NEWSLETTER
Although no one outside of MLB and its owners can perfectly conduct a forensic analysis of the financial fight taking place – the owners, so far, have seen to that – Jeff Passan does the best job he can, and you must read his article today.
MLB and the MLBPA remain at a stalemate keeping baseball from returning. At its core, it is a fight over pennies on the dollar. It is myopic, it is unnecessary and it has solutions. At @espn, I look at baseball’s problems and find the necessary compromise: https://t.co/zfmivlOhmh
— Jeff Passan (@JeffPassan) June 5, 2020
There is so much in Passan’s piece carefully walking through the financial and narrative elements in the fight between the two sides, but one of the most important things he does is really nail the actual total dollars that represent the gap between the owners and the players right now.
We know that the owners are willing to pay full prorated salaries for at least 48 games. We believe that the players are willing to accept an 82-game season with full prorated pay. So, if you could know the actual losses the league faces on average on a per-game basis, you could easily figure out the actual money we’re talking about. That’s what Passan does, with the best numbers available, and the conclusion will make you very angry:
Accordingly, between the time it might take to settle on a deal and the September cutoff, an 82-game season might be the most players can hope for. Seeing as they would settle for a full pro rata at 1,230 total games, the projected losses from owners based on the $640,000-per-game figure is crucial for this exercise: $787,200,000. Compared to the projected losses owners would face in the 48-game season they’re ready to rubber-stamp, playing an 82-game season would cost $326,400,000 more.
And there you have it. Distilled to the simplest form, Major League Baseball is in crisis because of a $326 million problem.
That’s a lot of money in an absolute sense, but let me put it to you in a couple ways for context. One is that, even in MLB’s probably-overly-dire warning that revenues for the sport would be under $3 billion this year, you’re talking about barely over 10% of the revenue driving this entire fight. The other way to contextualize the number, as Passan puts it, is that $326 million is actually less than $11 million per team.
Think about what it would really say about owners if they were willing to trade 34 games of your fan enjoyment – at a time like this – in exchange for under $11 million.
(Bonus note that I don’t see anyone talking about? Businesses can carry forward their losses to future years for tax purposes, offsetting profits in those future years, and reducing that year’s tax burden (or, thanks to new legislation, they can carry it back to offset profits in prior years). So, effectively, losing $100 million this year can partly be recouped in taxes. Salaries reduced for the players do not come with that ability to “get back” some money in future years. Sure, the players don’t have to pay taxes on the “lost” salary this year, but the one-time hit to an individual human feels a lot different than a longer-term hit to a business organization that can spread it out.)
Now, then. I do get that the underlying issues – even the underlying math – is much more complicated than that. There are huge questions about what the revenues will actually look like at the end of the day, there are real risks of shutdown, and there are open questions about how to deal with postseason money (size and share). But without more access to the books, how can the players know what they’re even negotiating about, short of doing the best math they can like Passan did?
There is also some math in Passan’s piece that suggests the players could get more money by playing a bit more and taking a small (under 10%) pay cut, but they might decide that taking this stand is worth more in the long-term than accepting a cut this year for more short-term money. If they want to take that principled stand, I have no problem with it, but in fairness, we do have to point out that it would be a choice made by the players.
… following a choice made by the owners not to simply agree to pay full prorated salaries for 82 games, and extract revenue-generating concessions from the players for extra events, a longer postseason, etc. When the possible bill for doing so comes to maybe $11 million per team (much of which can be recouped later on via added revenue opportunities and tax processes), it’s time for the owners to just suck it up.
How is it not worth that price tag to do *ONE JUST THING* for the players that have been pummeled in the last two CBAs? How is it not worth that price tag to get the sport back on positive terms in the middle of a pandemic? How is it not worth that price tag to get your fans – oh, hey, remember the fans? – more games this year?
