On Tuesday we saw Major League Baseball make their proposal to the players on another pay cut to try and get the season going. They proposed a sliding scale that would cut the highest paid players yearly salary to just over 15%, while keeping the lowest paid players near 46% – which is close to what the players and owners agreed to in late March when they agreed to play on a prorated by game basis. The immediate reaction was about as poor as you’d expect it to be. The players who did speak on it quickly said they were going to start making other plans, while many in the media noted that this plan was made to try and split the union and pit the younger, low-paid guys who make up 65% of the union (less than $1M per year BEFORE agreeing to take a 50% pay cut in March) against the guys making more money who would be taking a much larger pay cut.
Max Scherzer, who is near the top of the players union and a part of an 8-player subcommittee had this to say on twitter late last night.
After discussing the latest developments with the rest of the players there’s no reason to engage with MLB in any further compensation reductions. We have previously negotiated a pay cut in the version of prorated salaries, and there’s no justification to accept a 2nd pay cut based upon the current information the union has received. I’m glad to hear other players voicing the same viewpoint and believe MLB’s economic strategy would completely change if all documentation were to become public information.
There’s a little bit to unpack in Scherzer’s words here. First is that the players don’t even feel it’s worth it to go back to the owners with a counter proposal in the format that the owners sent them. Second is that the union asked for documentation on the revenues from the owners and what they got back showed them very little to suggest that they should take further pay cuts. We know that they requested information earlier in the month and MLB provided them with some, but not all of the information that they requested. Scherzer alludes to that in the final sentence of his statement.
Bill Shaikin of the Los Angeles Times made a point that I’ve been making for a while over on twitter last night.
Even if the owners were to open their books — a highly unlikely prospect — they might say, "Here's what the baseball team makes. That's your business. My adjacent real estate development? That's not." And that can't be resolved in a week.
— Bill Shaikin (@BillShaikin) May 28, 2020
And he’s not wrong here. There are so many ways that owners are making money off of the baseball team that they aren’t putting on the “baseball books”. Like when they sold off $2.6B of BAMTech and said it wasn’t “baseball revenue”. Or when teams took ownership stakes in their regional sports networks in place of cash payments to broadcast baseball games, which is now “non-baseball revenue”. And there’s a lot of other little things like that they are doing all around the league to keep money off of the “baseball revenue” ledger. This is one of the largest reasons that the players union wants nothing to do with a “revenue split between owners and players” this year, or any year. Accountants and side businesses easily hide or move profits elsewhere.
Just after midnight on Wednesday, Jeff Passan of ESPN reported that the players would be looking to present their plan to Major League Baseball by the end of the week. He reports that the players will be offering a plan for more than 100 games and a guaranteed prorated salary for the 2020 season.
Much like the owners proposal, that plan likely won’t go over well based on what we know. The owners wanted a shorter season because they make an enormous chunk of money from their playoff television contracts. Their plan presented on Tuesday included $200,000,000 to the players if the playoffs were completed this year – $25,000,000 if they completed the division series, $50,000,000 if they completed the league championship series, and another $125,000,000 if they completed the World Series.
MLB is concerned that there would be a second wave of COVID-19 that hits the country later this year (much like every expert on the planet expects to happen, too), and thus the early plans we saw in April that had the regular season extending into November were scrapped. The players plan of a longer season that includes more games probably pushes the playoffs back in a schedule, which would in theory put the playoffs more into question and with the playoff money at stake, the owners aren’t likely to want to see that happen.
The players just gave the owners the leverage of urgency. Owners want an 81 game season, players want 100. The longer they negotiate, the fewer games that can be played.
If the owners want to try and claim they can’t uphold the previous agreement because they’ll lose too much money, then yes, I believe that not opening the books will create an impossible hurdle to overcome.
When the owners want to open their books to show the players that there’s an actual economic viability issue, I’ll believe the owners that maybe there is such a thing. Instead they’ve yet to fulfill the request asked for by the MLBPA to show that it’s actually not feasible.
The currently breaking news is that many organizations are moving forward with releasing a large number of their minor leaguers. Per tweets from several “national” writers, this includes the Reds.
These releases come on the heels of the Athletics yesterday informing their minor league players they would no longer be paid. Agents quickly pointed out the dichotomy of trying to hold players under contract while at the same time refusing to pay them. Apparently the actions today are MLBs response.
The wheels are falling off.
Not surprising, there will be may minor league free agents now available to the teams with the best financial situation.
My guess is that none of the players released are considered true prospects. They are probably the players who fill out rosters and lineups around the true prospects. Doug probably has some thoughts on that.
It is not looking good at the moment.
Sorry, I forget the exact team but per tweets at least 1 was reported to be releasing up to 40 guys. Another series of reporter/ agent tweets used the term 100s describing the level MLB wide.
Yes a number of them figure to be guys in camps on MilB contracts looking to nail down spots. However, there are probably going to be some very recognizable names. But correct NOT guys seen as leading prospects.
Here is a more recent tweet from Jeff Passan.
He says “hundreds” released this week; by this time next week “hundreds” more. The eventual total could come to 1000 or more
A business that was in good shape financially would not want to do that. In the case of the Reds, one of the new organizational undertakings was to have a coaching plan for each individual minor leaguer. Seems like quite a bit of wasted time, energy and cost if a lot of those guys are going to just be released.
I will admit that I am getting a bit worried about what is going to happen (or not happen).
smart, long term thinking teams will pick up anyone which could have value in the future.
Smart, long term thinking companies, buy up undervalued assets during bad times, short term thinking companies, sell during bad times.
reading today at MLB trade rumors that at least some of these minor league cuts were players that would have not made the MILB teams out of minor league spring training as there were no cuts to the minor leagues when the camps were abruptly closed and all players that were in minor league camps were getting the $400 a week from the MLB teams.
Some teams are still paying all the minor league camp participants anyway even those they would have cut.
May not be deserving of outrage after all as the teams did pay them for a few months after they would have been cut anyway.
And then there is this from Scott Boras, sent to his clients, courtesy Associated Press…
Several main points:
“Owners are asking for more salary cuts to bail them out of the investment decisions they have made,”
“The owners’ current problem is a result of the money they borrowed when they purchased their franchises, renovated their stadiums, or developed land around their ballparks.”
“This type of financing is allowed and encouraged by MLB because it has resulted in significant franchise valuations.”
If the owners have leveraged the team valuations for loans to do other businesses that would mean the baseball team business could be collateral on the loan so the “owners” do not really own the franchise the company or individuals that funded the loan are the real owners.
That would get really interesting if teams value are collateral and the owners stop paying the loans, if that occurs the lenders could sell the loan which could result in a new owner of the team.
No wonder the owners do not want to show their books, there is probably lots of hidden costs and revenue funny business between multiple incorporated companies all which are owned by the same person in the end but different legal entities.
What a tangled web is possible
Oh, what tangled webs we weave when we first practice to deceive.
Nice that none of this affects my access to playing golf.
True dat Doc. I’m so frustrated about the lack of progress in baseball negotiations but so grateful for weekend tee times right now.
I am getting tired of Billionaires and Millionaires squabbling over how big their piece of pie is. Millions are unemployed, there are bigger problems than this. Get it together, or you’ll both lose out as fans stop spending their money on you.
65% of the players union does not make $1,000,000 a year in a normal season, much less half of a season. It’s not millionaires vs billionaires. It’s billionaires versus guys who made somewhere between $10,000 last year and $37,000,000 last year.
Greene, India, Lodolo, Rdoriguez, Garcia – Not in the MLBPA, have no voting rights or say in the battle you are talking about.
Tejay Antone has made $10,000 or less every year of his professional baseball career. He’s made, before any taxes, agent fees, clubhouse fees or anything like that, about $350,000 if we include his signing bonus.
Jose De Leon was a 24th round pick who signed for $35,000 has not made anywhere near $1,000,000 in his career. It’s tough to calculate exactly what he has made because his split contract is unknown, though they usually range from about $90,000-200,000 depending on how long you had played in the Majors previously.
Ryan Hendrix signed for $410,000. He’s made about $450,000 before taxes or frees in his professional baseball career.
Joel Kuhnel signed for $125,000. He’s made roughly $400,000 before taxes or fees in his professional baseball career.
Aristides Aquino signed for $110,000. To this point in his career he’s made under $500,000 as a professional baseball player.
Mark Payton signed for $45,000. He’s made less than $100,000 in his professional baseball career that started in 2014.
Josh VanMeter signed for $308,000. He’s made roughly $600,000 in his baseball career that started in 2013.
Yeah, there are plenty of millionaires in the MLBPA. There are also plenty of guys that have been professional players for 5-10 years who haven’t sniffed a million dollars in career earnings before a single penny has been taken from those checks from Uncle Sam, Agent Bob, the MLBPA, clubhouse fees, etc. A whole lot of guys in the MLBPA fall into this group. It’s a lot different than just millionaires vs billionaires.
The 100 game Clause from the players just goes against the grain of the recommendations from the cdc and it just makes the players look greedy in the negotiations. The season has to end by mid october at the latest to avoid coinciding with the fall surge that is pretty much a given. Playing more games just makes no sense to anybody.
Doug , if disneyworld opens in July, there is no reason why fans should not be able to attend games in July!
I don’t agree with that. And neither does MLB since they clearly have about no belief that they’re going to be having fans in the stands when the games start, which they are hoping to happen in July.
A bigger question might be who would be willing to attend an MLB game given the virus situation, especially given they will be on TV?
How would concessions, even restroom access work?
I read that some of the amusement parks are working on systems to manage arrivals via a phone app. I.e. you register for an arrival time. Same thing with rides and attractions. Not sure if this would work with a structured attraction like a baseball game.
And can the teams even break even on a 25% capacity crowd? How much would they have to charge per seat to do so?
Maybe it would not be a matter of breaking even but at least preventing some of their losses with the 25 % crouds. The other thing is concessions would be obviously reduced too because you wouldn’t need as many concession booths open.
Overall I just want to say I am doubting that there will be a baseball season this year considering how far apart the players and owners are in negotiations at this point.