NEWSLETTER
Among the many questions I laid out this morning that follow something as jaw-dropping as suspending a professional sports season, one of the biggest is how is everyone going to handle the economic impact.
Nobody wants to focus on money at the time of a worldwide pandemic, but the financial questions that attend the suspension of a major business will absolutely wind up being critical to so many people. When the teams get hit, all their workers get hit. When the players get hit, their families (and their service providers) get hit.
So I don’t think it’s unreasonable to discuss that big question: how will the players be paid their salaries?
Those salaries – for the currently-suspended NBA and to-be-suspended MLB – are fully-guaranteed to the players by the terms of the respective sport’s collective bargaining agreement. But, on the flip side, those salaries come as a part of the revenue generated by the teams, from ticket sales, concessions, and TV contracts, all of which are potentially going to go *poof* if the suspended games are not played later.
So, then, what happens? Who eats that loss if the games don’t take place? It might seem obvious to say that it’s up to the owners to eat it, since the salaries of the players are guaranteed.
But here’s the problem. Both the MLB CBA and the NBA CBA contemplate this kind of “act of God” situation, and it could yield protections that operate in favor of the owners. The MLB CBA speaks to the issue generally:
Something to note in MLB's official announcement of the regular season delay – they used the term "national emergency," which is explicitly referenced in the CBA as a potential time when the CBA will not apply.
Announcement, and CBA language: pic.twitter.com/KgJ6Tb4Tjx
— Bleacher Nation (@BleacherNation) March 13, 2020
The NBA CBA is very specific about how player compensation could be withheld during an act of God:
In email to players, the NBPA spelled out terms on a doomsday provision included in CBA that could free owners from paying players a percentage of their salaries should rest of season be lost to the coronavirus pandemic. Story on ESPN: https://t.co/s3cQSqCN8w
— Adrian Wojnarowski (@wojespn) March 13, 2020
That is all to say, *IF* games were officially lost, and *IF* things got very contentious between the league and the players union, then it appears that the owners in each league would be within their CBA rights not to pay the full sums of the players’ guaranteed contracts (in the NBA because of the explicit CBA language, and in the MLB because they would argue the CBA was not in effect for those games, thus no mechanism for payment).
But would we actually GET to that point?
Well, for one thing, let’s just hope that our country gets COVID-19 under reasonable control as soon as possible, and then each league will be able – somehow – to make up any lost games. I know that, at least for baseball, it would be very challenging to tack games on to the end of the regular season, pushing the postseason deeper and deeper into November. Still, if you want to hope, that’s your hope: ultimately no missed games.
If there are some missed games, however, then what I think you’re most likely to see is some negotiation between the leagues and the players about how to share the burden of the lost revenue. It could be that the owners mostly eat it if they have insurance that covers this kind of loss. Or it could be that the owners seek to have the players take a haircut from their salaries depending on how many games are lost. I cannot predict for the moment how this would play out. (Also, none of this addresses minor league players in baseball, who are not subject to the CBA, and will definitely need someone to step up for them, as they are already underpaid.)
But I guarantee that the sides are thinking about it at this moment, and will eventually have to discuss what’s going to happen – hence the NBPA reaching out to basketball players to give them a heads up, and hence reports like this from Jon Heyman:
MLB and union leaders are meeting today and into the weekend to discuss a range of topics related to coronavirus, including the financial hit the sport will take and how much of a hit players may take. Union leaders have told folks that certainly won’t be how they begin talks.
— Jon Heyman (@JonHeyman) March 13, 2020
