This afternoon the Major League Baseball Players Association representatives sat down, in person, with the Major League Baseball ownership representatives. It was the first time that the two sides have been together in person since before the owners instituted a lockout on December 2nd. In their last in-person meeting the ownership representatives told the players before the meeting began that they would not even listen to proposals on the matter of earlier free agency and the meeting lasted a whole seven minutes before the ownership group walked out of the meeting. Shortly after that meeting the owners locked out the players.
The next meeting to discuss core economic issues, which are anything and everything that the two sides truly have disagreements over, took six weeks for the owners to come with their proposal that actually offered the players LESS money overall due to cutting down the luxury tax threshold that most teams use as a salary cap. The majority of people covering this for a living believe that the owners are not making serious proposals to try and make a compromise with the players, instead trying to simply wait them out and force them to accept whatever the ownership group wants.
As Maury Brown of Forbes pointed out earlier today, though, perhaps the owners will cave in a little bit once spring training is set to start because that will actually begin to cost them money. And that money is something that they may indeed need – or at least some of them – to help pay back what they were essentially loaned during the 2020 season from television contracts that have bills coming due.
As for today’s meeting, it was the players association that was making their presentation to the owners. Evan Drellich of The Athletic first reported that the players agreed to drop a request for an age-based free agency system. The owners were firm that they were not willing to negotiate on that, so at least in this area, there was some progress made between the two sides. But the players are still seeking to have arbitration begin after two years instead of three years and the owners are still said to not be willing to even discuss that.
Jeff Passan of ESPN is reporting that another meeting will take place tomorrow. That’s good news, probably, as things went six weeks between meetings last time. It would seem that after hearing the players proposal that tomorrow it will be the owners who will come back with a counter proposal. When that happens we will actually see if the owners are taking any of this seriously or not. The players gave in on one of their big asks this afternoon. What will ownership cede in return?
Thanks for consolidating the update for us, Doug. I’m still not at all optimistic, but that’s just me. I supposed I’ll have to become a Bandwagon Bengals fan (for at least another week) at this point.
One question I do have is about MiLB. With their play and season unaffected, will they open up training camps on schedule? And what about the MiLB contract players that have an invite to the Big Camp … can they actually do their Spring Training?
So it sounds like the player’s union proposals will result in higher player salaries and the owners’ proposals will result in either no change or a slight overall reduction in player salaries.
Put another way, if the player’s union wins these negotiations it will cost me more to take my family to a game to watch analytic driven baseball (aka watching paint dry), and if the owners win ticket prices stay the same (more likely just a slower rate of increase) to watch paint dry. Not really a tough call from a fan’s perspective.
Player salaries have NO relation to ticket prices. None. Zero.
of course you are right Doug, but Homer has a point. If I’m an owner, I am absolutely using the new CBA as one reason why I am raising ticket prices. It is a factor, whether we like it or not.
Sure Doug. Ticket prices just coincidentally go up as salaries go up. No correlation at all. No siree. None at all. As the product becomes more expensive to produce, the cost to to the consumer doesn’t change. Riiiight.
Once upon a time it may have been true because money made was highly tied to selling tickets. That is absolutely not the case anymore as an overwhelming amount of the money made by teams comes from television deals (local and national).
But hey – don’t take my word for it. You can read about it here (and there are other studies linked within that also show that there’s very little correlation between player salaries and ticket prices): https://mlb.nbcsports.com/2019/03/22/there-is-little-correlation-between-player-salaries-and-ticket-prices/
Little is key versus none
The article you referenced cites two studies, one from 1998 and one from 2003. One might say the data is a little dated. That said, it is certainly true that ticket revenue is a decreasing portion of overall baseball revenue. However, for the Reds, the team I care most about, ALL revenue is relevant. It’s really hard to compete when some teams have almost double the revenue the Reds have and it’s certainly pricy to go to a game.
Business charge the most money they believe a customer is willing to pay for a product. How much that product costs them doesn’t matter much to that point.
It was just a few years ago that teams began charging more for certain games than others. They called it dynamic pricing. Prices never go below the initial ticket price set at the beginning of the year, but they go up from there. Why? Because enough people are willing to pay more. It’s not because the players got a raise in the middle of the season. It isn’t because the ushers got a bump in pay. It is because they know that the fans are going to be willing to pay more money for that game.
This kind of thing happens in all kinds of businesses. Ever compared the price of an Uber ride at 2pm on a Wednesday versus the price of an Uber ride on New Years at 1am?
Economics 101 teaches us that the Reds set their ticket and beer prices at what the Reds believe is a profit-maximizing price. Kroger does that; Dell does that; Blue Emu does that.
That doesn’t mean that the Reds are accurately setting that profit-maximizing price. For example, I think that the profit-maximizing price for both tickets and beer should vary widely, depending on the day of the week, the month of the year, the opponent, and the Reds’ place in the standings. Tickets and beer should be cheaper on a Tuesday night in April for a game against the Rockies, than it is for a Friday night game in June against the Cardinals. They do that to an extent for tickets, but I think that the Reds could raise more money on the mediocre games with more creative pricing, including specifically lowering prices of tickets and concessions.
Paying players, though, is a completely separate economic calculation from pricing tickets and beer. The teams generally figure what their revenue stream is going to be and then budget a certain amount for player (and other labor) costs. While revenue from tickets and concessions is part of that equation, it isn’t necessarily true that higher ticket prices actually increase the revenue from direct consumer sales.
But what
Slightly biased I would say since all income affects what owners are willing to pay. Ticket prices are income and will be affected by the cost to the put product on the field to what degree may be arguable. Parking and concessions also may be affected if costs go up. Pretty sure owners don’t care where income comes from, just that it comes, they will raise the price of something.
Reading here and elsewhere, my gut tells me the MLBPA is caving and the owners aren’t. Hopefully, I’m wrong. I’m not following it as closely as others.
Even if the owners win and the player lose ticket prices will go up and the owners will say it’s the players fault. Not that the owners are greedy in any way. That’s how all management rolls. Blame the workers. Even if the workers are millionaire’s.
Just sayin…..
The players don’t stand a chance. For very dollar that I or hard working middle class people have saved, the typical MLB guy has $100 but only 3-4 years on average to improve upon that sum. The average owner though has another $1000 for each dollar the average player has. Just as companies nearly always win negotiations with people like me, the same dynamic works in this instance. The owners also have a valuable asset that never seems to decrease and probably a decent share of the growth in gambling revenue and other ancillary licensures and media contracts.
I would be curious to know if MLB players get any kind of pension after their playing days are over, otherwise their future is rather limited unless they are really exceptional and fancy being a lackey to David Bell and the owner that screwed him over in the first place. The game will go on, most of the season will be salvaged but very few will be happy as the problems in the game itself won’t be addressed. Attendance will probably fall but does it really matter?
MLB players do receive a pension based on service time after 43 days on a MLB roster. Minimum amount is $1000 per month and maxed out at $180,000 for players with 10+ years of service
It seems much of this would be resolved if MLB owners & players were willing to follow the successful NFL model.
In the NFL the TV contracts are league-wide, not regional. Meaning the TV money is split evenly between the teams.
All teams have the same salary cap, meaning rich owners / big market teams can’t regularly buy their way into success.
All teams have a salary floor (89% of the cap) so owners can’t just sit on the shared revenue.
Because of the financial structure, player control is not as big an issue as it is in MLB, because small-market teams like the Packers or Bengals aren’t scared about big market teams like the Rams or Giants constantly scooping up their players in free agency, since every team has the same pot of $ to work with.
@amgd,
In a perfect world that would make sense but I think that ship sailed a long time ago for united tv negotations. Too many teams have locked in long term deals, ownership stakes in regional networks (that will be interesting as some of those are bleeding money) etc…
Michael
I would say that a handful of very influential teams in big markets (Boston, New York, Los Angeles, Chicago) have very lucrative cable-TV contracts, and they aren’t about to share that advantage in revenue with the Reds or the Kansas City Royals, for instance.
The NFL would be a good model for MLB to emulate, but…..that isn’t going to happen.
The NFL has other problems, but their salary structure has meant that there is a great deal of real parity.
The Lords of Baseball really don’t want that.
And the Lords of Baseball really don’t give a fig about the fans or the future of the game, except to fleece the fans when they come through the turnstile. As a fan, you start to feel like a mark in a carney side-show.
Some good points taken about the NFL. Even the NBA model is better than MLB by a long shot. Except for historical reasons, its hard to understand why a salary or “revenue” cap is not imposed. Then, the superstar who makes 30 mill per year may lose some but the group of players who are 80% as good will benefit greatly and teams won’t have to tank when they can’t pay top dollar. Seems like the players union is listening to Scott Boras or the player’s agents. I can’t think of anyone else that benefits from this structure.
@data,
I agree with your assessment for the NFL and NBA. The players are guaranteed a set band of revenue and take risk if it drops (rarely does) and benefit if it rises. MLB players union can not say the same thing. Also while giving up some things they were able to get team cap minimums and you dont see this bull with teams trotting out AAA teams for 40 million while other teams are spending 200 million.
@david,
I agree with what you are saying. Personally I feel like the large markets are stepping over a dollar to pick up a dime every time. The NFL owners have realized they need each other and having viable franchises leads to even bigger ratings, attendance etc…
Also while the NFL Players Union has been weak compared to the MLB one, I think there long term relationship with the owners has guaranteed a reasonable share of revenue. The NFL tv contract amount just exploded and the players are going to reap the benefits from that when the cap goes from around 200 million to 300 million in a few years. I dont think the same thing would happen in MLB without a full out war between owners and players.