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Potential Owner Player Salary Fight


diehardtwinsfan
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Isn’t most of the money made with tv deals anyway? With more people watching maybe ownership should be negotiating with the cable companies for more money?

 

Let's say a team draws 20,000 fans a game (25 teams were above that threshold last year). Let's say the average ticket price is $20 (probably low), and each fan spends $10 on concessions.  That's 48.6M in revenue, and as previously stated, that number is in all probability tens of millions low for most teams.  TV definitely makes up the lion's share of team revenue, but in-stadium revenue is far from small.

 

The cable companies also have no reason to renegotiate right now--the team can threaten to move to a different channel, or start it's own broadcast company if they don't, but so long as there is a contract, the team isn't going anywhere.  Most teams would also struggle to find a viable second channel in their home market, and the start-up costs for a new broadcast channel I'm sure are quite high.  Add to that the reality that the cable providers are under no obligation to add a new channel to their platform (which is where the majority of cable channels' revenue comes from), and walking away from tens of millions a year is a risky proposition.

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So not knowing all the ins and outs of the deal back in March, from how the article states it, the owners still have all the power.  I get the players would say we made a deal lets stick to it.  However, the deal was if games would be played.  The owners could say, until we can have fans no games, and unless we can start on July 4th, no games because cannot have meaningful enough season.  Then the players get the share their 170 million, however they do that, and owners are out much less money, than if they pay players half salaries to empty ball parks.  I have read up to 40% comes from game days tickets and other sales.  So if you cut out 40% of money off your budget now you have 60% budget.  Then you would assume 50% tv money, unless you can work out deal there because nothing else to watch and cannot go to game so ratings will be higher.  But assume you cannot get extra from tv.  Now you have 30% budget and paying out 50% to players.  That is a 20% shortfall.  Pretty big hit to a business.

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Are the owners going to share extra revenue with players when they get more? Of course not. The players should get their pro rated salary. Nothing less.

 

Are the players going to give back salary when revenue goes down?  Of course not.  Contracts were signed, and they should be honored, except for in those circumstances, like this one, where extraordinary circumstances make normal operations impossible.  If games are played without fans, but the players are unwilling to make salary concessions, they are asking the owners to forgo tens of millions in revenue--of course the owners are going to balk at that.  What other business would keep it's highest cost active while giving up it's 2nd largest revenue stream?

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Are the players going to give back salary when revenue goes down?  Of course not.  Contracts were signed, and they should be honored, except for in those circumstances, like this one, where extraordinary circumstances make normal operations impossible.  If games are played without fans, but the players are unwilling to make salary concessions, they are asking the owners to forgo tens of millions in revenue--of course the owners are going to balk at that.  What other business would keep it's highest cost active while giving up it's 2nd largest revenue stream?

I do see your point of view. But then part of me wonders, because these are extraordinary circumstances to say the least, why cannot owners absorb their share of the pain here, for just 2020, then deal with 2021 when that time comes.
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I do see your point of view. But then part of me wonders, because these are extraordinary circumstances to say the least, why cannot owners absorb their share of the pain here, for just 2020, then deal with 2021 when that time comes.

aren't the owners already but not having revenues by not having fans? and possibly paying up to 50 players?

 

 

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aren't the owners already but not having revenues by not having fans? and possibly paying up to 50 players?

The owners are taking a bath—of course they are. The players haven’t been paid yet, except for the token amount offered after the season was suspended, in exchange for pro-rated full salaries once the season resumed. That’s my understanding. Like another poster said above, we don’t really know the fine details.
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When we ask all owners of businesses are held to this standard I will hold baseball owners.

 

How do you feel about tax subsidies for ballparks? same as other businesses? And, in theory, that IS the standard other businesses are held to. They own capital, and make more money when there is more revenue, and less money when there is less revenue. I'm guessing most people that are still employed by huge corporations that have hundreds of millions in revenue aren't taking pay cuts beyond having their hours cut.......

 

They have a contract. They agreed to pro-rate salaries in March. They now don't want to honor that agreement. 

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How do you feel about tax subsidies for ballparks? same as other businesses? And, in theory, that IS the standard other businesses are held to. They own capital, and make more money when there is more revenue, and less money when there is less revenue. I'm guessing most people that are still employed by huge corporations that have hundreds of millions in revenue aren't taking pay cuts beyond having their hours cut.......

 

They have a contract. They agreed to pro-rate salaries in March. They now don't want to honor that agreement. 

funny the Mayo clinic did sweeping pay cuts and furloughs (https://www.mprnews.org/story/2020/04/10/mayo-clinic-announces-sweeping-pay-cuts-furloughs)

I am pretty sure the Mayo gets tax subsidies as well.

 

Of course I am bias because I don't think any pro sports should be playing if the amateurs and kids aren't allowed to play.

 

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When we ask all owners of businesses are held to this standard I will hold baseball owners.

Most good business owners are taking less salary or forgoing their salary completely during this pandemic. Hell, we’re asking common Joe landlord to take responsibility on rent payments that their tenants can’t afford. Billionaire baseball owners can survive a down year revenue wise.

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They have a contract. They agreed to pro-rate salaries in March. They now don't want to honor that agreement. 

 

This here is the only thing that matters. 

 

The owners have insurance for catastrophes. They're not hurting anywhere near where they want you to think they are.

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This here is the only thing that matters. 

 

The owners have insurance for catastrophes. They're not hurting anywhere near where they want you to think they are.

I was going to make this exact point. My understanding is that it's common for large businesses to have insurance that covers revenue loss due to so-called acts of god, such as floods, earthquakes, and storms. And epidemics.

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Let's say a team draws 20,000 fans a game (25 teams were above that threshold last year). Let's say the average ticket price is $20 (probably low), and each fan spends $10 on concessions. That's 48.6M in revenue, and as previously stated, that number is in all probability tens of millions low for most teams. TV definitely makes up the lion's share of team revenue, but in-stadium revenue is far from small.

 

The cable companies also have no reason to renegotiate right now--the team can threaten to move to a different channel, or start it's own broadcast company if they don't, but so long as there is a contract, the team isn't going anywhere. Most teams would also struggle to find a viable second channel in their home market, and the start-up costs for a new broadcast channel I'm sure are quite high. Add to that the reality that the cable providers are under no obligation to add a new channel to their platform (which is where the majority of cable channels' revenue comes from), and walking away from tens of millions a year is a risky proposition.

Average ticket price by team is here:

https://www.statista.com/statistics/193673/average-ticket-price-in-the-mlb-by-team/

 

Median is between KC and Toronto at $65.50 per ticket.

 

Average attendance: 28k median

http://www.espn.com/mlb/attendance/_/year/2019/sort/awayAvg

 

Your $10 per attendant spend is about right if you skip parking. If the google is to be trusted, 171,000,000 per year at the ballpark on average, 3.5x your figure.

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I was going to make this exact point. My understanding is that it's common for large businesses to have insurance that covers revenue loss due to so-called acts of god, such as floods, earthquakes, and storms. And epidemics.

 

Now one thing I will say is I wouldn't be surprised if there are a few teams that are in bad shape. Especially if they have a bad local TV deal. I was concerned last year that Cleveland was hurting since they're attendance was lagging for a few years as a contender. The lack of moves and trading Kluber still have me thinking that again now. I do not know there tv deal though.

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I have two people who have both said the same thing to me regarding the 2020 season, though in different phrasing:

 

"If 2020 happens, 2022 won't."

 

There are more than 50 players known who will refuse to play in any proposed scenario out there right now. That's all levels of players. There are parks that will not be allowed to even host games empty, let alone if they try to put any fans in the stadiums, due to their state laws. On top of all that, owners have been so heavy-handed in these negotiations that players are done with it. They don't want to talk 2021. Right now, there should be a dual discussion on making a 2020 season right and working on concessions to middle ground for the 2021 CBA negotiations. Instead, owners are essentially telling players how it will be.

 

Those that own baseball teams are about to cost the game a season of baseball. It's as illogical as it sounds, but it's true. I'm not sure if there's a more obvious sign of just how out of touch the voices running the league truly are...

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No one is asking for a full salary. They should get their pro rated salary. No one is asking for a full salary.

I probably should have clarified my comments in regard to some pushback by agents like Boras and other rumors that have been put it there.

 

In truth, we don't have all the financial details. The owners won't open their books and I don't know if they should or shouldn't. I guess my point is an agreement was reached based on information/speculation as it was known at the time. I am not against the players and a flat proration of salaries at all. But if new information shows a very different prospectus for income/lost income, then I can see the point of owners wanting to open up conversation again and basically say; "look guys, when we talked about this a couple months ago projections were X. We now see an entirely different set of numbers we didn't anticipate at the time that shows Y."

 

Every business has bottom lines they have to look at for the profitability and health of their business. My own company is privately owned and doing a great job for all their employees. But they are also capping salaries, bonuses incentives and the such to make sure everyone is taken care of and the company stays healthy. I don't know if the owners of my company are billionaires or multi millionaires, but they are very wealthy. But my company is only a single entity under their corporate umbrella. That means overhead and thousands of additional employees they are responsible for. The billionaire owners of MLB franchises are in a similar situation.

 

Do the owners have some sort of catastrophic insurance to offset losses from the pandemic? I don't know. Maybe they do. I find myself somewhat dubious that even if they do, it fully offsets projected losses. And if they are playing games with the players to squeeze out a little more, then shame on them. (Especially with a new labor agreement due in the near future). But if there are honest new numbers that have come to light, then I understand them going to the union and stating as such and hammering out a different arrangement for everyone's sake.

 

I hate to say this as I want everyone to play nice always, for the good of the sport we all love, but I hope the owners are being honest and the players will be open minded.

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I have two people who have both said the same thing to me regarding the 2020 season, though in different phrasing:

 

"If 2020 happens, 2022 won't."

 

There are more than 50 players known who will refuse to play in any proposed scenario out there right now. That's all levels of players. There are parks that will not be allowed to even host games empty, let alone if they try to put any fans in the stadiums, due to their state laws. On top of all that, owners have been so heavy-handed in these negotiations that players are done with it. They don't want to talk 2021. Right now, there should be a dual discussion on making a 2020 season right and working on concessions to middle ground for the 2021 CBA negotiations. Instead, owners are essentially telling players how it will be.

 

Those that own baseball teams are about to cost the game a season of baseball. It's as illogical as it sounds, but it's true. I'm not sure if there's a more obvious sign of just how out of touch the voices running the league truly are...

And if this is true...not saying it's not...then the owners are being very, very short sighted.

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If you look at revenue after strike years it took several years to get back to where they were when they did not have a season. They may have to lose a buck this year to make two next year and the year after and the year after

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If you look at revenue after strike years it took several years to get back to where they were when they did not have a season. They may have to lose a buck this year to make two next year and the year after and the year after

The current situation is not the same as a strike or a lockout. I don't think revenue in the coming years will be affected whether they play this year or not.

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There are a lot of very good points on both sides of this thread, and I'd encourage everyone to try a bit harder to listen to each other here. I do think there are solutions, but it's likely going to be a compromise on both parts... and I agree... both sides need to tread carefully here, because doing 2020 wrong will likely mean no 2022 (and I'd argue that not playing in 2020 could still mean not playing in 2022).

 

From an owner standpoint, I think this is a hurt a bit more by the fact that you have a huge disparity in revenue across teams, something you don't see in the NFL. The Yankees, Cubs, and Dodgers can literally print money, but the sport as a whole is going to be hurt badly if teams like the Marlins, Rays, and Pirates fold.. I'm not sure we should be rooting for that b/c that will ultimately lead to the death of a sport that we all love. Owners have already basically set a stop loss of 170M... I do think we forget that like any human being, they are likely not going to be too terribly interested in a season if their losses mount higher than that... That's even more true for smaller market teams, because what will likely happen is teams like NY and LA being profitable over the rest of the MLB landscape... That's why I really think some sort of temporary revenue sharing with the players getting the lions share of the profits is the best course of action personally... as long as everyone profits, I think it bodes well for a long term prospects of the sport since baseball in 2020 is likely to bring in a lot of new fans that would otherwise not give it another look... not to mention that this tells they players "we are in this together"... but that requires both sides to set down their agendas...

 

Bottom line, I think the smart play is for everyone to put those issues down and try and find a way to play in 2020 where players are getting as much of their salary as possible while owners are breaking even or taking a small profit. It would require teams like NY and LA to share revenue they don't normally share... and I think that in particular is where the real problem sits... 

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They want to renege on the deal made in March because they are greedy bastards. 

You may call them greedy  bastards. I expect the truth is that they are fighting for their survivals and for most, baseball is a small part of it.

 

The Pohlad Companies have a major interest in many businesses. Two of the largest are United Properties and auto dealerships. Has anyone checked how many cars have been sold of late?  Well, in Minnesota it is either none or very few. No one knows when those businesses will return to normal, whatever normal in the future is. 

 

Another major company is United Properties. Do you know that United has a major investment in senior housing? With most of the deaths in Minnesota coming from senior, nursing and assisted living housing, they are faced with a nightmare working to combat the virus attacking and killing many of their residents [i don't know if any of these have occurred in housing owned by UP].  Regardless of any deaths, the costs they are facing are huge as they battle these outbreaks in this type of housing.  As for the rest of United Properties holdings, don't know how many tenants in commercial buildings aren't paying rent, but it doesn't take many to turn a profit into a loss.  As for their hotels, expect they are closed with no income and lots of continuing expenses.

 

That's the world those greedy bastards are in today.  Thanks to Sconnie, we know that their average ticket price last year was $57.  If they have zero fans in the stands during the last half of the normal season they would lose more than a 1,000,000 fans.  So their revenue will be reduced by at least $57,000,000 for those 41 games.  That doesn't take into consideration the other revenue related to those games that will also be lost, such as concessions.  Yes, they won't have their normal game day expenses, however, they will have a lot of new expenses related to dealing with the virus and keeping the players as safe as possible.

 

I believe I have seen that their revenue last year was around $250,000,000...someone can get this exact number.  So half a season would have been $125,000,000.  The $57,000,000 plus other game day income is probably at least half of their normal revenue.  I don't know how to respond to those who believe it is realistic, much less fair, to expect them to lose half of their revenue yet pay 100% of their largest cost, player salaries.  

 

Like every small, medium and large company in America, the Pohlad Companies are fighting a battle to both deal with the effects of the virus as well as the survival of their businesses.  I pray that they and the other owners will be realistic in dealing with the players.  However, the players also have to understand that the world has changed and be fair in their dealings with the owners.  If neither side is prepared to be reasonable, we won't have baseball.  Personally, I am running out of books to read and really want to turn on the tv and see the Twins play whomever.

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There are a lot of very good points on both sides of this thread, and I'd encourage everyone to try a bit harder to listen to each other here. I do think there are solutions, but it's likely going to be a compromise on both parts... and I agree... both sides need to tread carefully here, because doing 2020 wrong will likely mean no 2022 (and I'd argue that not playing in 2020 could still mean not playing in 2022).

 

From an owner standpoint, I think this is a hurt a bit more by the fact that you have a huge disparity in revenue across teams, something you don't see in the NFL. The Yankees, Cubs, and Dodgers can literally print money, but the sport as a whole is going to be hurt badly if teams like the Marlins, Rays, and Pirates fold.. I'm not sure we should be rooting for that b/c that will ultimately lead to the death of a sport that we all love. Owners have already basically set a stop loss of 170M... I do think we forget that like any human being, they are likely not going to be too terribly interested in a season if their losses mount higher than that... That's even more true for smaller market teams, because what will likely happen is teams like NY and LA being profitable over the rest of the MLB landscape... That's why I really think some sort of temporary revenue sharing with the players getting the lions share of the profits is the best course of action personally... as long as everyone profits, I think it bodes well for a long term prospects of the sport since baseball in 2020 is likely to bring in a lot of new fans that would otherwise not give it another look... not to mention that this tells they players "we are in this together"... but that requires both sides to set down their agendas...

 

Bottom line, I think the smart play is for everyone to put those issues down and try and find a way to play in 2020 where players are getting as much of their salary as possible while owners are breaking even or taking a small profit. It would require teams like NY and LA to share revenue they don't normally share... and I think that in particular is where the real problem sits... 

Great comment, diehard. 

 

But there is one point in which I believe you are wrong.  There will be no profits in baseball this year.  What the owners are attempting to do is reduce their losses.  Every action they are taking deals with this, such as reducing the draft to five rounds with 90% of the signing bonuses deferred for a year or two.  That doesn't change the accrued loss for this year, but it does save each team several million dollars of cash-flow.  

 

I think they are approaching it in the wrong manner and should be negotiating what percentage of their regular game day salary each player receives.  That is much easier for the players to get their hands around.  Each player would know what he was playing for if the offer was 67% of his normal pay versus 50% of whatever the total revenue is.  Expect that is where they will end, hopefully, it won't be too bloody to get there.

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You may call them greedy  bastards. I expect the truth is that they are fighting for their survivals and for most, baseball is a small part of it.

 

The Pohlad Companies have a major interest in many businesses. Two of the largest are United Properties and auto dealerships. Has anyone checked how many cars have been sold of late?  Well, in Minnesota it is either none or very few. No one knows when those businesses will return to normal, whatever normal in the future is. 

 

Another major company is United Properties. Do you know that United has a major investment in senior housing? With most of the deaths in Minnesota coming from senior, nursing and assisted living housing, they are faced with a nightmare working to combat the virus attacking and killing many of their residents [i don't know if any of these have occurred in housing owned by UP].  Regardless of any deaths, the costs they are facing are huge as they battle these outbreaks in this type of housing.  As for the rest of United Properties holdings, don't know how many tenants in commercial buildings aren't paying rent, but it doesn't take many to turn a profit into a loss.  As for their hotels, expect they are closed with no income and lots of continuing expenses.

 

That's the world those greedy bastards are in today.  Thanks to Sconnie, we know that their average ticket price last year was $57.  If they have zero fans in the stands during the last half of the normal season they would lose more than a 1,000,000 fans.  So their revenue will be reduced by at least $57,000,000 for those 41 games.  That doesn't take into consideration the other revenue related to those games that will also be lost, such as concessions.  Yes, they won't have their normal game day expenses, however, they will have a lot of new expenses related to dealing with the virus and keeping the players as safe as possible.

 

I believe I have seen that their revenue last year was around $250,000,000...someone can get this exact number.  So half a season would have been $125,000,000.  The $57,000,000 plus other game day income is probably at least half of their normal revenue.  I don't know how to respond to those who believe it is realistic, much less fair, to expect them to lose half of their revenue yet pay 100% of their largest cost, player salaries.  

 

Like every small, medium and large company in America, the Pohlad Companies are fighting a battle to both deal with the effects of the virus as well as the survival of their businesses.  I pray that they and the other owners will be realistic in dealing with the players.  However, the players also have to understand that the world has changed and be fair in their dealings with the owners.  If neither side is prepared to be reasonable, we won't have baseball.  Personally, I am running out of books to read and really want to turn on the tv and see the Twins play whomever.

 

rdehring - Way too much logic and common sense for an discussion like this, and you could have added the stock market is down around 20% (which I think owners have quite a bit of money in)

 

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Great comment, diehard. 

 

But there is one point in which I believe you are wrong.  There will be no profits in baseball this year.  What the owners are attempting to do is reduce their losses.  Every action they are taking deals with this, such as reducing the draft to five rounds with 90% of the signing bonuses deferred for a year or two.  That doesn't change the accrued loss for this year, but it does save each team several million dollars of cash-flow.  

 

I think they are approaching it in the wrong manner and should be negotiating what percentage of their regular game day salary each player receives.  That is much easier for the players to get their hands around.  Each player would know what he was playing for if the offer was 67% of his normal pay versus 50% of whatever the total revenue is.  Expect that is where they will end, hopefully, it won't be too bloody to get there.

 

You may be right about that... I don't know. I doubt any of us know what the non-player salary operating costs total per team and how much of that has been shaved off. Using the 52% number for salaries, which is really a Twins thing, I'm guessing your additional operating costs are likely around 30% leaving 18% for profit... That's completely a number I'm pulling out of nowhere, so take it with a grain of salt, but I'm also guessing that number (dollar figure, not percentage) is pretty similar across all teams.. 

 

As such, I think large market teams are still likely profiting to some extent while everyone else is not... That's my back of the napkin math, but I'd also guess that if they did revenue sharing that those teams could likely float baseball to pretty close to break even for 2020 while paying most of the players..

 

but ultimately you may be right. 

 

I'm still arguing at the end of the day that baseball would be best served to do a one time revenue share across all teams and do everything possible to give the lions share of whatever remaining profit to the players. To me that's the ethical thing that an owner should be doing so as to ensure the sport goes on and that no one takes a massive loss.  

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