Small Gap, Big Differences Continue To Divide Owners And Players
And so the wait continues.
The “will they or won’t they” dalliance between Major League Baseball and the players union long ago exasperated fans and, in the Commissioner’s own words, has been a “disaster for our game.” Given the chance to consummate a deal and have a hungry American-sports viewing public all to itself, the league instead remains in negotiations without a firm return date on the calendar.
MLB’s latest proposal to the union called for 60 games at full prorated salaries. The players countered with a proposal for 70 games. The gap between the proposals is narrowing, but the difference has been enough to create another round of public sniping and stalled progress.
A 60-game season at full prorated pay would result in players receiving about 37% of their salaries and would total roughly $1.48 billion, according to the Associated Press. A 70-game season would result in players receiving about $1.73 billion. That’s a difference of $250 million—or roughly $8.3 million per team.
To get to the midpoint of 65 games, it would cost each team about an additional $4.15 million. Or, roughly what Steven Souza and Lance McCullers made last year while sitting out the entire season with injuries.
There are many other aspects of a deal that will need to be worked out, not the least of which is health protocols. The union also proposed the postseason player pool be increased from $25 million to $50 million, that players who live with high-risk individuals to be granted full pay and service time even if they opt out of playing and forgiveness of a portion of the $170 million salary advance the players received in March.
But at its core, the number of games played—and thus the amount of money players will receive—is the main issue keeping the sides apart.
Financially, bridging an $8.3 million gap is feasible on the part of the owners. Despite recent protestations to the contrary, baseball has been an extremely lucrative business for the league and its owners in recent years.
As Washington Post columnist Thomas Boswell noted, player salaries have increased 1% in the last four offseasons. Owners’ revenue in that time has increased 15%.
The average franchise value has more than doubled in the past six years and now stands at $1.85 billion. The two most recent team sales—the small-market Marlins and Royals—went for $1.2 billion and $1 billion, respectively.
Beyond team values, the average net worth of the 22 owners for whom figures are publicly available, through Yahoo Finance or Forbes, is $2.39 billion. And those are just the principal owners. Most, if not all, are backed by minority owners whose collective wealth reaches into the hundreds of millions, if not more.
An extra $4.15-$8.3 million is not cost prohibitive, for any franchise. And the owners have a greater ability to pay it than the players do to give it up.
In effect, the players agreed to a pay cut when they accepted prorated salaries in the March 26 agreement between the two sides. By offering a 70-game season, they’re swallowing a 57% salary reduction.
Owners, meanwhile, on average face a 39% loss of local revenue that comes from attendance and attendance-related expenses like parking and concessions. There are likely other ancillary losses, too.
But the owners already saved themselves $79.2 million compared to last year by cutting the draft to five rounds and are deferring more than $200 million worth of draft bonuses to future years. They also are deferring the more than $163 million they have in available international bonus pool money by delaying the start of the international signing period until January 2021. Twenty-one teams have instituted furloughs or pay cuts for staff. Six teams have guaranteed employment only through the middle or end of June.
Preliminary Estimated 2021 MLB Draft Order
While we await a final ruling from MLB on its method for determining the 2021 draft order, here is the best estimate of how it will line up if MLB uses its normal rules to determine who picks first.
The difficulties between the league and the union have increasingly come to the forefront in recent days. Commissioner Rob Manfred and executive director of the union Tony Clark met in Arizona on Tuesday. On Wednesday, Manfred issued a statement saying “We left that meeting with a jointly developed framework that we agreed could form the basis of an agreement and subject to conversations with our respective constituents.” Owners reportedly interpreted the events to mean the outline of a deal had been reached. The player’s union disputed that characterization. In a matter of hours, the fissure expanded and Clark and Manfred were issuing combative public statements.
And so, three months and one week after the coronavirus pandemic shut baseball down, no agreement to resume play has been reached. The Commissioner can impose a season at a set number of games, but he can’t expand the postseason without the union’s assent. Ownership also wants to strike a deal to prevent the union from filing a grievance that they violated the terms of the March 26 agreement between the two sides.
The cost for owners to take the first step to getting what they want is about $8.3 million each. Whether they make that commitment will determine the course of future negotiations, and, ultimately, baseball's return.