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MLB Proposal Seeks Bigger Cuts From Premier Players

Today was the biggest day since COVID-19 shut down Major League Baseball way back on March 12. After publicly disseminating information over the course of the past few weeks, owners were presenting a formal proposal to the MLBPA. How it is received will be drawn out over the next few days, but it doesn’t look good for the billionaires.
Image courtesy of © Darren Yamashita-USA TODAY Sports
Since publicly asking players to consider a revenue split and going back on the already agreed upon prorated pay for 2020, Major League Baseball ownership had yet to put forth any concrete proposal. Tony Clark and the Major League Baseball Players Association were given that proposal this afternoon. Clark publicly stated that contracts would not be renegotiated, and that ownership needed to figure out a way forward for 2020.

Despite turning annual revenues near $10 billion, it was suggested today that Major League Baseball would still bring in around $3 billion in 2020 should an 80-game slate with no fans be the route taken. There's a possibility that net revenues could still dip into the red, but baseball has opportunity to at least break even as well.



With the afternoon meeting coming to a close reports of the proposal began to leak. New York Post writer Joel Sherman outlined what can be described as a sliding scale. In this structure the players making the most money would be paid the smallest percentage of their agreed upon contract. Those players who are set to make less money would retain a higher portion of the prorated dollars.

Defining it as simply and most straightforward as possible, the owners are looking for their highly compensated players to provide them relief. Gerrit Cole inked a deal with the Yankees this winter and was expecting a $36 million annual paycheck. Instead of getting that, he’d be taking a substantial cut in order for lower compensated players to receive a higher amount of their annual expected take home.

Jeff Passan of ESPN relayed some specific details of the plan on Twitter:


In a season where expanded rosters will increase the number of players making closer to the league minimum, Major League owners would get the benefit of savings from high dollar contracts while handing out minimal sums to a few more players. It’s the exact reason why service time manipulation exists, in that ownership is able to keep lower payrolls by owning a player’s low dollar years. Getting a discount on the highest contracts, having those well compensated players foot the bill, and paying a bunch of minimum salaries sounds like nothing but roses for the owners.

At the end of the day this argument is always going to be between millionaires and billionaires. For some fans, the economics will never present an opportunity for logic. While it’s difficult to insert yourself into the situation, the total sum of money shouldn’t change the optics of what is going on here. Imagine a situation in which the CEO of a company asks a manager to take a substantial cut in pay so that the intern can receive their full wages. There’s a morality issue here too, but logic doesn’t hold up across the entire example.

Also noted in Sherman’s breakdown of MLB’s proposal is what could be an underlying desire to cause cracks within the union. Most teams are represented by veteran players, many of which would fall into the highly compensated category. The group of lesser compensated players is far larger and would have no reason to oppose this deal. Those taking the hit, however, are often vocal decision makers and have earned the contracts to which they have been signed.

It should have been expected a storm was brewing between MLB and the MLBPA. With CBA expiration on the horizon, a lockout was thought potential in the not-so-distant-future. Now we have MLB ownership using the time constraints of a global pandemic as a negotiation tactic in hopes that players act quickly on a less than advantageous deal.



Suppose that Harold Steinbrenner wanted to leverage Gerrit Cole’s contract and defer the money he’ll lose to a future time, I’d imagine that would be met begrudgingly but fine. Asking players of that ilk to simply foot the bill and then pitting them against guys in the same clubhouse, I certainly can’t see it going over well.

While this is just the first proposal, it doesn't seem like a good foot to start on. Maybe the first week of June isn't a hard and fast deadline. Maybe a goal of dividing the players is of further importance. Maybe any cash flow relief is the greatest goal for ownership. We're dealing with lots of maybes here, but in unprecedented times we're likely in store for more unprecedented measures than we can imagine.

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52 Comments

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theBOMisthebomb
May 26 2020 05:38 PM
If both sides end up scuttling the 2020 season and get portrayed as greedy pigs unable to split a $3 billion pie then they will lose many fans.
    • Sconnie, DocBauer, Minny505 and 2 others like this
Ask the players and the owners how losing a season of baseball did for their overall profit? How long did it take last time for baseball to rebound? Gimme a break.
When/how are top players going to make up the lost $27 million? If they opt out, will their contracts simply toll until 2021? And the contract expiration season is pushed one year into the future?
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Ted Schwerzler
May 26 2020 08:06 PM

 

If both sides end up scuttling the 2020 season and get portrayed as greedy pigs unable to split a $3 billion pie then they will lose many fans.

Imagine your boss asking you to cut your salary by 75% so that he can pay the intern 95% of theirs...

 

How would that go over? It's not both sides, and it never has been. Economics are bad in baseball because the owners are routinely a group of knuckle-dragging ding dongs.

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Ted Schwerzler
May 26 2020 08:07 PM

 

When/how are top players going to make up the lost $27 million? If they opt out, will their contracts simply toll until 2021? And the contract expiration season is pushed one year into the future?

Based on agreements already in place, 2020 is going to happen as a season in the contractual sense regardless of if it's played. Nelson Cruz is a free agent next year regardless of whether or not he plays a game or makes a dime.

They are asking the players to get 31 percent of wages, for fifty percent of the games....... Owners don't pay bonuses when revenue goes up ... They pay the agreed to contracts
    • Sconnie, Ted Schwerzler and Minny505 like this

They are asking the players to get 31 percent of wages, for fifty percent of the games....... Owners don't pay bonuses when revenue goes up ... They pay the agreed to contracts

The concept of risk/reward has come up a few times, and the looming CBA means maybe revenue sharing with the players is on the table for 21. If the players assume more risk, they’re going to want commensurate reward to go with it. Otherwise contracts won’t be “guaranteed”.
    • Ted Schwerzler likes this

The players are getting backlash from this but I think they are right to stand up to the deal.

 

Yes MLB salaries are ridiculous, someone making 20+ million dollars a year to be great at a game is logically stupid.Despite that the salaries are that high because it still makes the owners a massive profit to pay them.

 

The corporations/ people that own professional sports franchises are insane money, maybe the virus has their profits down but they can suffer for year and still reap the benefits of being the first major sports league to be televised.

 

Assume you are a sous chef somewhere and business reopens.You get offered less than what was your salary rate to work in special conditions.You tell them to go pound sand.

    • Ted Schwerzler likes this

I guess we know your position as far as the owner's are concerned, Ted.The reason I say this is because of your promotion of the idea that the owner's are going back on their earlier deal.Have read in too many places from reliable sources that there was language in that deal for further discussions should the games be played without fans in attendance.

 

As for the offer?Does anyone think the owner's original offer was their best offer?Or even anything close to what they eventually hoped to get?If it was, their negotiator should be fired.The important take from it is that they didn't include revenue sharing which would have been a non starter for the players.

 

As for this format, makes a ton of sense to me.Have been thinking for some time that there should be some type of sliding scale with all players making the pro-rated minimum with some percentage of their contract's salary above that.Looks like that may be the case after they negotiate the actual percentages.Also wouldn't surprise me that at some point the $170,000,000 players already received is no longer included in their compensation when games begin.  

 

Companies all over America are doing this exact thing with management and all employees taking substantial cuts of 15%, 20% or greater.  

 

 

 

 

 

    • DocBauer and MN_ExPat like this

 

The players are getting backlash from this but I think they are right to stand up to the deal.

 

Yes MLB salaries are ridiculous, someone making 20+ million dollars a year to be great at a game is logically stupid.Despite that the salaries are that high because it still makes the owners a massive profit to pay them.

 

The corporations/ people that own professional sports franchises are insane money, maybe the virus has their profits down but they can suffer for year and still reap the benefits of being the first major sports league to be televised.

 

Assume you are a sous chef somewhere and business reopens.You get offered less than what was your salary rate to work in special conditions.You tell them to go pound sand.

Agree with much of what you say Raoul. 

 

But wanted to comment on your sous chef example. My son is with a major restaurant company where every employee in the company is sharing in the pain, taking cuts of roughly 20%...or higher at senior management. Everyone was furloughed for over two months, even though many continued working while not paid. They are just now starting to get some of the central office people back with restaurant re-openings approaching 50% of their locations.  

    • MN_ExPat likes this
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Doctor Gast
May 27 2020 07:37 AM

To me the owners are trying to split the union to get votes. Since this is a unique season we need unique solutions. I was thinking maybe for this year only that these big market owners could carve into their high revenues to help out the lower markets & help cut a more favorable deal w/ the players. If there is still a hardship of any owner, hopefully they can negotiate some kind of deferred payment.

Because of this covid fiasco, baseball has suffered tremendously this year & years to come. Those who will suffer the most are minor leaguers, owners, MLB players & die hard fans. It`s out of minorleaguers & fans hands, so it`s to everyone`s advantage for the owners & MLB players to limit this damage! Or baseball will further diminish & it`s effect on society

    • DocBauer and Ted Schwerzler like this
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Major League Ready
May 27 2020 08:13 AM

 

Imagine your boss asking you to cut your salary by 75% so that he can pay the intern 95% of theirs...

 

How would that go over? It's not both sides, and it never has been. Economics are bad in baseball because the owners are routinely a group of knuckle-dragging ding dongs.

 

Right Ted. They have been the most successful business people in the country in spite of your assumed complete ineptitude. If only they had your exceptional financial acumen and business aptitude. So, as someone with business skills superior to that of ignorant MLB owners, tell us how you would resolve the present dillema. That dillema being cancelling the season costs on average $127M per team according to reports. Therefore, cancelling the second half costs roughly $63M. Playing at full wage for players costs $80+ billion. 

 

I would love to hear why they are the idiots you portray in your comment.  

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Hosken Bombo Disco
May 27 2020 08:19 AM

Right Ted. They have been the most successful business people in the country in spite of your assumed complete ineptitude. If only they had your exceptional financial acumen and business aptitude. So, as someone with business skills superior to that of ignorant MLB owners, tell us how you would resolve the present dillema. That dillema being cancelling the season costs on average $127M per team according to reports. Therefore, cancelling the second half costs roughly $63M. Playing at full wage for players costs $80+ billion. 
 
I would love to hear why they are the idiots you portray in your comment.

What about canceling 2021?

I want to hear you think this out.
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Ted Schwerzler
May 27 2020 08:24 AM

 

Right Ted. They have been the most successful business people in the country in spite of your assumed complete ineptitude. If only they had your exceptional financial acumen and business aptitude. So, as someone with business skills superior to that of ignorant MLB owners, tell us how you would resolve the present dillema. That dillema being cancelling the season costs on average $127M per team according to reports. Therefore, cancelling the second half costs roughly $63M. Playing at full wage for players costs $80+ billion. 

 

I would love to hear why they are the idiots you portray in your comment.  

There's a difference between being good at business, and having a clue what public perception looks like. You elevate to your position of wealth because of sound financial decisions. That doesn't mean when you propose something so economically obtuse you shouldn't be called on your crap.

 

Owners of sports teams utilize it as a secondary cash flow in most cases. They turn ridiculous profits on an annual basis. That isn't to say it's bad, negative, or unfair. Siding with billionaires while they look to exploit a group of employees in a public forum says plenty about a thought process though.

    • ashbury and adorduan like this

Right Ted. They have been the most successful business people in the country in spite of your assumed complete ineptitude. If only they had your exceptional financial acumen and business aptitude. So, as someone with business skills superior to that of ignorant MLB owners, tell us how you would resolve the present dillema. That dillema being cancelling the season costs on average $127M per team according to reports. Therefore, cancelling the second half costs roughly $63M. Playing at full wage for players costs $80+ billion.

I would love to hear why they are the idiots you portray in your comment.


You always say they get the big money because they take the risk. Well, here is the downside. If they don't take it, there is no real risk, which we already know, because teams never go under in the US.... So, which is it? They take the risk, like you always say, or they don't?
    • ashbury and Vanimal46 like this
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Nick Nelson
May 27 2020 09:21 AM

 

Imagine your boss asking you to cut your salary by 75% so that he can pay the intern 95% of theirs...

 

How would that go over? It's not both sides, and it never has been. Economics are bad in baseball because the owners are routinely a group of knuckle-dragging ding dongs.

I tend to side more with the players but this comparison doesn't do much for me. If I was making vastly more money than the "intern" (who is doing the exact same job) and we were amidst a massive crisis, I'd probably be okay with taking the larger cut. Isn't that pretty much what we're asking the owners to do? Make a bigger sacrifice because they're in far more comfortable position?

 

It is common for companies to be instituting deeper salary cuts for senior management and higher-paid positions in efforts to stay above water right now. https://www.nytimes....s-pay-cuts.html

 

 

    • Major League Ready, DocBauer, Minny505 and 3 others like this
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In My La-Z-boy
May 27 2020 09:27 AM

Like it or not, it is the owners with all the leverage. Player careers are finite - owners careers exist to the grave. Players generally make 100% of their earnings playing the game - owners generally have other business interests to feed themselves.

Comparing the business of baseball with other business in America isn't apples to apples in any way. If I don't pay my managers and my staff proper competitive wages, they will end up at my competitor.

I believe players will need to do the caving here and they should hurry up. No 2020 season hurts the individual players far more than the owners. No service time and depressed wages in winter free agency - too much supply, and not enough demand will dominate the off season. It is a mess and we shouldn't expect the owners to be kind and gracious. They are the side willing to play hardball and walk away. 

Let me also go on record as being disgusted by what I've just written. But I believe this to be our reality. I am still keeping my Hulu account just in case, but I am losing hope.

    • ashbury, Minny505 and MN_ExPat like this
Ted, you've completely ignored the 70% drop in revenue.

If revenues go from $10B to $3B, it's not unreasonable for owners to demand players salaries drop massively.

And as Nick mentions, taking more from higher salaried employees than lower is a pretty reasonable and standard business practice.

This article is not well thought out. In fact, it's ridiculously biased.
    • Major League Ready, DocBauer, rdehring and 1 other like this
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Major League Ready
May 27 2020 10:46 AM

 

You always say they get the big money because they take the risk. Well, here is the downside. If they don't take it, there is no real risk, which we already know, because teams never go under in the US.... So, which is it? They take the risk, like you always say, or they don't?

 

Let’s break this down based on the fact we know the 1st half of the season is cancelled. Players loss = 0 unless you don’t know the difference between a loss and break-even.

Teams are going to lose $63M+ on average.

Players break-even (don't get paid)

 

Under the proposal for the 2nd half.
Teams would lose another $63M best case scenario. 
Players would make less than their contract.

 

Teams lose $126M on average. Players have a net gain smaller than normal. Please explain to me how the owners don’t absorb all the risk? BTW … I doubt I ever said owners make big money because they take on risk. My position has been that players have contracts that assure them 100% of their compensation regardless of their performance. That does not happen in the rest of the working world. Perhaps that precedent is why they feel they should receive full comp even if it's not economically feasible.

    • DocBauer and rdehring like this

 

Let’s break this down based on the fact we know the 1st half of the season is cancelled. Players loss = 0 unless you don’t know the difference between a loss and break-even.

Teams are going to lose $63M+ on average.

Players break-even (don't get paid)

 

Under the proposal for the 2nd half.
Teams would lose another $63M best case scenario. 
Players would make less than their contract.

 

Teams lose $126M on average. Players have a net gain smaller than normal. Please explain to me how the owners don’t absorb all the risk? BTW … I doubt I ever said owners make big money because they take on risk. My position has been that players have contracts that assure them 100% of their compensation regardless of their performance. That does not happen in the rest of the working world. Perhaps that precedent is why they feel they should receive full comp even if it's not economically feasible.

 

People with contracts actually do get 100% of their money, during the term of the contract. That's very different than most employment, yes, but people with contracts get their money.

 

The players will work half the year, why don't they get half their contract? That's all they are asking for.

 

People with contracts actually do get 100% of their money, during the term of the contract. That's very different than most employment, yes, but people with contracts get their money.

 

The players will work half the year, why don't they get half their contract? That's all they are asking for.

Actually, Mike, people with contracts don't always get their money. Almost all employment contracts have language in them under what conditions the employee doesn't get all or any of his/her compensation. There would be lots of reasons ranging from malfeasance to fraud to conduct unbecoming to acts of God and probably global pandemics. I expect it is that language that is enabling the teams to withhold salaries if games aren't played. 

 

Now the owner's have said to the players, we will try to get in a half season if you are agreeable to certain changes in your compensation because fans won't be allowed to attend games. If they can come to an agreement that is acceptable to both parties, we will have baseball. If they can't, we won't have baseball...at least major league baseball. I expect the owners have discussed how much they will lose with no baseball and aren't willing to go beyond, or much beyond that number to resume play. It is reasonable, in my opinion, for the owner's to take this position as it is reasonable for the players to negotiate to get the largest share of their salaries as they can.  

    • MN_ExPat likes this

 

Ted, you've completely ignored the 70% drop in revenue.

If revenues go from $10B to $3B, it's not unreasonable for owners to demand players salaries drop massively.

And as Nick mentions, taking more from higher salaried employees than lower is a pretty reasonable and standard business practice.

This article is not well thought out. In fact, it's ridiculously biased.

So, you are OK with Owners wanting to be privatizing the profits but socializing the losses....

    • SQUIRREL and Twins33 like this

I support scaling salaries up the ladder to help owners pay for the massive influx of MLBPA players that are expected in the 2020 season now. That should only be something like 5% at the top. Those are unexpected labor costs that benefit members of the MLBPA.

 

I do not support this concept with 47%ish cut from the top. You assume the risk of owning a business when you become an owner. All businesses owners do, whether investing in a publicly traded company or a privately held business. Contracts are honored regardless, unless settled in a court of law. 

That said, this is an initial offering and is fully understandable as such from the owners perspective, regardless of how ugly the optics are to the public. There does need to be negotiations though as the original agreement in March was to renegotiate pay should games be played with no fans. The MLBPA needs to honor that agreement and renegotiate, which I suspect they will. 

There seems to be a bit of overreaction by fans that this is some sort of final proposal when it is a starting point, albeit a one-sided proposal. Still, when I negotiate out large contracts for my business, I will often start with something extremely beneficial to my company and move down from there.

The team owners are business people first and foremost. This one-sided rough draft should not surprise anyone.

    • SQUIRREL, Mike Sixel, MN_ExPat and 2 others like this
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Major League Ready
May 27 2020 01:33 PM

 

So, you are OK with Owners wanting to be privatizing the profits but socializing the losses....

 

That's a Boris quote and he knew that he could get this past fans that would blindly follow a cute quote. A loss suggests a net result of less than zero. Making $5M instead of $10M is not a loss, it's less profit. 

 

Socializing losses is not an actual thing in a free market economy, it's a soundbite so Boris attempted to define something that does not actually exist. Players participating in actual losses would suggest the owners pay the players nothing and ask that they take money out of their pockets and contribute to mitigating their losses. Of course, his compensation is directly tied to player compensation so he just might be looking out for his own bottom line.

    • DocBauer, rdehring and In My La-Z-boy like this

I will try to be as neutral as possible when I post this.First, from what I have read, many players already like the formal proposal with the sliding scale over the revenue sharing.Do I think the purpose of this proposal was to get votes from the lower paid players that most likely need the money to live, yes I do.Do I think the players have a legitimate argument that they should get a full compensation for the contracts they signed?Sure.However, I doubt anywhere in any provision of the contract was there a clause saying, Should games be able to be played but with no fans due to pandemic situation the compensation will be X.  

 

Do the players also have a valid argument that they entered into an agreement in March on what will happen when games start back up?Yes they did and it is valid, however, the Owners also have valid argument that their understanding was this was under normal conditions.I have not seen the word for word agreement reached, but from what I have read in articles I believe both have a valid argument.It makes sense that the expectation would be a prorated pay, but when the contracts were made it was with the assumption fans would be at the games and that financials were considered when agreeing to the contract.Of course, the team assumes the risk that attendance would be down regardless, but I doubt either side would expect zero fans at all games.  

 

The players argument is they signed to play a game, regardless of how many people watched.However, they had to understand that if fans do not watch there is no reason to play the game.The players will argue the owners are trying to screw them and are greedy, well sure they are greedy, but the players also are greedy are they not?

 

The owners are trying to look like the good guys coming to the table with options to make financial sense across the board, and players, as of now keep saying no deal we want full pay for play.Which this sounds reasonable.  

 

People who argue the owners are billionaires they can afford it, shows you have never and will never run a successful business.MLB is not a charity for entertainment for people.For the people who side with pay the players the prorated contract amount and make the owners take the hit, this means you believe business should be willing to operate at a loss, because they can and you want to keep going. Just because the owners have billions does not mean we should expect that they lose millions so we can be entertained.I mean if I ran a business at a loss, I would raise cost to public or cut internal cost, like labor costs.Else eventually I would go bankrupt.

 

My question, how many years should owners take losses?How much should they be expected to lose?Of course we do not see their books and will never know how much they make or lose each year, but players will continue to seek the same level or higher salaries, but for all we know stadiums will never be able to operate at full capacity again, unlikely but we do not know how long reduced attendance will be required.Will players accept a cut in pay under those conditions?  

 

Maybe the players can get their prorated pays, and to make up for lost attendance revenue, we start a go fund me for the teams?I mean the real people that pay the players are the fans.Sure it comes from the owners, but it is the fans that pay, because no fans means no games.  

 

I personally would be fine with owners say no games and players get no pay.MLB could just fold up and say we are done.What would the players do then?The owners have all the power, but they understand making some money is better than no money, but if they are asked to lose money they will close and I would not hold it against them.

 

If I ran an entertainment business and not enough people were coming to pay my bills I would either raise prices and make the people that were coming to cover my costs or I would close and have the people that were coming lose out on that entertainment.That is just how business works.

 

Both sides do need to understand though, the more they fight over money the worse they both look and will lose fans, which will hurt both of them.While both sides fight over the pie, we are the ones that hold the pie and we can take it away from both of them.If we stop watching or going to games, when we can go again, then owners make no money, and players will make no money.We have the power, we just need to assert it. 

    • DocBauer, Minny505, MN_ExPat and 1 other like this

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