As we await MLB’s proposed path for an open to the season (which could be sent to the players any day now), we already know one of the biggest points of contention is going to be about the financial particulars in a dramatically altered season.
Keep in mind, the owners and the players already answered this question – in surprisingly expedient and pleasantly agreeable fashion – before the would-have-been start of the regular season. They came up with an interim deal that prorated salaries and service time, and also gave players credit for a full year of service time.
The problem with that deal in hindsight is that the sides apparently had a very fundamental disagreement about what was being decided, or not, in the event that the season happens, but games cannot be played in front of fans all year. We discussed the issue at length here, but the super short version: the players believed they were agreeing to prorate their salaries based on games, and that’s it; the league believed they were agreeing to prorate salaries, but predicating that on the assumption that games would have fans. Unfortunately, each side has a good textual argument based on the language of the agreement, so it’s a beef. It’s a problem.
With fans unlikely to attend any games this year – or maybe very limited seating later in the year – gate receipts and associated revenues (which could be upwards of 50% of revenue for many teams) are going to approach zero. Thus, even after prorating salaries for games played, it’s not surprising that owners *also* want players to take a further haircut on a per-game basis to account for the lost stadium revenue.
Thus, some teams, reportedly, might seek a revenue-sharing model:
Some league officials and team executives believe the best plan for baseball in 2020 would include a totally revised economic system — a revenue-sharing arrangement between the players and teams, if only for one year.https://t.co/9X88XmlHlH
— Evan Drellich (@EvanDrellich) May 8, 2020
At an extremely superficial level, you can see why the league could make this argument: revenues are going to be way down, you players typically wind up with about 50% of revenues in a normal year, so let’s just say you get 50% of our revenues this year, too.
There are big issues with that logic, however. For one thing, business owners necessarily retain much of the risk of operating a business (which is how they also get access to the upside), so there is a bit of a pure logic problem in saying the workers should absorb as much of the loss from a bad year as the owners absorb. It’s not like the owners have been tripping all over themselves to share more of the *increasing* revenue of the sport with the players the last five years (indeed, based on how the last CBA has played out, it looks like the opposite was true).
For another thing, the owners – especially as a collective MLB unit – are in a far better position to absorb one-year financial losses than individual players, whose careers are short, and whose earnings capacity vary so wildly player to player, year to year. (As a hypothetical example to illustrate the point: Tell an up-and-down fringe roster guy that it’s the “same thing” for him to see his expected annual take-home drop from like $100,000 to $25,000, as it is for an owner to see his expected annual profit drop from $40 million to $10 million. The simple division might say those are the “same,” but I’d hope your brain and your conscience tell you otherwise.)
For another thing, the players are taking more of a risk by getting back out there this year than the owners. Just as we expect front-line workers through this pandemic to be taken care of, physically and financially, why wouldn’t you make the same argument about the players?
For still another thing, per Drellich’s article, the Players Association does not actually believe the owners’ claims that they will lose money on a per-game basis if they pay players their full, pro-rated salaries. When you account for postseason revenues, related businesses, etc., the players are not at all convinced owners would actually lose money per-game at “full” player salaries.
For still another thing, I’d make the argument that even if it were true that some owners are losing money on a per-game basis this year, it would still be worth it to do so for the long-term value of the sport and your own franchise. Think about how much long-term value you’d piss away by sacrificing a season – at a time like this! – on the altar of short-term cash.
That is all to say, upon initial reflection, I do not think a revenue-sharing model for this year is a particularly compelling idea. Should the players perhaps have to take an additional haircut of some kind – maybe tied to guarantees from the teams that they will not lay off other employees? – yeah, I could see that. But a full-on revenue share (at 50/50, anyway) probably goes too far.
Hopefully the league submits a fantastic proposal to the players on the health and safety side of things, which includes an acceptable idea on the financial side of things. There will have to be negotiating. There will probably be some minor rumbling behind the scenes – these sides have been fighting about money this entire CBA. But hopefully, they can land somewhere good enough such that, if this season does ultimately get totally scuttled, it won’t be because of money.