a 2003-2018 data set.
Also, it’s a completely unfair argument – when talking about the overall factors that underlie the economics of the baseball business – to talk only about the pittance paid minor leaguers while ignoring the fact that those who make it to MLB have the best lifetime pension and medical benefits of any major pro sport, and better than virtually all non-athletes in America. This cost the owners over $400 million in 2018 and never gets mentioned. If you play in one major league game, you have health care coverage provided for the rest of your life. If you have 43 days of service time, you get an annual pension at retirement age of $34,000 per year – and that pension can grow up to $100,000 per year if you make it to 10 years of service time. This is among the most valuable employee benefits packages in the world and it cost each team over $14 million in 2018. That’s a liability that most business owners don’t absorb. So I find it incredibly disingenuous when intelligent baseball minds omit that from the equation.
Disingenuous? Go to Forbes. Go to any team’s individual capsule. There’s a box for Player Expenses. Next to the box is a number. If you hover it, a box appears and says “Includes Benefits and Bonuses” It’s totally fair to criticize based on accurate information. That’s not what you are doing. We include those figures here at FanGraphs on the Roster Resource page. They are very much available and generally acknowledged.
Craig, I’m responding specifically to comments that someone posted about Rob Mains’ article at BP, which doesn’t appear to include that information. It is disingenuous of Rob’s article to talk of minor league salaries in the way he does without acknowledging the generous medical and pension benefit that MLB offers. Full stop.
I would add that a lot of his points (including the minor league pay) are double counting in a way. The discussion of team profitability already factors those benefits into a bottom line number. Those listed advantages don’t all of a sudden make the cash flows better than they are, rather they are an input into the observed cash flows.
Craig, in re-reading, I apologize if my comment was construed as a side-swipe against you. It was not intended that way. I was referring specifically to the Rob Mains article in question. If you’ll re-read my comment, I hope it is clear that I was responding to a specific point:
However, I don’t agree with some of the rest of Rob’s comments in terms of comparing them to actual real-world investment decisions.
Risk is still far lower for MLB team ownership than in PE. PE activity and valuations have proven to be greatly impacted by market volatility in a way that baseball has proven resistant to in past times of economic turmoil.
That said, most of the research on MLB and recessions uses Forbes valuation data which I find to be inexact, but can be directionally accurate.
Ben Lindbergh’s (amazing) article from 2018 shows the Union accepting figures that are a lot closer to the owners’ numbers than to Forbes’ numbers.
https://www.theringer.com/mlb/2018/2/21/17035624/mlb-revenue-sharing-owners-players-free-agency-rob-manfred
Forbes is missing at least two big numbers:
1. The Central Office expenses, which get paid out of the national TV money and other national revenue. Forbes is summing the teams without deducting the central office expeneses. (The teams don’t receive the national revenue directly. The central office receives that revenue, pays its central office expenses, and then makes a distribution of residual cash flow to the owners. So, simply summing up national revenue and crediting it to the teams is missing hundreds of millions of dollars a year in central office expenses. MLB projects this number as $360M in 2020.
2. We *think* Forbes is excluding the teams’ annual contributions to the pension and medical plans, which was $421 million in 2018.
Those two items could easily be $700M-$800M/year in expenses, or $3.5M to $4M over a five year period.
Forbes has had its share of inaccuracies elsewhere, most recently in accepting dramatically inflated estimates of the Kardashian family wealth which turned out to be smoke and mirrors.
It’s just amazing to me how easily the anti-owners folks dismiss this article by Lindbergh, usually on the basis of nothing at all. Like, he has PA folks on the record saying that they have access to the same financial information as MLB — the books are largely open already! — and get basically the same numbers. It’s pretty obviously the case that the players are primarily angry because the owners know how to value performance now, and have redistributed funds accordingly, not that the total amount of spending has gone down substantially in percentage terms.
But even if it’s not true, the players have never accepted a compensation framework organized around revenue sharing anyway. They turned it down again as recently as last month. So why does it even matter? If they want a greater percentage of revenue then they should bargain for it. The owners have repeatedly indicated a willingness to negotiate along those lines. Such an agreement would align players’ and owners’ incentives around growing the sport, which has been a boon for the other major sports leagues. There’s only one interest group that opposes that. And it’s the players. That’s their right. But it’s not then their right to *also* demand X% of revenue, for any X.
Yes… there are things in Ben’s article that some folks would rather ignore. Key among that is that the MLBPA has *much* more financial information than people realize they do.
Also, the RSN argument is a distraction. Sure, a couple of owners who own all or most of their RSN may be gaming some things there. It’s possible. But something like 2/3 of teams own less than 25% of their RSN. Other parties own 75% or more. You think those other RSN owner/investors are going to allow the MLB owner to mess with the fair value of the TV rights payments?
Besides the Yankees, do you know who owns part of the YES Network? The Ontario Teachers Association. So does Mubadala, a UAE sovereign wealth fund. So does Michael Dell and Amazon.com. You think any of those sophisticated investors are helping the Steinbrenners cook the Yankees books for purposes of hiding the ball from CBA negotiations, rather than making sure they’re getting the investment deal they bargained for?
Then, also remember that the owners share a portion of local revenue. Do you think that Owner A would stand for Owner B “cooking the books” to deflate local TV revenue on the MLB team’s financial statements, when Owner A (and all other owners) has a direct financial incentive in that number being as high as possible?
The RSN argument isn’t a distraction and again the phrase cooking the books isn’t appropriate. Moving revenue around to different business lines is just called accounting. I don’t believe the owners are doing anything illegal, they just have really good accountants. And putting more revenue into the networks actually makes them look a lot better to the investors in those networks…
I understand well the way this works, quite legally, especially when the financial reporting of an item or an issue is subject to interpretation or could legitimately be reported in multiple ways. And it does happen, in general, when there is material common ownership across business entities.
[Of course, the “common control” rules generally result in the consolidation of financial statements for entities under common control and related purposes, and the “VIE” rules generally result in the further consolidation of entities where common owners have implied control or the economic benefits of ownership without control.]
But that’s literally not going to happen in any material way when ownership of the RSN is materially different from ownership of the team. And it’s not going to happen when you have Fiduciaries like Ontario Teacher’s Association – which has over $200 BILLION in assets under management – at the table.
To your argument that revenue could be booked the other way, or expenses shifted the other way, in a way that favors the RSN on paper but not in economic reality… again, I highly doubt that happens in a material way for several reasons:
1. Unless the team owner owns more of the RSN than they do the team, the team owner is costing themselves money in the future when the RSN is sold, or a minority partner needs to be bought out under a buy-sell agreement, etc. Business owners don’t usually shift paper wealth away from themselves because it’s harder to get back later. Again, this is different from common ownership scenarios… but I’m going off the data that says that 2/3 of teams own less than 25% of their RSN, and less than a handful of teams own more than 50% of their RSN.
2. Debt is usually at the team level or a holdco level. As a result, owners (now more than ever!) need their MLB team financials to look strong for debt purposes. Shifting revenue to the RSN would negatively impair the financial reporting position of the team itself, which can be costly.
3. Other baseball owners would lose revenue sharing money and would cry foul. I believe the owners will largely police themselves on this issue because regardless of how they interact with the Union, they will clearly protect their own financial interests first.
[We also don’t know what Sinclair’s operating agreement is for the RSN’s that they operate, and whether they have incentive fees for financial performance, which many operators do in other industries… but if Sinclair earns any kind of incentive fee, that’s another reason why those RSN’s wouldn’t want to shift revenue into the RSN model and pay out additional incentive to Sinclair… but I truly have no idea on this point, and raise it only as an interesting point for consideration.]
So – is it possible that there is some legal revenue-shifting among the couple of teams that own all or virtually all of their RSN? Sure, it’s possible. But is this widespread or material, especially when around 2/3 of teams own less than 25% of their RSN? I doubt it.
You’re very informed and very patient. The reality is the MLBPA and owners need to align on top line revenue to be included in the discussion whether there is or isn’t revenue sharing. It also seems to me the parties need to sign a CDA and keep the “open the books” out of the media. IMO it’s the most uninformed conversation in the public domain.
Obviously trust needs to be earned (particularly by ownership), there will be disagreements about what portions of business should be MLB related (again on both sides), but there are standards in other sports, potential trades to be made, and incremental value to be created. I’d also make the suggestion that player agents be bound by the CDA as well.
The whole point of open books is leveling the playing field in future negotiations by giving the players more complete information from which to bargain. It really has nothing to do with ‘whose numbers are right’ or ‘how bad are the owners screwing the players.’ The MLBPA simply wants to be able to negotiate with all the cards face up on the table for both sides.
The union sees the grievance as their ticket to achieving that goal and put a high value on maintaining their ability to do so. Conversely, the owners appear to feel relatively confident that open books won’t have all that much impact on their future negotiations.
I can understand the union’s position in wanting complete information while at the same time you may very well be right that it is much ado about nothing from the owners’ perspective.
The NHL like MLB gets a small percentage of revenues from the National TV contract. I believe the numbers for MLB/NHL are 15% versus 50% for NBA/MLB (fact checkers please). To do revenue sharing (of RSN revenue) will be painful for the owners… However my point about the players is it’s an agent driven Union. Two thirds of membership makes less than a million a year, and average career length has gone down. If, if there were to be an agreement on revenue sharing, say 49% with a floor and cap, compensation would be more predictable, players would have more say on where on the age/value curve they get paid. IMO it would devalue the Scott Boras’s of the world, allow for more compensation equity- both good things for humanity. I do find it amusing that the “eat the rich” (posters and especially writers) crowd doesn’t look at how sports unions treat the rank and file. But my larger point is until ownership and the union are partnered on growing top line revenue, the sport won’t be in a growth mode and will suffer the horrible optics we just witnessed.
Yep, this is exactly my view of the situation too.
Agree 100 % with your comment.
The bias of fangraphs writers is obvious. Tony Clark is representing Scott Boras more than representing players. That is never mentioned by these writers.
This occasionally comes up but there are huge hurdles and they are all interrelated. First, there is no central revenue sharing agreement that is remotely comparable among teams. Second, the share of TV money is much more locally defined than for a large number of major sports leagues. Third, revenues are substantially less transparent for MLB than for other leagues. Fourth, the history of the league has a particularly nasty set of collusion charges which poisoned the well in the mid-90s strike, where the owners essentially proposed the model the league after others. So there is already a history of that and it is bad.
The first two are interconnected like a tangle of yarn, where if you pull on one thread it tightens in another part of the knot. There would need to be some sort of understanding between ownership about how to proceed, and it’s not clear there is any sort of will for that. Similarly, the second and third are interconnected, as are the third and fourth. It would be a very heavy lift.
I think that the owners may want a cap, but MLBPA would never agree to it without much more transparency and the owners would be foolish to allow that. Heck, I bet a good number of owners don’t want to be transparent to the other owners, much less to the players.
think a problem for some teams is yeah they might want a cap- but with that would be a hard floor- and you think the Rays and Marlins want to be forced to spend 75% of the cap?
I think with enough revenue sharing they would go for it, for sure. Of course, that hurdle itself is a pretty tough one for the owners. The Dodgers owners paid $2B and are running an exceptionally profitable team. I don’t see them, or a bunch of other teams like them, running to subsidize the others.
It’s too bad though. I think the league needs much better revenue sharing.
Agreed
If there is true revenue sharing as in the NBA, perhaps they would support a floor.
Agreed there would have to be alignment on top line revenue and costs to arrive at the revenue share number.
I agree that MLB doesn’t have as aggressive of revenue sharing as other leagues do and thus can’t have the same payroll caps and floors as other leagues. I’m not sure how “TV money is much more locally defined” than the NBA or NHL since often these teams are on the same RSN in a given city. (Maybe you’re repeating that MLB’s revenue sharing isn’t aggressive.) I also don’t know where you’re getting MLB revenues are “substantially less transparent” when MLBPA said that MLB’s numbers were “basically correct” in Ben Lindberg’s 2018 article. I know that’s a favorite hobby horse on Fangraphs, but where’s the proof that owners in other leagues can’t own parking garages off-book or hide revenues from their own TV networks as the MLB supposedly does?
Shalesh, I’ve posted the link on % of total revenue from national contracts before (in the last month), I’ll look again… The NBA has big deals with several networks (TNT, ABC, and ESPN) and obviously the NFL is a national sport. As I said earlier, the NFL and NBA get about 50% of revenue from these deals. Baseball national money comes from the playoffs. Don’t be surprised if we don’t see 140 game seasons and expanded playoffs in the future. The traditionalists reaction will be amusing- maybe even the reaction to the heresy I just wrote…
This is all a big part of it all that the pro-owner side doesn’t seem to get – the owners have no credibility which to say “just trust us” and expect that the MLBPA will. They’ve already been busted for collusion once. Some people seem quite convinced that they’re doing so again. The service time shenanigans are very well documented. If you want to be trusted, you have to act so as to gain trust, particularly when you’re talking about hundreds of millions of dollars.
Your points are all fair and I attempted to allude to some of them. My point is the NHL is the model for this kind of a structure because of the local revenue numbers. Obviously the Yankees and Dodgers wouldn’t totally devalue their franchise value “for the good of MLB”. But the NHL went through a very difficult lock out in 2012-2013 and did get a deal. The Rangers valuation is still 4 times that of franchises at the bottom of the valuation list.
Nice little exhibition tournament for 2020. Here is hoping we get things back to normal for 2021.
If Ronald Blum is right, that’s a cretinous idea. You simply cannot fit Interleague games into a 60 game Covid season.
The error bars if all 60 are played against direct competitors are bad enough. They obviously grow with a foreshrtened Interleague.
But adding another two games (and remember, these are singleton “series”) with possibly 3000 miles of travel, setup, logistics, etc?
Medically bonkers.
I agree 100%. I think the issue is there is a odd number of teams in the divisions, so you have to have an outside division matchup everyday. They could have gotten rid of the divisions entirely I guess.
Even then, odd number in each league.
With no DH, one could get rid of the leagues I guess…
I’d guess when you’re playing interleague games, it’d be 2 sets of 4-game road series, 2 sets of 4-game home series, and 2 home+2 road vs a logical opponent (e.g., Dodgers/Angels, Nationals/Orioles, Indians/Reds. Not every team has a great fit for that but most do).
You’re also gonna have teams from different divisions in each league competing for the two Wild Card spots based on record… despite having zero common opponents.
“The proposed schedule will largely feature divisional play, with the remaining portion of each Club’s games against their opposite league’s corresponding geographical division (i.e., East vs. East, Central vs. Central and West vs. West), in order to mitigate travel.”
I understand limiting travel by avoiding games like Yankees vs Angels — but at that point, I think I’d have just ditched interleague and went full interdivision only.
Or if you really want to minimize travel, how about just forget divisions entirely and make 5 groups of 6 teams as regional as possible? And since that works out to 12 games per opponent, reduce travel further by doing six game series.
Granted, as far as travel, any way you group up the teams, several will just get boned by being pretty far from any clusters, but those same teams are disadvantaged by travel anyways, so I guess, what are you going to do about it?
#1: Padres, Dodgers, Angels, Giants, A’s and Mariners
#2: D’Backs, Rockies, Rangers, Astros, Royals and Tigers
#3: Twins, Brewers, Cubs, White Sox, Reds and Cardinals
#4: Braves, Yankees, Mets, Red Sox, Pirates and Phillies
#5: Blue Jays, Indians, Nationals, Orioles, Rays and Marlins
I made some decisions there to try and squeeze in most of the major rivalries. I didn’t tweak anything to try and balance them, but the top five teams by Fangraphs current 2020 projected win% are one per group.
Doesn’t work out as well otherwise– here are the average 2020 projected win%:
#1 .500
#2 .483
#3 .519
#4 .517
#5 .480
… at the expense of a couple of rivalries, swap the Braves and Marlins and also the Royals and Twins and then each of the groups is within the range of .498-.502
I don’t mean speak casually about other people’s jobs being at stake but it seems like a poor decision to begin a baseball season right now. Cases don’t really appear to be under control and people (in my area) are very overall pretty dismissive of the risks involved in resuming normal activities. I realize the employment of a lot of people is dependent on the return of baseball and I honestly don’t know what the answer is to that. To do it safely, though, seems like a tall order.
Show me an athlete in any sport who died from Covid.
Are you blatantly ignoring the primary concern that is the spread of the virus to others who will die? Your statement would be considered ignorant back in March, and it’s embarrassing to still see it anywhere. The players speak to caring about the virus impact to their and others’ families than themselves.
I think it would be awfully unlikely for a larger number of reasons. The bigger problem is disability. They’re called “long-haulers”, where people literally don’t seem to get better (many of them are on 2 or 3 months now). I doubt it will kill any ballplayers, but wrecking your body (and dealing with disability) when you get paid for athleticism is pretty bad too.
Plus, the number of other staff that are more vulnerable is notable. Plus, everything shumway said.
The risk of an athlete dying of COVID may be low. The risk of an older manager, coach, trainer, etc. having serious complications after catching the virus from a contagious player is much, much higher. The highest risk is to the older members of the baseball ecosystem, and not the players themselves.
Kiyotaka Suetake, a Japanese Sumo wrestler, died from Covid.
Cody Lyster was a 21 year old College baseball player. Died from covid in early April.
Your concerns are pretty valid. I think MLB is trying to do what it can to make it safe for the players and give us some kind of season, but the way the pandemic is spiking right now it doesn’t seem certain play will be able to resume.
It’d be unforgivable if MLB forced it’s players and staff at gunpoint to play a season. But given they have the option to not play/work, this seems like letting adults make their own decisions.
A return to playing ball is a good thing. The biggest risk that such a fraught negotiation brings is that there’s no reservoir of good will or a sense of hard-but-fair bargaining to fall back on if there’s a health or facility problem.
So… maybe I’m in the dark, but with the Canadian border shutdown, how is Toronto participating?
MLB can have teams play in another location if they deem it necessary. There’s been some talk of the Blue Jays playing in Buffalo.
It gets even better. New York just said if you come in from a high-COVID state (including Texas and Florida) you have to self-quarantine for 14 days.
The Blue Jays is obviously the more serious problem but I don’t see many exceptions to the New York rule either.
It gets even better than that. News broke around supper time that the Jays apparently had “several” people test positive. A week after they shut down their ST facility because a player had symptoms.
Add that to the dozen unnamed Phillies personnel/players that were also infected at their ST facility in Clearwater. According to reports 7 phillies players are in that group of 12. Which means over a quarter of the 25 man roster tested positive.
its getting harder and harder to see how this is actually going to happen.
I am pretty well convinced that even if teams don’t quarantine players who come into contact with an infected player for a few days there are going to be crazy situations where teams don’t have more than a few pitchers available, outfielders playing second base, and eventually not having enough players to field a team for a week. I keep revising this number upwards as I think through the scenarios, but under the assumption that states themselves don’t close down the games (which is a distinct possibility). I think the over/under on the number of games a team gets through is about 40. I sincerely doubt any team gets to 60.
sadtrombone, Essentially players will be in quarantine mode with the regulations in place- isolating, taking temperature, daily testing. Even Gov Cuomo said self isolating for travelers is a voluntary request. Also remember the Gov. chastised the Rhode Island governor for attempting to stop New Yorkers when they were the super spreaders… For all of us, social distancing is about common sense, we primarily wear masks to protect others- to stop viral shedding and spread to others. Its a self sacrifice and civic duty if you will, something in short supply these days… Instead what we see is political narratives and hypocrisy. stay well.
Well, they will be quarantining except they’ll be in contact with players from the other team. I don’t really have big thoughts on this except that it’s perhaps a bad look to have people who are clearly violating the state order on TV (or getting a waiver to do it).
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If there was ever a time to institute an automated strike zone, a global pandemic seems to be it. Instead, we get some coed beer league softball-inspired “runners start on second base in extra innings” nonsense.
Because, Manfred.
“We get some coed beer league softball-inspired “runners start on second base in extra innings” nonsense.”
I hate this rule so much
The umpires are unionized too.
You still need a home plate umpire with automated strike zones. Maybe they get to hang 10 feet back and lower out of foul tip danger, and they still get to announce balls and strikes. Or maybe find a better position to make the other calls, like foul tips, check swings, and balls in the dirt. No jobs would be lost.
We could use one more poll, yes? On how many games people think will actually get played/completed? Maybe something along the lines of 0 / 1-30 / 31-60, no playoffs / Some playoffs / Whole shebang
I remain thoroughly convinced that there is no chance they actually play this all the way through.
“And here we thought the three batter minimum rule was what would get rid of LOOGY’s”
Buh-dump, ching!
I can’t blame any of the Leagues trying to get a season in despite the pandemic. No league wants a year to go by without at least a Hello we’re still here. With MLB and no bubble, mainly due to the logistics, I’ll be surprised the season gets completed. I question if the NFL will get theirs in. NHL/NBA have the best chance but still iffy and asterisks ** may apply to ALL the Leagues this year.
The sad thing is, the actual gameplay is the least dangerous of all them. The spread would be clubhouses and dugouts.
But the actual games are probably fine.
Agree. As I was reading some of the do’s and don’ts you wonder if they have to go their extremes is it worth it. A lot of it is based on the honor system of guys in their twenties who don’t have the full frontal lobe developed
Yes, gameplay wise baseball is lucky that it is naturally a socially distanced sport (I’m baffled at how the NFL expects to play with the amount of contace on every play. even the NBA to a lesser extent). But as stated, gameplay is probably never the biggest concern. We already have reports of players/personnel testing positive and we arent playing games yet.
Agree. Then you hear of Golfers and /or their caddies getting positive tests. Golf is considered one of the “easier” sports to navigate Covid 19. Played outside, social distancing ,small number of personnel to contend with. If they are experiencing small troubles early in season……MLB???
The NFL is living in a dream world. The NBA is by far the most intelligent of the big 4 right now and had the right idea in quarantining the league from the outside world, but they’re already running into issues with support staff testing positive and Florida being a petrie dish. Choosing to restart the league in the state that has been the least responsible in responding to the virus was a mistake they’re already reaping the fallout from.
What a ton of people everywhere in the US (not just in sports) don’t seem to realize is that being sick of being in quarantine isn’t the same thing as no longer needing to be in quarantine.
Baseball!
This is like drawing confidence from a water gun in the middle of an raging inferno. Someone will fall ill and die, and everyone will be tut tuting this rash decision.
“And here we thought the three batter minimum rule was what would get rid of LOOGY’s.”
Bravo, sir. Bravo.
Oh my goodness, I had no idea the players’ recent proposals included Jersey ads!! .. a small part of me is glad that got nixed. As it is, I’m not happy the Swoosh is tarnishing my Yankees’ pinstripes