For those of you hoping that there may be some light at the end of the tunnel for Major League Baseball returning, you may have seen that light get a little dimmer on Tuesday evening. After backing off of an idea of a 50-50 revenue split of 2020 revenues between the players and owners after union head Tony Clark said it was a non-starter because it was basically a salary cap, MLB came to the virtual table on Tuesday with a different plan. It was basically a slap in the face to the players.
Jeff Passan of ESPN was the first to report the salary scale proposed by MLB to the union. The players and owners agreed to a deal at the end of March that the players would be paid on a prorated basis per game this year. The owners decided that they would try to use the “economically feasible” clause in the contract since fans aren’t likely to be in stadiums at the start of the year and negotiate a new agreement.
What they offered on Tuesday broke down like this:
The more money you make in 2020, the more of a pay cut you actually are expected to take here. Guys making league minimum almost get their full salary that they agreed to back in March. The group making $15,000,000 or more a season? They get 44.53% of what was agreed to back in March.
Sort of. What do I mean sort of? Well, it came out later in the evening that these numbers actually reflect what guys would be paid if the World Series were to be completed. With each round of the playoffs that are completed, the players actually get a chunk of money to be added to the “pool” to pay players.
Let’s take Mike Trout as an example here, because Jeff Passan has already done the math for me. If there are no playoffs played, then Mike Trout would actually only get paid $5,748,577.
Now for a harder one: Mike Trout. His 2020 salary: $37,666,666. Prorated: $19,065,843. He would get $256,706 for his first $563,500 earned, $160,185 for the second tier, $1,012,346 for the third and fourth, $1,518,519 for the fifth and $1,788,477 for the sixth. Total: $5,748,577.
— Jeff Passan (@JeffPassan) May 27, 2020
The impact of the playoffs happening are lesser on the players making lower end money – as noted by Passan, a league minimum player would only see $5,512 in a “postseason bonus”, but for Mike Trout, that postseason bonus is about $2,500,000.
The owners are asking Mike Trout, who entered the year with a guaranteed contract for $37,666,666 to agree to play for 15.3% of that, and if things go just right, he’ll get a little bonus that will push his salary to just a reduction overall to 22% of what he was supposed to be guaranteed this year and just over 44% of what the two sides already agreed to back in March.
The owners want absolutely ZERO risk at all. They’ve enjoyed record revenue and team value growth for the last two decades straight. And now that there is finally a situation where they may lose money in a single year, they have decided that they can’t have that happen and want the players to not only take an enormous pay cut, but also to actually risk their health and their families health to do so.
The owners want the players to share the losses. But when they sold 70-something percent of BAMTech to Disney over two years for $2.6 Billion, they claimed it was non-baseball revenue (despite the fact that BAMTech was created as apart of Major League Baseball Advanced Media). And when teams have signed new local television deals, 18 of the 30 teams wound up as partial owners of the regional sports network that their games were on as a part of the contracts for broadcasting the baseball games, which they got instead of paying more money for the rights to broadcast those games. One additional team, the Blue Jays, are owned outright by the company that also owns their sports network (so 19 team owners of the 30 own at least part of their RSN). And as you guessed it, owning part of Fox Sports whatever region isn’t “baseball revenue”, either. Yet it only exists because of baseball. The owners definitely don’t want to share those gains.
Many see Major League Baseball’s proposal as an attempt to try and divide the union. With more members being in the lower tier of salary, they wouldn’t be effected nearly as much by the “decline” from the already agreed upon prorated by game pay. While the more senior members of the union, the ones who have reached free agency and been able to sign big contracts after years of being vastly underpaid, are now expected to take massive pay reductions.
In an article from Evan Drellich and Ken Rosenthal at The Athletic published at nearly 2am ET (yeah, it was published 9 minutes ago, and I’m typing this at 1:52am – my schedule probably is nothing like yours, and for that, you should be happy because man, it’s a weird schedule I keep), this quote from an agent makes you think that it’s not going to work in splitting the union into factions:
I have never seen a collective response like I’m seeing today from the players,” one agent said. “They are livid.
Marcus Stroman, starting pitcher for the Mets weighed in on Tuesday evening with this….
This season is not looking promising. Keeping the mind and body ready regardless. Time to dive into some life-after-baseball projects. Hope everyone is staying safe and healthy. Brighter times remain ahead!
— Marcus Stroman (@STR0) May 26, 2020
Things can change rather quickly in these sorts of things, but it’s ugly right now. And the players feel insulted, nearly across the board.
What exactly the players come back to the virtual table with is unknown. The whole thing needs to be discussed among the teams and team reps before they then get back to the discussion of what they want to do. With that said, if “the plan” is to get baseball back by the first week of July, there’s about a week remaining to come to an agreement if that’s going to happen given the amount of time needed for spring training (are we still calling it spring training?).
The owners are doing their best to drag baseball down to the aftermath of the last strike. The players have a legitimate beef here.
I agree with D Ray. I get that your first offer is low when you’re negotiating but wow that’s low. I actually like the concept of the sliding scale, but this looks an awful lot like the players taking the whole hit for lost revenue. That far right hand column probably needs to look more like 100% up to $1M and maybe 2/3 or more in the Trout row at the bottom before playoff bonuses. And the owners need to guarantee full salaries for next year if a full season is played. This is disappointing. I’m just hoping that the owners know this is just a starting point and have a lot of room to move or this won’t get done. And the optics of no baseball because billionaires got really greedy and millionaires wouldn’t budge is are not good for the game, or revenues, in the long run. Not good at all. The owners better not be so penny wise and pound foolish.
If the owners are willing to play the “economic infeasibility” card, that’s a very serious move in a labor negotiation. It means the MLB and teams will have to open their financial books for the union. Claiming economic infeasibility is a negotiating tactic privately held companies rarely use in contract negotiations because it exposes the company’s finances to scrutiny.
With a contract negotiation coming up, opening the books is either going to give the union a massive lever -or- things are worse off in baseball than we all thought and that will be laid bare for the union (and, through leaks, the world).
If MLB was truly in dire financial straits, it seems they would open the books to the union and say, here’s what it is. Do you want to help us with this or not? I believe that has happened in our lifetimes in both the NHL and NBA.
The MLB owners keeping the books closed indicates to me that while they are feeling some financial pressure, they don’t want the union to see the full picture of what is happening.
It is obvious that MLB is pitting the highest earners, who are few, against the lower-paid guys, who are many. The owners have similar issues — the business model for the Indians and Marlins, for example, is way different than that for the Dodgers and Cubs.
I do not agree with you that the owners have all the cards. I believe that the owners are risking a collapse of their business model, if they can’t reach an agreement with the players. When unemployment is reaching close to 20%, the industry cannot handle a New-Coke level PR blunder. The ordinary baseball consumer (the kind who are not on this site) will give up on the sport. Even I am losing interest; I’ve gone 8 months without any baseball, and I’ve adjusted. If they don’t play until 2021 (with a strike/lockout looming), then the industry will go 18 months without any product to sell. Good luck with that prospect.
I think the revenue model is suspect, anyway. People hadn’t been going to live sports events like they used to do. College football, NASCAR, bad NFL and NBA teams, etc. are all down, for a variety of reasons: (1) younger people don’t care; (2) Hi-Def TV is better or at least an excellent substitute for the live game; (3) cord-cutting, which undercuts how much local rights can be worth; (4) overpriced events and concessions that price too many people out of the market; etc.
Throw in a PR disaster and 18 months without product, and the revenues will collapse. Attendance will tank; regional sports networks will lose eyeballs and will renegotiate or file Chapter 11; and soon enough, the national contracts won’t be renewed at anywhere near where they will be.
The owners may legitimately believe that they will lose their shirts this season, without fans and without a concession from the union. But losing their shirts this season will be nothing compared to what they lose if the business model collapses altogether.
I think Rob Manfred is too smug to grasp this possibility. The saving grace may be the owners of the Cubs, Nationals, Yanks, Dodgers, etc. have the clout to force a settlement.
@biged,
Never forget the Commish works for the owners. He is presenting there perspective. This is what the owners want.
It amazes me watching the owners and unions in the NBA and NFL work things out, mostly behind closed doors and keep on milking the cow. The owners and union in MLB seem to want to hit the cow over the head with a hammer and will be shocked when it is not producing milk.
Not sure how much of a force the Yankees might be. They’ve been watching their $$$ in recent years. Their market is the virus epicenter of the US; and, one of the 2 co-owning Steinbrenner brothers, Hank, died just over a month ago.
The surviving brother, Hal, was already the main force with the team; and, his brother’s death from what I’ve read was not a bolt from the blue. However, we never know in what way estate settlement is going to impact a privately held family company’s financial situation.
I’ll go back to something I said early on. Some of these owners and ownership groups are in genuine economic distress. Increasingly that is becoming the only feasible explanation of their behavior.
My guess is they are too proud and/ or ideological to really open their books and try to work with the players.
Everyone else suffers for their attitude.
@jim,
If they are in real financial trouble then the whole system is going to implode.
And isn’t that what’s happening right before our eyes?
@jim yes that seems to be the case. The curious thing is why not open your books if you are in that kind of trouble. The union might be open to working with them if they know things are bad.
Or is this a case to where the owners believe they are better off not playing at all and locking in the loss vs losing even more? This will be an interesting case study in a few years.
Teams values are increasing way over the rate of inflation.
Players are making monopoly money.
I can’t go to a game anymore. It’s not the game ticket but all the extra costs associated.
I watch a game on TV and after every inning Tucker Barhart is trying to sell me a water conditioner.
Gentlemen, I believe both sides need a dose of reality and a 50% loss in value of a franchise is a good start.
Some of us love the game so much that we’d have no trouble taking the 1/2 their minimum wage.
Seems to me neither side has a love for the game, just their monopoly money.
I still think the players are either scared to go back or just not grasping the concept of what is going on here.
The players are trying to recreate 2019 baseball and the owners are trying to recreate 1919 baseball and i think the owners have the right idea.
the motto “simplify or die” will have to be followed for the next few seasons until the economy recovers and the virus goes away. the players will have to just show up to the park, stretch, play the game and get out of doge. crowds will be sparse at best and tv contracts less lucrative. the days of 10 different team trainers and assistant coaches and team buffets are over at least for a while and the players just have to accept it.
i still think baseball has the best chance of surviving the next few years of all sports because it is a summer sport and becasue it is not a contact sport. the players just have to realize they are going to have to make big sacrifices
Players should be paid 1/162nd of their salary for every game the team plays.
That would be fair and the players should demand nothing more or less.
Playoff bonus are whatever they are in a standard year, assuming playoffs occur.
If the owners take a loss this year, so be it, businesses sometime take losses, it happens that is why well run businesses have rainy day savings and lines of credit. This is called Capitalism and Private Enterprise.
Let the owners cry poverty and until they declare bankruptcy or close the business permanently with a chapter 7 filling, it is just whining.
If there is a marketplace for your business either an investor will come in and save the company just before the bankruptcy filing and usually assume some type of ownership control or this occurs during the bankruptcy procedures or the parts that are left are sold for pennies on the dollar as the company is liquidated.
If the business cannot survive that is why bankruptcy courts exists.
Ask Hertz, JCPenny, Frontier Communication, Gold’s Gym, J.Crew,Neiman Marcus to name just a few whom have filed in the last month, ask their employees how life is during a Chapter 11 bankruptcy event. As someone whom has gone through Chapter 11 as an employee, it is as stressful as almost any time in one’s life with no end in site.
Players and all employees of all companies should understand, the only salary that is guaranteed is the check that has already been cashed without bouncing, all “future” salary is a promise by someone that may or may not be trustworthy.
MLBPA Union reps and Commissioner staff (or whomever represents owners) need to get locked in a room without any ability to communicate outside the room to anyone for any reason. They stay in the room until an agreement is made (that needs approval of the union and the owners to be ratified without changes) or they decide no agreement is possible and the 2020 season is canceled.
Both sides look very childish in what is occurring (leaking to press), they need to be adults and get something done one way or the other.
We live in a time of a lack of leadership in many areas including baseball. Time is getting short and I don’t see a season happening in 2020 and it might even extend into 2021, with well paid and wealthy people unable to compromise. They’re basically saying the fans are not important, and many of us fans are finding things of interest to replace our devotion to baseball. It’s certainly not good for the Redlegs where attendance has not been robust over the last 6-7 years. Someone from both sides, with a vision, needs to step forward to benefit baseball because other pro sports are leaving it behind.
The MLBPA should explore having their players to do a joint venture beginning in 2022 with Amazon and/or Facebook, and others like Mark Cuban or Blackstone, etc. Both Amazon and Facebook need content, and they have the financial clout to overmatch MLB’s current ownership.
The investors could guarantee a percentage of the contracts that guys like Trout had signed, with MLBPA holding an ownership interest in the venture. They could start with 24 teams with 30 players each, which would approximate the number of jobs in MLB. Stadiums would be an issue, especially in places like Boston, where the only feasible venue is Fenway, owned by whatever would be left of the Red Sox.
The team names would have to change. The San Francisco Seals? The Kansas City Karens? The Pittsburgh Pit Bosses?
It would upset the apple cart, but Silicon Valley excels at disruption.
Well, in all fairness, pretty much the exact same thing just happened the NFL, so it’s not just a baseball thing.
Both sides acting like little kids while the real little kids won’t get to see baseball this year. Meanwhile the high contact sports making provisions to play anyway. Hockey introducing an exciting expanded playoff. Basketball perhaps a play in end of regular season then playoffs. NFL mainly business as usual. Fans will be watching. Baseball digging their own grave. Think the owners crying now? How about when no one is watching same as after the strike. Think the players crying now? How about when no one is paying them millions and they have to bag groceries because most of them have no college degree. Go on, keep going down this path knuckleheads!