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MLB Proposal Seeks Bigger Cuts From Premier Players

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#21 Mike Sixel

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Posted 27 May 2020 - 11:58 AM

 

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.

It's been a fun year so far, GO Twins. 


#22 rdehring

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Posted 27 May 2020 - 12:30 PM

 

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.  

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#23 adorduan

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Posted 27 May 2020 - 12:47 PM

 

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....

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#24 Minny505

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Posted 27 May 2020 - 01:28 PM

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.

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#25 Major League Ready

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Posted 27 May 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.

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#26 Trov

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Posted 27 May 2020 - 01:33 PM

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. 

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#27 Sconnie

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Posted 27 May 2020 - 01:46 PM

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.

this isn’t a free market

http://twinsdaily.co...cents/?p=965912
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#28 Mike Sixel

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Posted 27 May 2020 - 01:48 PM

 

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. 

 

The owners have that right, of course. But then, why do they expect players to share in the losses, but not in gains when revenues are higher than expected? 

 

They will play half the games, why are the players taking less than half the money? When they go back to regular, and a team makes way more revenue than planned, will they pay the players more than their contract? Of course not. 

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It's been a fun year so far, GO Twins. 


#29 Mike Sixel

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Posted 27 May 2020 - 01:50 PM

 

this isn’t a free market

 

It's not even close. In a free market, the players could go to any team they wanted. That part is never brought up by those arguing that the contracts aren't "fair" because they get paid no matter how they do. They also never point out that the teams pay them MUCH less than they are worth for the first few years of their time in the majors. Much less.

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#30 DocBauer

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Posted 27 May 2020 - 02:00 PM

Rounded slightly, as a whole, MLB brings in $10B to pay for the sport. (Obviously individual teams $ varies). Only half a season is played, total revenue becomes $5B.

Your $20M player's prorated salary is now $10M. Simple, right?

Now, half a season without fans, and expected MLB revenue becomes $3B, or so is estimated. That means a half season, fan less, is 1/3 total income. Your $20M salaried player now earns slightly more than $6.5M. In other words, not far off from the $5M proposed in the chart above.

Now, there is some debate/confusion as to language in the original agreement between both sides. This could all be media fed hype, but it would sound logical that the reported clauses to re-address the original agreement once more information was gathered ring true.

The debate then becomes very different. Lower salary players earn less, but make a higher percent of their 100% target. Are the owners just trying to save more $? Are they trying to be more equitable and fair to lower salary players? Both?

You don't have to answer that, I'm just tossing out thoughts. Kind of puts some of the onus on the players to agree amongst themselves. But really, at least as an initial proposal, what ownership has presented doesn't sound all that illogical or impractical to me.
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#31 Major League Ready

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Posted 27 May 2020 - 03:37 PM

 

this isn’t a free market

http://twinsdaily.co...cents/?p=965912

 

That's fine but you are still missing the point. Socializing the losses is a designed to be a sound bite. The whole privatize the gain and socialize the losses makes no sense and it's misguided propaganda.


#32 USAFChief

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Posted 27 May 2020 - 03:49 PM

The owners have that right, of course. But then, why do they expect players to share in the losses, but not in gains when revenues are higher than expected?

They will play half the games, why are the players taking less than half the money? When they go back to regular, and a team makes way more revenue than planned, will they pay the players more than their contract? Of course not.

Players haven't shared in the increased revenues over the past decades??

And They aren't getting offered 1/2 their salary for 1/2 the games because owners dont expect 1/2 the revenue.

These aren't honest arguments you're making, Mike.
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#33 Major League Ready

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Posted 27 May 2020 - 03:50 PM

 

It's not even close. In a free market, the players could go to any team they wanted. That part is never brought up by those arguing that the contracts aren't "fair" because they get paid no matter how they do. They also never point out that the teams pay them MUCH less than they are worth for the first few years of their time in the majors. Much less.

 

Keep banging that drum but you cant see the forest for the trees. None of this is all that relevant to if we have baseball this year. It's real simple, if the owners losses are magnified by playing, we probably don't have baseball. I say probably because they might decide the best long-term solution is to cave right now and then hold out for terms that recapture those losses over the next several years when they renegotiate the CBA. In other words, we will likely miss another season. We might even have replacement players. So go ahead cheer for the players to cling to they want every dime in their contract but don't be surprised if we don't have baseball this year.

 

To Chief's point ... take a look at an inflation calculator. Then, tell me how MLB players have done in terms of compensation increase. I can't think of another group in this country that has fared anywhere near as well as MLB players over the past 30 years. Compensation has increased by roughly 750%. To say they have not participated in profits requires an exceptionally blind view of the facts. What actually happened is player received steady huge increases in pay as revenue increased. Now that the revenue is not there you and some of the players are saying just pay us anyway, the players deserve to get paid as if revenue is as it has been. 

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#34 Sconnie

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Posted 27 May 2020 - 04:04 PM

That's fine but you are still missing the point. Socializing the losses is a designed to be a sound bite. The whole privatize the gain and socialize the losses makes no sense and it's misguided propaganda.

agreed that the phrase is a sound bite. Make no mistake, the CBA negotiation has begun.

However the concept of risk/reward is legitimate here.

Ownership has previously earned a profit based on accepting risk as an investment, now finding the risk greater than ownership is willing to accept has tried to spread that risk among the players. The players already had made their own risk/reward decision by accepting a minor league salary at the reward for a major league one. Being this is new risk (business failure)for the players shouldn’t they ask for a cut of the profit?

In a free market I forgo job security but get to negotiate with competitive employers to increase my earnings. In this case, players have only one league. Negotiation of free agent contracts is basically just back pay, and the teams are one league competing inside of itself.
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#35 Major League Ready

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Posted 27 May 2020 - 04:24 PM

 

agreed that the phrase is a sound bite. Make no mistake, the CBA negotiation has begun.

However the concept of risk/reward is legitimate here.

Ownership has previously earned a profit based on accepting risk as an investment, now finding the risk greater than ownership is willing to accept has tried to spread that risk among the players. The players already had made their own risk/reward decision by accepting a minor league salary at the reward for a major league one. Being this is new risk (business failure)for the players shouldn’t they ask for a cut of the profit?

In a free market I forgo job security but get to negotiate with competitive employers to increase my earnings. In this case, players have only one league. Negotiation of free agent contracts is basically just back pay, and the teams are one league competing inside of itself.

 

I disagree. Getting paid less and taking a loss are two very different things. When the players have to pay out of their pocket to play that would be sharing in the losses. There is no doubt owners are going to pay well over $100M on average for the privilige of owning a MLB player. Players are not going to pay a dime which is very different from not profiting.

 

Players also have guaranteed contracts. If they were willing to accept the risk associated with giving the owners the right to terminate that contract, I am quite sure teams would be willing to pay considerably more if the risk of non-performance was nullified.

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#36 Sconnie

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Posted 27 May 2020 - 04:35 PM

I disagree. Getting paid less and taking a loss are two very different things. When the players have to pay out of their pocket to play that would be sharing in the losses.

the players did take an opportunity cost “loss”. They earned less than minimum wage for 6 years as minor leaguers, many leave MiLB in debt because the wages don’t cover the cost of training and travel in the offseason, let alone cost of living. If they had gotten a job at Home Depot, it would have been banked income over those 6 years, and they would have been able to negotiate higher wages with other employers over that time as well. What percentage of minor leaguers make it to the bigs? Maybe 5-10%. It’s a real cost/benefit calculation.
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#37 DocBauer

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Posted 27 May 2020 - 05:57 PM

the players did take an opportunity cost “loss”. They earned less than minimum wage for 6 years as minor leaguers, many leave MiLB in debt because the wages don’t cover the cost of training and travel in the offseason, let alone cost of living. If they had gotten a job at Home Depot, it would have been banked income over those 6 years, and they would have been able to negotiate higher wages with other employers over that time as well. What percentage of minor leaguers make it to the bigs? Maybe 5-10%. It’s a real cost/benefit calculation.


I feel for the milb system and am amongst the VAST MAJORITY of us here who have advocated for change there. And I'm not going to bring up that debate again except to say that I don't think financial "loss" is accurate. Players in MLB today "paid their dues" to arrive at their goal. They received millions to a couple thousand dollars for signing and then a salary to play, unfair though the $ may be. But they never lost $ to play, unless they chose to turn down $ in another career area to peruse their dream.

Not picking on your post as you and mostly agree on all things, including this conversation, just trying to be clear headed and accurate while trying to make some additional points and using your quote as a place to start. :)

When something hits a business hard, such as this pandemic, losses are also generally spread out from infrastructure to salary cutbacks. Most people I know, fortunately for them, have remained gainfully employed, though have lost bonuses or various forms of extra pay they may have earned. But they are still employed and still earning $. But it obviously hasn't been the same for a lot of people who are temporarily or permanently let go. Someone mentioned a chef, I believe it was, as an analogy of someone being asked to take a pay cut to work. While that stinks, at least that chef would still be able to work and earn while the business was carry out only, no in house customers, and now maybe partial in house customer occupancy. But that restaurant owner was still paying rent, utilities, taxes, benefits for his employees, and salaries for as many employees as they still could, even if there were cut backs.

Taken to a big picture scenario, this is where baseball finds itself right now.

When most anyone joins a business or a company, they start at a lower level and work their way up in regard to salary and title. This is generally true from a recent college grad to a fry cook who becomes a restaurant manager. Even if salaries are absurd, ML players have earned their contracts via the structures in place. And I can be appreciative of them and their talent and earnings, While also being a bit jealous, but I don't begrudge them their $. And IMO, they are being asked to make less $, but truly, they are not being asked to "lose" money the way MLB is expected to lose. (Or at best maybe break even).

Now, where I think ownership is making a mistake is IF they are still trying to find profit here. It's one thing to mitigate losses or break even, but it's another situation entirely if they're still trying to eek out said profit in their "side investment/hobby" at this juncture.

Another area where ownership could be POTENTIALLY making a mistake is the lower percentage of $ paid to the higher market players. If they are going to lose $ as the entity that is MLB, perhaps losing a bit more to adjust higher values to those players could be seen as a good faith offering, especially with the CBA around the corner. Business wise, agreeing to a bigger loss may not make sense, but for better labor peace it could pay eventual dividends.

In regard to MLB, and owners, asking for assistance to mitigate losses but unwilling to share in additional revenue, i am utterly perplexed. Before THIS CRAZY SITUATION, the players have enjoyed great financial rewards over the past couple of decades. So they HAVE shared in tne revenue growth of the sport. Further, while final numbers may be fluid, I find it very interesting that tbe owners proposal includes bonuses paid out to the players based on post season and WS revenue. Perhaps I read it wrong, but my impression was that would be league wide.

To the players I would simply add, they are smart enough to know this pandemic situation is going to have far reaching affects over the next few years in regard to everything from extensions, arbitration and FA. But for the good of the sport, the union, the players themselves, a little more hurt for 2020 might somewhat somewhat soften the blow over the next few years. But again, I'd offer up to ownership that a little more loss and cooperation with the union now may lead to a better CBA going forward.
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#38 Major League Ready

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Posted 27 May 2020 - 06:39 PM

 

the players did take an opportunity cost “loss”. They earned less than minimum wage for 6 years as minor leaguers, many leave MiLB in debt because the wages don’t cover the cost of training and travel in the offseason, let alone cost of living. If they had gotten a job at Home Depot, it would have been banked income over those 6 years, and they would have been able to negotiate higher wages with other employers over that time as well. What percentage of minor leaguers make it to the bigs? Maybe 5-10%. It’s a real cost/benefit calculation.

 

I agree completely that MilB players should be paid more or at least paid more consistently instead of unproven players getting multi-million dollar signing bonuses. However, I don't agree that poor pay during their development has any merit here. I went to college and grad school for 7 years and paid for that education. MiLB players are not paid enough but its a lot better than paying for developing the skills necessary at the next level.

 

Once again you are still completely missing the decision scenario present here. The owners decision is to cancel the remainder of the season or play. At full scale they no doubt increase already enormous losses. They can just cancel the season or they can ask the players if they are interested in playing at less than full-scale. The net result is still likely a loss but apparently they are willing to accept the more palatable losses under this scenario.

 

The players option is to accept less than full scale or opt to not play and get nothing. In other words, the net result of the season is the average team losing in excess of $100M regardless of if they play or not. Under the proposed split, assuming $3B in revenue, the average player receives $1.5M. (1.66 / 900 players). Those poor bastards having to work for an entire half season for a wage equivalent of 33 years income for the average American worker. How could they be accept this inequity?


#39 adorduan

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Posted 27 May 2020 - 06:47 PM

 

I disagree. Getting paid less and taking a loss are two very different things. When the players have to pay out of their pocket to play that would be sharing in the losses. There is no doubt owners are going to pay well over $100M on average for the privilige of owning a MLB player. Players are not going to pay a dime which is very different from not profiting.

 

Players also have guaranteed contracts. If they were willing to accept the risk associated with giving the owners the right to terminate that contract, I am quite sure teams would be willing to pay considerably more if the risk of non-performance was nullified.

Owning is a bad word choice. just sayin...

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#40 Sconnie

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Posted 27 May 2020 - 06:55 PM

Owning is a bad word choice. just sayin...

seems to fit pretty well from my perspective:)



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