Major League Ready

It would appear that you confuse revenue and profit using them interchangeably. Teams earned a collective profit last year of a little over $1B, depending on the source. Players earned $4.4B or roughly 4 times more than owners. Do you understand that the owners pay all of the expenses, hundreds of non-player employees, advertising, payroll taxes, pensions, medical, etc? BTW ... It is absolutely common for top earners to take a pay cut when a company or industry falls on hard times. A pandemic is about as extreme as it gets. Had we been able to get a half season in revenue would have been roughly 1/3 of normal and expenses about 2/3 of normal.

I don't think the MLB players worry too much if the MiLB players are getting their fair share. The union seems to pretty heavily favor the stars so their objections might be the high profile prospects not getting a giant pay day before ever playing a MLB game or MiLB game for that matter. Regardless, the salaries would be stipulated as part of the new structure or CBA. Therefore, there would be no question the MiLB players would get the money.

I have also wondered why the league takes the image hit when they could pay MiLB players quite well with the money they are already spending. I used 80% because I wanted to give all the players a $5K raise. Maybe your 40% number would be more acceptable to the MLBPA or perhaps somewhere between 40-80%. IDK but this sure seems like it would be great way to take care of ALL MiLB players.

They need to quit giving unproven players $5M or $6M or $7M signing bonuses. If they live up to the bonus, they are going to make huge money over their career. The problem is not one of payment but distribution of payment. Too many guys who don't pan out get huge bonuses. Take 80% of the bonus money and put it into MiLB salaries. That would allow for an increase in MiLB pay by an average of 5K/month per player. BTW ... I built a quick model. This still allows for a $750K bonus for the top spot and then decrease each spot by 2% for the 1st two rounds. 4%, 6%, and 10 percent decreases in rounds 3-5. 25K for rounds 6-10 and 15K thereafter.

For me, determination of fault here is heavily weighted by the existence or non-existence of an understanding to renegotiate player compensation if fans are not present. I think the players were told one thing but the evidence strongly suggests there was an understanding terms would need to be defined if fans were not present. If this understanding existed, the owners were acting in accordance with that understanding. The players at every turn demanded 100% which obviously had blatant disregard for renegotiating if fans were not present. So, who here believes that the original agreement did not address the need for different terms if fans were not present. Do you believe the owners agreed to pay the exact same amount to players regardless of revenue level with a likely $2B reduction in revenue if fans are not present?

If you had any interest in presenting an accurate portrayal of TB's profitability you would have chosen to user a larger sample size than 1 year. Their average profit for the last 10 years is 21.7M even after having by far their most profitable season last year. Do you not understand using a single data point, especially one that is an anomaly, is misleading or do you just not care as long as it supports your position?

I agree more than I disagree but both sides have handled the negotiations poorly so the owners deserve some of the blame too. The whole thing went off the rails because of how the March agreement specifically the part about economic feasibility without fans present was handled. I place 90% of that blame on the union because they decided they would simply ignore the part about renegotiating if fans were not present. The memo is quite clear so it is convenient that the union asserts this was not understood. Negotiations after that initial agreement were doomed because the union just ignored the part of the original agreement that did not suite them. Sure, they followed up and verified terms would need to be negotiated if fans were not present. However, what were both sides thinking? The probability fans would not be present was very high. They drafted an agreement based on an assumption that was very unlikely. If they wanted to start with an agreement based on fans being in the stands, fine. However, they should have went straight to negotiating terms without fans present. The owners really screwed up when they did not proceed directly to negotiating terms without fans present and the union pretended like that part of the agreement did not exist. That would have forced the MLBPA to assert the position they did not agree to negotiate terms in the absence of fans in attendance. Then, the league could have asked for immediate arbitration on this key point. I have read the memo several times. Unless it has been falsified, I just can’t see how an arbitrator does not find that the union be required to negotiate based on financial metrics without fans present. Perhaps this would have focused the negotiations on solutions that were feasible. One final note: Lawyers for the owner's should documented the understanding regarding "fan presence" and presented it to the MLBPA's attorneys for their signature instead of just sending an internal memo outlining the discussion surround economic feasibility. Therefore, ownership or at least their counsel is partly to blame. I just don't understand how someone in ownership did not as their representation to get signed documentation. Of course, we don't have all the facts.

I got that number from an article that provided the detail. I don't know that I could fund it but what you are missing their retirement contribution and lifetime medical. Benefits for the average employee generally run 25-30%. The contribution for MLB players is considerably less because their income is extremely high. This makes the medical insurance contribution much smaller than normal. In your other post you said you do not have enough info. While I generally commend the recognition of not having all the data, Chief was absolutely spot on when he wrote he did not need all of the operating cost data to know that it was not feasible to operate at full cost with 60% of the revenue. The accounting I provided yesterday is uses only data that we now with a high degree of certainty. We know the exact amount of all MLB salaries. I used the actual bonus pools for both domestic and international draft pools. We know exactly what MiLB players are being paid. I did have to estimate the number of players. However, even if I was off by 10%, the net error would be two-tenths of one percent of revenue. By issue here is that the MLBPA has stated repeatedly there is evidence a concession is necessary. We know with a very high degree of certainty that the players demand is 93% of the projected revenue. To suggest they need to open the books to understand this is not viable is absolutely ludicrous. I put together clear proof in 20 minutes. There are only two possibilities. One is that they don't employ anyone with even modest financial acumen. I don't believe that for a second. The more likely possibility is that they they are delivering a message they know is not accurate. Consequently, we are going to have a very short season or no season at all. We don't know what sort of financial documentation or financial analysis was provided by MLB. It's hard to believe someone has not put together the accounting I did yesterday. It's just not possible to deny their position asks for 93% of revenue assuming $3B. If you believe $3B will be exceeded, include a a parameter for revenue in excess of $3B. However, 7% of 60 percent of normal revenue is 4.2%. To suggest to baseball fans that they don't see the problem is to assume we are absolute morons.

Player comp as a percentage of revenue is dropping because teams have identified other investments they believe are more productive. Teams are still spending the money just in other areas. You and I and many others called for more investment in analytics. There are also far more employees in player development and other areas. The Cardinals for example have increased from 260 to 400 non-baseball employees. Teams have also gotten smarter about the length of contracts. This is not a product of an unwillingness to spend but a reaction to the number of these deals that have been absolute shipwrecks. I have provided that data to you as well which of course you continue to ignore. To an unbiased observer with modest business acumen this makes perfect sense.

So, in other words, you are unwilling to challenge the content or facts presented in my post. The fact you would support the players in any and every situation is to be expected by anyone who has been on this site frequently but can you argue the players have taken the position I have illustrated here? The players are saying screw the pandemic, screw everyone else who should get a share of the pie, we want it all! It's a free country and you are welcome to support that position. In terms of the relative financial treatment of players ... Player compensation has grown by an average of 22.2% per year for the past 40 years. Player compensation has outpaced the adjusted rate of inflation by 10X. How you manage to characterize this as anything less than incredibly fortunate for players is something I just can't comprehend. I would say that the owners have shared their good fortunate quite adequately.

I did the math. Here is the MLBPA’s position assuming the $3B revenue forecast is relatively accurate. I am going to calculate assuming they would have rolled back to 81 games at full prorated salaries given time constraints. We want full prorated salaries which equates to 67.37% of the revenue. Of course, employers pay payroll taxes bringing the total to 75.12% of revenue. Then, newly drafted players will be paid 8.77% of the total revenue Then, the international players drafted will receive 6.5% of total revenue. Then, MiLB players will receive 2.3% of total revenue. In total players will receive just shy of 93% of all revenue. The MLBPA has stated the don’t see any need for a concession on their part. In other words, they can’t see a problem paying the other 350 employees per team with the remaining $7.2M/team. After all, that equates to $18,500 after accounting for employee contributions to tax. What it does not include is health insurance. Health insurance is going to eat the most of the rest. So, what’s the problem? Can’t all of the other employees work for free? Of course, we still have not accounted for Travel Costs / Meals / Advertising / Offices / Baseball Equipment and Office Equipment, etc. I am only modestly disappointed that a segment of baseball fans can’t see what Chief pointed out long ago is exceptionally obvious. I am thoroughly disappointed that “writers” continue to publish this incredibly prejudice garbage. I know they are not this financially ignorant so it would sure be nice to see a handful of writers able to produce a piece without extreme prejudice.

I am not suggesting you begrudge either side. Quite the opposite. I am asking people be fair and unbiased. I was raised with a very strong emphasis on being fair. Some folks here believe that the formulation for fair is a product of how much money someone has accumulated. Should a millionaire pay $100 for his kid’s happy meals? It is obvious that some posters here make no attempt to understand the financials. They don’t care. The owners should pay because they have a lot of money. It’s bias to the point of prejudice. It’s certainly not approached with objectivity. Supporting this ridiculous article is a good example. A sophomore business student would look at this article and pick it part. It is absolutely a mess in terms of analytical methodology. I have seen similar conceptual flaws called out here before. The same posters here supporting this “data” would recognize how conceptually flawed it was if not for their prejudice. Just to be clear, my problem is the fanatical bias being shown here. When people starting using players that don't make it as evidence the players who do make it don't make a lot, that's not likely a lack of education in finance / quantitative methodology. It's just not that complicated. Virtually every poster here knows the average player make over $4M/year. Therefore, it makes sense to conclude its extreme bias.

I could have used any number of private sector comparisons but these comparison have very little to do with the core points being made. His example was AAAA player that managed to log 2.5 years of service time. and was cut at age 31. The article suggested we should side with the guys making an average of $4M/year because some other guys don't make it. This is some really bias logic. Then, he tells the story of a 31 y/o player who could not stick. Sawchik reported his career compensation at 1.31M after logging 2 1/2 years service time. He failed to include a $110,000 signing bonus he received as a free agent. He also failed to include whatever he made with MiLB teams during his 7 years of pro ball. Since you want private sector examples, that equates to 33 years salary for the average American male age 25-34. It's still ridiculous to hold up guys that could not stick as logic for why players making huge money should not have to take less during a pandemic. The author then suggest we feel bad for a guy that made the equivalent to 33 years income for the average guy working a real job 12 months out of the year. You have also managed to ignore the 95% that was most germane to the various posts being shared. Just in case it's not clear, the entire thought process was brutally flawed. If you want to make an argument that we should not consider the people making an average of over $4M/year extremely fortunate because a lot of guys only play a few games, have at it. The article was absolute nonsense written by someone unable to think past his fanaticism and bias.

Ted, Obviously, the team have a huge loss for the 1st half. They absorbed all of the operating cost with virtually no revenue. This has been reported as being roughly $60M per team on average. We could debate that number but let’s just look at the 2nd half and see what the likelihood of recouping any of that “red” number. We have two numbers that we can verify with relative confidence. One is that in stadium revenue is about 40% of total revenue. The other is that player salaries + taxes & benefits are roughly 52% of revenue. Therefore, your conclusion teams are not operating in the red for the 2nd half of 2020 (not 2020 as a whole) requires that operating cost not exceed 8%. If we include draft and International bonuses, I would guess MiLB operations alone are greater than 8%. Of course, teams are spending much more these days on player development, analytics, technology, etc. The Cardinals went from 240 to 400 non-player employees. Travel, hotel, equipment. Target field upkeep, advertising, etc. I don’t have a problem believing teams operating costs are roughly 35% as reported by Forbes and Statistica. It does not matter, we could conclude those folks are incompetent fools and that operating costs are only 25%. Your conclusion will not operate in the red for 2020 suggests you are not willing to view the situation objectively. I will happily apologize if you can someone support that operating budgets are less than 10%. That still would not negate the 1st half losses but as Chief suggested, it is not necessary to have the financials to understand there is no way 2020 does not result in big losses for teams.

Mike's position was basically two-fold. One was that the author provided data. Well, constructing the data they way the author did was either incompetent or bias showing. His position was that half of MLB players have not made millions so players (all players) should not be subject to a reduction in compensation. The problem with that position is that other half make 95% of the total compensation. Therefore, the appropriate solution is to exempt the players making the league minimum. Exempting every single one of them would require the rest of the players or ownership to make up for roughly 2% of total compensation. In a word, the content of that argument was absolute financial ignorance. The second point or inference was that these players don't make big bucks. Your comeback is they should have been baseball players if they make big bucks. Your logic eludes me. BTW ... The argument about MiLB bonuses should not be considered in the context of MLB salaries. If players live up to the expectations consistent with a big bonus, they are going to make life altering money. Of course, many do not live up to this expectation and other small bonus players become all-starts. So, why are prospects paid millions of dollars before they prove themselves? If we redistributed 75% of the bonuses to MiLB salary, we could give every MiLB player a 5K/month increase in compensation. To be clear, I am not saying we could pay them 5K/month, we could give them a 5K INCREASE in pay.

Who here thinks the owners would accept a counter of 81 games at 80% or prorated salaries? It should be crystal clear to the players the owners will opt for a 50 game season (roughly) if players won't move off full prorated salaries if the players in unwilling to accept a reduced rate. That option would pay the average player $725,000 for 50 games. If you believe, as I do, that the owners would accept an 81 game season at 80%, that option would increase player pay by 30% to $940,000 on average. I would bet that if there was no union and the owners made it optional to return at 75% of normal compensation, 90 percent of the players would return.So, no, I am not going to blame owners if we have a 50 game season.

Let’s talk about the author’s data, Mike. We are arguing the point of the article is absolutely absurd because to say the data is flawed would be horribly understated. The author uses every player with one day of service time to come up with the percentage of players that made less than $1M in career earnings. Just for starters, their careers are not over so to include them as a data point for career earnings is not just flawed, it’s extremely biased. “Career Earnings” also strongly suggests someone was actively employed for a considerable length of time. The players who don’t stick do not belong in this calculation. The basis of this debate is how revenue should be distributed. Half of those 1453 players the author included will collectively receive less than 1% of total player compensation. In other words, this is another reason why the entire premise of this article is horribly flawed. The average player who is actually good enough to retain a job makes over $4M. It’s really quite simple. The rest of the world answers the question … how much does someone make per year based people who actually work for a year. So, there’s your first data point. The average player makes $4.3M dollars. Here is your next data point. The average MLB player makes roughly 100 TIMES the salary of the average adult male age 25-34. The average MLB player makes 75X the average police officer. MLB minimum salary for 1st year platers is 3X the amount of a 4-Star General. An average player makes 24X the salary of a 4-Star General. It general takes 30+ years to achieve this rank. Therefore, the average player will make as much in one year as the elite of the armed services will make over 30 years earning the rank of 4-Star General. Here are some additional data points. Since 1990, the cost of living has doubled. Real wages (adjusted for inflation) have improved from 6-60% depending on specific demographic. There are numerous reports. Just google US Wage and Salaries. MLB player wages have increased by roughly 750%. How could anyone think players should be expected to accept a 25% pay cut during a pandemic?

I am sure you have a point but I was trying to simply dismiss the entire notion that these players were relevant to the discussion regardless of how we defined them. This is a negotiation over the distribution of funds. I am not going to try to figure it the percentage exactly but the annual amount paid to the players referenced probably equates to one-tenth of one percent. Suggesting they are the reason players should not accept anything less than 100% of normal rates is not well thought out. Perhaps more to the point, the league recognized that there are many players that are not yet established or are making the league minimum. Their proposal considered the fact that the roughly 60% of players in this category represent only 8% of total player salaries. The leagues proposal considered this fact. The MLBPA rejected the notion of giving special consideration to this group not the owners. Finally, if the concern is the players that have not made it, then construct a plan based on this need. Don’t suggest that all players should be exempt from reduced compensation because some of them have not made millions. This was a poor attempt to cover up a position of prejudice.

The negotiation is not between AAAA players or replacement players or however you want to describe the players that have not been able to stick. The people receiving 99.5 percent of the revenue in question are players that actually make the team. You are reaching and consequentially the argument is exceptionally ill-conceived. Your argument appears to be the players who have not made a couple million yet should not suffer. Then, construct the distribution accordingly as opposed to saying the guys with $100M contracts should be protected because some other guys have not or will not make it. Would you support a 27% reduction for players that have made more than $2M in their career? If we take players with a $1.3M salaries and above, these players have already made it through 3 years at the minimum. Their salaries represent 92.1 of total player compensation. A 27% reduction in their salaries would equate to the 25% reduction sought by ownership and none of the 513 league minimum players would have to contribute a dime. There is no doubt the league would accept this proposal. BTW … the 3 players with 1.3M are Danielson Lamet ? Cody Allen / and Evan White. Lamet is an arb-1 player. White has a $24M contract and Cody Allen has career earnings of $32M.

I might be missing the point. What does this have to do with the labor angst Doc was addressing?

Interesting question Doc. Both the NBA and the NFL have salary caps. The NBA has a max of 4 year contracts for free agents. However, the incumbent team is allowed to make a 5 year offer. In most cases, players have to accept less to leave their current team. NFL contracts generally have far less guaranteed money. It seems to me MLB players have more favorable contract and free agency terms. So why is the relationship between the players union and MLB more contentious than other leagues? I really don't know.

50 games at 100% is still 14% less in terms of gross pay vs 76 games at 75%. My guess is the players don’t care how many games they play. They are trying to maximize gross pay. If I am the player’s representation, I recommend a counter of 82 games at 80%. Getting more aggressive than this runs the risk of the owners calling it a day and implementing the 50 game season at pro-rated salaries. 82 games at 80% nets the players 31% more gross pay than a 50 game season at full prorated salaries.

Are you thinking the players would strike if the league utilizes their option to play a 50 game season? If so, I would have to agree that's entirely possible. I am hoping they counter with 82 games at 80%. I think that counter would have a chance. I get the sense that any counter beyond 82 games at 80% salary is met with the league implementing a 50 game (roughly) season at prorated salaries.

The season is not going to be lost. It has been reported the league has the option to reinstate play at a given number of games at prorated salaries. The number of games is just going to be far less than what we fans would like to see if the players insist on something near 100% of prorated salary. That’s the league’s fallback position. It’s a pretty safe assumption the league is proceeding with a plan that includes rolling to this fallback position. That’s likely part of the reason they asked for a response by Wednesday. If I were them, I would have a drop-dead date set where we roll to plan B. The premise that players will leave for other leagues has been floated here in other discussions. I can’t find any form of logic that substantiates this scenario. Where are they going to go? The next highest paid league is the Nippon Professional Baseball League. The average compensation for players in NPB is roughly ONE-EIGHT of MLB. I spelled it out so I could capitalize this point. Players would play for half in a heartbeat if that’s what revenue dictated.

You are correct. The players would lose most of their normal compensation if the season is lost. However, you are only considering one side of the equation. Owners will not only lose 100% of their normal income, they will PAYOUT the equivalent of 3 years income. The equivalent from a players perspective would NOT be to MAKE 6% of normal. The equivalent would be the players contributed 3 years of wages toward covering operating losses.