Off the Kuff Rotating Header Image

Here’s the MLB season-starter proposal

Make of it what you will.

Major League Baseball owners gave the go-ahead Monday to making a proposal to the players’ union that could lead to the coronavirus-delayed season starting around the Fourth of July weekend in ballparks without fans, a plan that envisioned expanding the designated hitter to the National League for 2020.

Spring training would start in early to mid-June, a person familiar with the decision told The Associated Press. The person spoke on condition of anonymity because details of the plan were not announced.

[…]

Teams will propose that players receive the percentage of their 2020 salaries based on a 50-50 split of revenues MLB receives during the regular-season and postseason, which likely will be among the most contentious aspects of the proposal during negotiations with the players’ association.

That proposal would take into account fans being able to return to ballparks at some point, perhaps with a small percentage of seats sold at first and then gradually increasing.

Rosters would be expanded from 26 to around 30. With minor leagues shuttered, there likely will be the addition of about 20 players per club akin to the NFL’s practice squad.

MLB officials are slated to make a presentation to the union on Tuesday.

Players and teams agreed to a deal on March 26 that called for each player to receive only a portion of salary, determined by what percentage of a 162-game schedule is played. As part of that deal, if no season is played each player would receive 2020 service time matching what the player earned in 2019.

But that deal is contingent there being no restrictions on mass gatherings at the federal, state, city and local level; no relevant travel restrictions in the U.S. and Canada; and Commissioner Rob Manfred after consulting the union and medical expects, determines there is no risk to playing in front of fans at regular-season ballparks.

Players and teams committed to “discuss in good faith the economic feasibility of playing games in the absence of spectators or at appropriate neutral sites.” Manfred has said about 40% of MLB revenue is tied to gate, including concessions, parking, ballpark advertising, luxury suites and programs.

Union officials and players have cited the March 26 agreement as setting economic terms and say they have no inclination for additional cuts.

See here for the background and some more details about the initial proposal. I’m going to hand this off to Fangraphs for some deeper analysis.

In a half-season scenario, if teams lost nearly all of their stadium revenue, and every other revenue and expense stream (including player payroll) were cut in half, there’s an argument that the owners might lose about $50 million per team this season. While that’s still about $2 billion shy of the profits they’ve made over the previous three seasons ($4 billion including BAMTech money), it’s a significant loss. Of course, the vast majority of those non-stadium revenues will not be cut in half. MLB is still in a very good position with its television partners, and even getting 75% of non-stadium revenue would allow the league to break even without renegotiating the deal it previously agreed to with the players. And that’s before we even get to teams taking lower annual local rights fees in exchange for ownership stakes in regional sports networks, which might send another half-billion dollars or more to teams annually. Those profits aren’t included in the revenue sharing among teams, and similar issues will make revenue sharing with players incredibly difficult to determine.

And even if we were to assume that by playing half a season without fans MLB is going to operate at a loss paying the players half their salaries, and then further decide that players should share a greater part of the burden of potential losses in the form of revenue sharing despite not having received any of the benefits of increasing profitability the last three years, what constitutes revenue in this scenario? Calculating revenues in a normal year is hard; calculating them this year will be near-impossible. We can talk about the under-market local TV deals of the Red Sox, Mets, Yankees, and Cubs, which siphon off baseball revenue in the form of network ownership, as a potential sticking point but even more difficult is determining revenue on national and local television deals and sponsorships.

If a team or the league agrees to take a discounted amount for a television deal or local sponsorship in order to make more money in future years, would such a deal require player approval? After all, the team or the league would be actively negotiating away money that might go to the players this year, but wouldn’t in future seasons when revenue sharing wasn’t in effect. The league and teams have longstanding relationships with their television partners and sponsors and they want to keep each other happy and provide each other with the biggest possible return on those relationships. The players are uniquely disadvantaged when trying to determine revenue due to these relationships and the potential for moving money around to the advantage of the parties already engaged in the deal. Involving the players will only lead to more acrimony and bigger headaches down the line.

So I dunno. I would dearly love to see baseball start again, if it is sufficiently safe, but I have no desire to see the players sacrifice their salaries for the owners’ benefit. I’m sure there’s room to make this work better, if the sides are willing to talk. We’ll see how the players react. ESPN has more.

Related Posts:

One Comment

  1. […] Major League Baseball plan, which would have had all the games played in Arizona; that plan has now morphed into something that would have games played in most league cities. As with MLB, this plan would […]