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.