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Potential Owner Player Salary Fight


diehardtwinsfan
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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.  

Agree 100% that baseball needs better revenue sharing than the current situation.  What is it right now, something like 30% of local media gets pooled?  Does anyone know the exact terms and what is included?

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Agree 100% that baseball needs better revenue sharing than the current situation.  What is it right now, something like 30% of local media gets pooled?  Does anyone know the exact terms and what is included?

 

I don't believe local media is pooled at all, but I'm not up on these things... bottom line is that there's a huge revenue disparity that's killing the game... One big reason people don't watch is that their teams for the most part never had a chance.

 

The owner player greed is only half the battle because there are a few owners that effectively hold all of it hostage.

 

In the NFL, it's a bit different as I believe luxury box sales are one of the main things that aren't split... pretty much everything else is. 

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I don't believe local media is pooled at all, but I'm not up on these things... bottom line is that there's a huge revenue disparity that's killing the game... One big reason people don't watch is that their teams for the most part never had a chance.

 

The owner player greed is only half the battle because there are a few owners that effectively hold all of it hostage.

 

In the NFL, it's a bit different as I believe luxury box sales are one of the main things that aren't split... pretty much everything else is. 

I read somewhere a few years ago, may have been a recap of the CBA, that local media revenues were shares.  Think the percentage was 31%, but that was a long time to remember.  Also didn't understand what the definition of local media revenue was.

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https://blogs.fangraphs.com/after-years-of-profits-mlb-owners-ask-players-to-subsidize-potential-losses/

 

The short version:

 

The owners have made larger and larger profits over the last few decades, while the percent of revenue spent on players has gone down. NOW that they will lose money, or make less, they want the players to take a hit.....while not giving them more the record profits in previous years.

 

Those arguing the players should give this year, do you expect owners to give more money in future years when revenue goes up? I mean, they don't do that now.....

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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.

agreed on profit isn’t happening this year. Also agreed on ratio of salary as a better negotiating tactic.

 

The League and Owners have never openly shared revenue before, and trust isn’t there. Without an NFL type of CBA already in place, trying to develop that without a salary cap and league wide TV deal, it’s almost impossible. No way do the players agree to a salary cap.

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https://blogs.fangraphs.com/after-years-of-profits-mlb-owners-ask-players-to-subsidize-potential-losses/

 

The short version:

 

The owners have made larger and larger profits over the last few decades, while the percent of revenue spent on players has gone down. NOW that they will lose money, or make less, they want the players to take a hit.....while not giving them more the record profits in previous years.

 

Those arguing the players should give this year, do you expect owners to give more money in future years when revenue goes up? I mean, they don't do that now.....

 

And of course player salaries have remained the same over the last few decades?  If owners are asking players to subsidize their losses (by asking players to accrue less revenue), then by the same logic, players are also asking owners to subsidize their losses (by asking owners to accrue less revenue).

 

Two quick googles show 68.5M fans in 2019, at an average ticket cost of $32.99.  That's $2.17 BILLION dollars of revenue on tickets alone.  It's completely reasonable to believe that concessions, merch, parking, and in-game sponsorships account for another billion, which means in an 81 game season played without fans, the owners are forgoing around $1.6B in revenue.  Meanwhile, player salaries were $4.16 Billion last year ($138.6M average payroll x 30 teams, according to Spottrac).  So players are asking for owners to still shell out over $2B dollars, while forgoing $1.5B in revenue.

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Meanwhile, player salaries were $4.16 Billion last year ($138.6M average payroll x 30 teams, according to Spottrac).  So players are asking for owners to still shell out over $2B dollars, while forgoing $1.5B in revenue.

This analysis seems to mix adding and subtracting, in a way that confuses me. Using the above numbers, would it not be the case that decline of revenue is $1.5B, as you say, while decline of salaries would be greater at around $2B (4.16 minus "over 2")? That seems more like an apples-to-apples comparison, if the numbers are valid.

 

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This analysis seems to mix adding and subtracting, in a way that confuses me. Using the above numbers, would it not be the case that decline of revenue is $1.5B, as you say, while decline of salaries would be greater at around $2B (4.16 minus "over 2")? That seems more like an apples-to-apples comparison, if the numbers are valid.
 

 

You could state it that way, yes--the owners save more by not paying player salaries, than they would earn by having games under normal conditions.  The point I was trying to make is that player salaries are an immense cost, and while fan attendance doesn't completely cover it, it does cover a substantial amount.  Therefore, the players insisting on full per-game pay even if games are played without fans is probably as much a non-starter for owners as if the owners insisted on a partial per-game pay with regular fan presence.

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And of course player salaries have remained the same over the last few decades?  If owners are asking players to subsidize their losses (by asking players to accrue less revenue), then by the same logic, players are also asking owners to subsidize their losses (by asking owners to accrue less revenue).

 

Two quick googles show 68.5M fans in 2019, at an average ticket cost of $32.99.  That's $2.17 BILLION dollars of revenue on tickets alone.  It's completely reasonable to believe that concessions, merch, parking, and in-game sponsorships account for another billion, which means in an 81 game season played without fans, the owners are forgoing around $1.6B in revenue.  Meanwhile, player salaries were $4.16 Billion last year ($138.6M average payroll x 30 teams, according to Spottrac).  So players are asking for owners to still shell out over $2B dollars, while forgoing $1.5B in revenue.

 

Player salaries are rising slower than revenue......meaning in good years, the owners are pocketing more money (which, btw, is every year for more than a decade). 

 

The owners aren't going to pay players more money than their contracts demand in good years, why should players give back money in bad years? More money than a pro-rated deal, both sides agreed to in March?

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Player salaries are rising slower than revenue......meaning in good years, the owners are pocketing more money (which, btw, is every year for more than a decade).

 

The owners aren't going to pay players more money than their contracts demand in good years, why should players give back money in bad years? More money than a pro-rated deal, both sides agreed to in March?

if ownership continues to push non-guaranteed contracts the price would have to go up from a players perspective. Shorter higher annual average value contracts more prevalent over the long drawn out contracts with deferred payments of today.
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I don't believe local media is pooled at all, but I'm not up on these things... bottom line is that there's a huge revenue disparity that's killing the game... One big reason people don't watch is that their teams for the most part never had a chance.

 

The owner player greed is only half the battle because there are a few owners that effectively hold all of it hostage.

 

In the NFL, it's a bit different as I believe luxury box sales are one of the main things that aren't split... pretty much everything else is.

 

Really like this post. Not 100% about a few owners holding the rest of the league hostage, but I could be convinced. The problems with baseball are two fold:

 

1] Marketing. Don't talk to me about pace of play and time frame until you first address marketing. The average baseball game is roughly 3hrs. So is the average NFL game. The NBA, with an 80+ game season has games that are around 2+ hours. The NFL is an EVENT because games are weekly vs daily. The NBA is almost exactly half a MLB season, not including long playoffs.

 

Marketing for MLB will never be the same for baseball as these other two sports due to its length of season. But the culmative of games watched and attendance doesn't show an overall loss from numbers I have read before. Its just more spread out. But where are jersey sales, shoe contracts, etc, when it comes to MLB?

 

But where is there any hype, any interest in something BIG? Yes, the occasional big market team facing another big market team, or cross city matchup. And with a marathon season, hype is hard to build up. I get it. But the NFL and NBA both hype up contests that MLB doesn't in regard to star players and matchups, which leads to my next point.

 

2] Competitive balance. If MLB owners are completely blind, then we are all cursed as baseball lovers. Think about KC for a moment. They stunk for years and then put together a really good team for 2yrs who managed to make the WS twice. And then they fell apart. They had to due to financial restraints. The Chiefs won the Super Bowl and have one of the most electric stars in all of the NFL. If their staff is smart, they can ride a tide of a talented roster and all pro QB for the next few years. The Royals are just hoping to rebuild on what they have over the next few years to compete again.

 

The NFL has shown, repeatedly, that a smart FO can assemble a team to compete every few years. Or, in some cases, compete consistently for several years if you have a few key players in place.

 

But MLB has consistently shown that the "have's" will be able to weather a poor season or two before rising again with greater finances. The MLB players union has fought any kind of cap for decades now. And it makes financial sence for them to some degree. But to some degree, the owners have to find a medium of total revenue sharing, even without a true cap, so that there is a more level playing field for the entire ML system. For the good of the entire league and it's future health. Today and tomorrow.

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I don't believe local media is pooled at all, but I'm not up on these things... bottom line is that there's a huge revenue disparity that's killing the game... One big reason people don't watch is that their teams for the most part never had a chance.

 

The owner player greed is only half the battle because there are a few owners that effectively hold all of it hostage.

 

In the NFL, it's a bit different as I believe luxury box sales are one of the main things that aren't split... pretty much everything else is. 

Prior to 2011 net local media was pooled at the rate of 31% with all teams sharing.  This continues, however, I don't know the exact percentage since 2011.  I have read articles mentioned that it approaches half...don't know if that is factual.  I understand the definition of "net local revenue" is also somewhat ambiguous.  

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 One big reason people don't watch is that their teams for the most part never had a chance.

 

The owner player greed is only half the battle because there are a few owners that effectively hold all of it hostage.

 

I think this is important, not just regarding 2020 but regarding the viability of the game moving forward.

What is best for MLB as a whole is what is best for each individual franchise. It's not good for MLB as a whole to have teams with unfair financial advantages. The wealthiest teams need to learn and accept this.

In the reserve clause era all that was required for success was to produce good players in house. In the modern era success is much more highly correlated with revenue. The only way for all teams to have approximately equal chances to succeed on merit is for all teams to have approximately equal revenue. I'm not going to go so far as to say that all revenue from all teams should be distributed equally to all teams but I think that a higher level of revenue sharing is a much better way to keep MLB viable than restrictions on spending.

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Player salaries are rising slower than revenue......meaning in good years, the owners are pocketing more money (which, btw, is every year for more than a decade). 

 

The owners aren't going to pay players more money than their contracts demand in good years, why should players give back money in bad years? More money than a pro-rated deal, both sides agreed to in March?

 

Player salaries will always grow slower than revenue, because player salary is only one piece of the revenue pie; first off, taxes need to be paid.  Then there's raises for other aspects of the organization (on-field staff, front office, operations folks, etc).  Upgrades to physical assets such as stadiums, training facilities.  I'm sure there's myriad other places a multi-million dollar entity needs to address with money, to blindly state that players should always see an increase commensurate with the overall increase is myopic, and a strategy no successful business would endorse.

 

It's also worth noting, this is not a bad year.  This is a cataclysmic year.  Statista estimates MLB brought in $9.9B in revenue in 2018--let's say they hit $10B in 2019.  With no fans at games, MLB is looking at about a 30% decline in revenue at minimum, and that's assuming they still get the full amount from all TV/radio deals.  If they only get half for an 80 game season, that's another $2-3 billion out the door.  Now owners are looking at a scenario where they are down 50 to 60 percent in revenue, but their largest single cost, which accounts for 40ish percent of total revenue, is not being attenuated.

 

In reality, a 50/50 revenue split is quite generous of the owners--since MLB salaries were somewhere between 40 and 42% of revenue in 2019.

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The idea of the players forming a new league fascinates me. No idea what that looks like or how far fetched it is. I would certainly pay to watch them if they filmed their games.

 

It's certainly possible, but would absolutely require substantial pay cuts from the players to work.  Fan revenue will be way down for a long time--no MLB team is going to allow a new league comprised of their former players to use their stadiums.  There will be massive up-front costs in establishing all the necessary infrastructure to run a modern professional sports league.  Either the players will need to both not pay themselves AND invest heavily from their career earnings/take out huge loans against future speculative revenue, or more likely, find 20-30 entities (individuals or corporations) willing to post 8-9 figure losses for multiple years.  No one would be willing to pay all the start up costs necessary, with no guarantee of revenue, and an inflexible commitment of $100M or more a year in player salary.

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It's certainly possible, but would absolutely require substantial pay cuts from the players to work. Fan revenue will be way down for a long time--no MLB team is going to allow a new league comprised of their former players to use their stadiums. There will be massive up-front costs in establishing all the necessary infrastructure to run a modern professional sports league. Either the players will need to both not pay themselves AND invest heavily from their career earnings/take out huge loans against future speculative revenue, or more likely, find 20-30 entities (individuals or corporations) willing to post 8-9 figure losses for multiple years. No one would be willing to pay all the start up costs necessary, with no guarantee of revenue, and an inflexible commitment of $100M or more a year in player salary.

Certainly possible, but probably too risky. I assumed they couldn’t use the stadiums, or the MLB team names either. They could still find places to play and actually do some traveling around the state. They would certainly make less money. I would want the new “Twins” to look a lot like the current Twins, too, but as essentially a new independent league I guess playere could scatter and reestablish themselves wherever they wanted. Fun to think about, but little more than that.
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And of course player salaries have remained the same over the last few decades?  If owners are asking players to subsidize their losses (by asking players to accrue less revenue), then by the same logic, players are also asking owners to subsidize their losses (by asking owners to accrue less revenue).

 

Two quick googles show 68.5M fans in 2019, at an average ticket cost of $32.99.  That's $2.17 BILLION dollars of revenue on tickets alone.  It's completely reasonable to believe that concessions, merch, parking, and in-game sponsorships account for another billion, which means in an 81 game season played without fans, the owners are forgoing around $1.6B in revenue.  Meanwhile, player salaries were $4.16 Billion last year ($138.6M average payroll x 30 teams, according to Spottrac).  So players are asking for owners to still shell out over $2B dollars, while forgoing $1.5B in revenue.

Average ticket cost is not average amount spent on tickets. Places cite the average cost of a ticket to the stadiums.  When you look at the people in the stands, more cheap seats are empty. Money from TV has been about 60% revenue. That is pure profit for the team. The rest of the revenue production all has money paid to make it exist. Revenue there is not equal to profit

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Thanks for linking that old nurse.  But it is really puzzling.  It says that pooling local media revenue had been contemplated, but never enacted.  Then at the end, it says 48% of local revenues are pooled with each team getting 3.3%...which was over a hundred million in 2018.  Not certain what to believe.

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Thanks for linking that old nurse.  But it is really puzzling.  It says that pooling local media revenue had been contemplated, but never enacted.  Then at the end, it says 48% of local revenues are pooled with each team getting 3.3%...which was over a hundred million in 2018.  Not certain what to believe.

This one may confuse you more

http://www.captainsblog.info/2020/03/07/looking-under-the-hood-of-mlbs-revenue-sharing-plan-yankees-baseball-red-sox-mets-how-does-baseballs-revenue-sharing-work/25425/

 

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Thanks, old nurse.

 

That's a lot of information. And as you said, not totally clear what is happening. A couple things that popped out to me were: a) The Twins had EBITDA of about $10,000,000 in 2018; :cool: it makes sense to borrow money for certain stadium costs as the interest expense reduces net local revenue; and c) after all is said and done they pool about 48% of net local revenue.

 

And maybe best of all, the Yankees wrote out a check for over $160,000,000. I like that.

 

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Thanks, old nurse.

 

That's a lot of information. And as you said, not totally clear what is happening. A couple things that popped out to me were: a) The Twins had EBITDA of about $10,000,000 in 2018; :cool: it makes sense to borrow money for certain stadium costs as the interest expense reduces net local revenue; and c) after all is said and done they pool about 48% of net local revenue.

 

And maybe best of all, the Yankees wrote out a check for over $160,000,000. I like that.

Here’s my take away

 

“ As a reminder, the model upon which this analysis is based has inherent flaws. Without access to the precise inputs that go into the formula, we can’t definitively calculate exactly how much each team is contributing to or drawing from MLB’s revenue sharing plan. Still, at the very least, this analysis not only helps to illustrate how the plan works, but also whether the design is effective for meeting the stated aim.”

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Average ticket cost is not average amount spent on tickets. Places cite the average cost of a ticket to the stadiums.  When you look at the people in the stands, more cheap seats are empty. Money from TV has been about 60% revenue. That is pure profit for the team. The rest of the revenue production all has money paid to make it exist. Revenue there is not equal to profit

 

If this is true, and average ticket cost is not weighted based on purchases, but rather availability, and we assume that better seats are purchased at a higher level, that simply adds to what I'm saying; it would mean revenue from tickets is actually higher than the $2.2ish billion I was quoting, and it's therefore even more disadvantageous for owners to put on games for which they cannot accrue fan revenue.

 

I also was very clear to say revenue, not profit; that being said, you can't have profit without revenue, and the owners are looking at a 50% decline, at least, in revenue.

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  • 3 weeks later...

Just saw that MLB has new proposal, not sent to players yet.  76 games at 75% prorated pay.  My guess is players will again stand hard and say no reduce in pay.  That has been their stance the whole time.  Maybe they will counter with more games, but full prorate as they did before.  

 

I find it interesting how often the MLB is leaking their stances.  This hurts the process because the whole purpose is two fold.  One, to get the public on the owner sides, by either showing they are trying, or they are willing to work something out.  The owners are trying to come across as reasonable and willing to make a deal.  The second reason, get the info to the players as a whole and not just the player reps.  For those who are not part of a union.  The two sides work out a deal to send to the people being represented and then the people being represented will vote.  They can tell their leaders what they want, but they do not normally know what is being talked about, unless the representatives tell them.  

 

So by leaking to public what they are thinking of proposing the players may tell the union leadership they would be willing to accept it and tell the leadership to send it down for a vote.  It seems this tactic by the owners has not worked on that prong though.  As neutral as I want to be, I want to lean towards the owners because they at least seem to be trying to work some middle ground, where players have not been willing to budge one bit.  They may be right in that decision, I am not privy to all the info, but I want baseball, and the players seemed to have drawn a line in the sand and they will not cross it.  Full prorated pay and at minimum half a season.  They want more than half a season for more money, but from what was leaked seems like 82 games at full prorated would maybe get it done on player side.

 

So this offer, if it is an offer, will not get it done unless players willing to budge.  The question is, will the players be willing to take nothing on pure principle?  The owners claim to be willing to do 50 games at full prorated.  Players say not worth it.  So if MLB says 50 at full prorated, will players say no?  Will they say no money to prove our point is better than some money?  If I was a player making league minimum counting on my paychecks to pay mortgage on support family, it would be hard to fully swallow no money. 

 

To make matters worse, will this be a single season issue?  Most likely we will have to deal with limited fans in seat next year and owners will have similar issues.  Will players be willing to take 2 full seasons of no pay because of this?  Would baseball ever survive something like that?  If there is no season this year, it may harm future revenue because some fans will not care about the "who is right" thing.

 

Players claim they want to play more games, to tell the fans we want to give you more games.  This is an attempt to look good to the fans.  However, now that the MLB is saying more games at the 75% prorate, will the players say no?  If the players say no, then what they are really saying is games do not matter, money does. Really, from what I have read, the 76 games at 75% is estimated to be about same loss to owners and pay to players at 50 games at full prorate.  Math could be a little fuzzy there.  However, if it is about games being played and not money then agree players. 

 

However, just as in most things in life, it is all about the money.  I expect the players to say no to this and say full prorate.  Will MLB then force 50 games?  If so will players opt out sighting now safety concerns?  Which may be legitimate, but could also be concerns of lowering FA value in short sample size should they have a poor season.

 

How many players will opt out?  Will minor league players get called up while the players that opt out do not get paid?  Will those players that opt out get service time? 

 

My personal thought is that this offer is final offer by owners and if players say no, then owners will either say no season or 50 games max at full prorate and move forward with that.  

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When you do the math over a full season at full percentage of salary, each offer is the same - roughly 33-35% of full-season salary. The owners aren't offering any compromise. They're packaging the same turd up with a new wrapper and calling it something else.

 

The players aren't "all about the money". They've come significantly down from their initial stance, but there's been no movement to middle ground from owners. The problem for owners is that Tony Clark and the MLBPA have begun to use the media to negotiate in the same way that the owners have leaked proposals the entire process. A more adept MLBPA with media negotiation that's PO'd by the owners' tactics right now? Good luck in the 2021 CBA negotiations...

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