On New MLB Proposal, How it Relates to the Twins and a Potential Solution

[Mike Sixel]

 

https://www.forbes.com/sites/maurybrown/2020/06/14/with-tbs-renewal-mlb-could-see-2b-annually-from-national-tv-contracts/#4bb7cc184411

 

thanks, man, the initial reporting was way off.....or something.

[rdehring]

 

https://www.forbes.com/sites/maurybrown/2020/06/14/with-tbs-renewal-mlb-could-see-2b-annually-from-national-tv-contracts/#4bb7cc184411

That's consistent with what I have seen in several reports, Wise One. I think the confusion was all the quotes that it was a $1b deal, with references to not having the details. So it appears that the billion is actually over two years, making it $500mm, which the Forbes report seems to have more accurate at $470mm, per year.  So yes, the added dollars to each team is about $4.75mm annually.  Also isn't clear if it begins this year or after the previous deal expires at the end of 2021. Still a nice increase.

[Major League Ready]

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.

[Hosken Bombo Disco]

I’d take that bet. Supply and demand. How many professional sports teams are available for purchase? Maybe 1 every 4-5 years? $1 billion, easily.

I'll take that bet. People don't buy long term assets based on the next year or two........look at the stock market.....

I’m not saying the value won’t rebound—though that’s no sure bet, either.

 

What I am saying is that I think it’s going to be a rough few years for MLB.

[Mike Sixel]

 

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.

 

If you think players should give up contractual money when things are bad, do you think owners should pay more than contracts call for when things are better than expected?

[The Wise One]

 

thanks, man, the initial reporting was way off.....or something.

3 sources or revenue on national contracts. They are at 2 billion total per year There are people who likely forgot about the ESPN money.. Essentially as long as there is a playoff and an uncompressed season the teams should be fine in paying the players a prorated portion of their full salary.Expect the owners to go with the 48 game season. A full 10 week season would not be hard on the players and maximize TV revenue. The players get their full prorated salary, owners get as much tv money as they can

[Hosken Bombo Disco]

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.

You present yourself as an expert on this issue. I think it’s extremely unfair of you to characterize Jeff Passan or our own writer in that way, or other posters; it wasn’t clear if you were talking about someone specific, and frankly we don’t need to know.

[Trov]

 

Players need to give too. 87.5% for 80 games is still 40% more than 100% for 50 games.

I fully agree, but based on what players response to most recent offer, was just tell us how many games, they clearly would rather do full pro rate at 50 games than anything less than prorate at more games.  At this point it came down to showing of strength by the union that they won't back down to the owners requests.  They felt like owners have taken advantage for too long recently.  

[yarnivek1972]

I still think a strike before the playoffs is likely.

 

Call it something a little birdie told me.

[bighat]

 

If you think players should give up contractual money when things are bad, do you think owners should pay more than contracts call for when things are better than expected?

"When things are bad"? This isn't a "down year" for baseball, this is a once-in-a-lifetime worldwide pandemic that's killed 100,000 Americans.

 

I do think players should indeed give up contractual money. The owners are already losing no matter what.

 

Question for you: Do you think players should make zero financial sacrifices in the wake of this national crisis?

[howeda7]

Rob Manfred has bungled this badly. MLB is all but committing suicide if they don't play this year. They will be relegated to a 2nd tier sport along with the NHL and MLS.

[Mike Sixel]

 

"When things are bad"? This isn't a "down year" for baseball, this is a once-in-a-lifetime worldwide pandemic that's killed 100,000 Americans.

 

I do think players should indeed give up contractual money. The owners are already losing no matter what.

 

Question for you: Do you think players should make zero financial sacrifices in the wake of this national crisis?

 

Not anymore than anyone else. Are you suggesting everyone everywhere take a pay cut? Did you voluntarily take a pay cut?

[Major League Ready]

 

If you think players should give up contractual money when things are bad, do you think owners should pay more than contracts call for when things are better than expected?

 

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. 

[howeda7]

 

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. 

What if attendance is just bad? Should owners be able to re-negotiate the contracts mid-season because no one showed up? Neither side is blameless here, but the players have a much stronger leg to stand on. The owners need to swallow hard and make this happen. If they lose $$ they can cut payroll next year(s).

[Mike Sixel]

 

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've read plenty of articles written online about this........not all of them agree with your numbers......

 

player compensation as a percent of revenue (reported revenue, not from related business that only make money by doing MLB related things, but we'll ignore that).....is dropping the last decade. Comparing it to other businesses makes no sense.......comparing it to the cost of living makes no sense...they are in the baseball business. 

[Major League Ready]

 

I've read plenty of articles written online about this........not all of them agree with your numbers......

 

player compensation as a percent of revenue (reported revenue, not from related business that only make money by doing MLB related things, but we'll ignore that).....is dropping the last decade. Comparing it to other businesses makes no sense.......comparing it to the cost of living makes no sense...they are in the baseball business. 

 

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. 

[jkcarew]

I'm confident we'll see some kind of a 2020 MLB season, but don't expect either side to compromise. My solution? Look for another way to inject (even more) money into the game. You'd have to expect TV ratings to boom, there has to be some way to benefit from that ...

 

At this point and date, what scenario could one possibly dream up that would have 2020 MLB TV ratings “booming”?

 

Going against the NBA playoffs and then the NFL?? In a season that many purists will consider an exhibition? And after the delays, feet-dragging, and ‘negotiating’ ugliness that we will have witnessed for half of the summer? And with the very strong likelihood that some stars will not play? Meanwhile, one could make the argument that MLB ratings have been ‘less bad’ than most other programming...but they haven’t boomed for a very, very long time. I think the chance of booming ratings for 2020 were probably always slim...and slim left the building right around the time MLB blew its opportunity to lead the return of professional sports.

[jkcarew]

That's consistent with what I have seen in several reports, Wise One. I think the confusion was all the quotes that it was a $1b deal, with references to not having the details. So it appears that the billion is actually over two years, making it $500mm, which the Forbes report seems to have more accurate at $470mm, per year. So yes, the added dollars to each team is about $4.75mm annually. Also isn't clear if it begins this year or after the previous deal expires at the end of 2021. Still a nice increase.

Not great by any means. Represents less than a 5% average year-over-year increase (over the 8 years since the previous deal was done). When considered alongside ongoing attendance struggles, this can be considered consistent with the narrative of slowing revenue growth on the horizon.

[glunn]

I don't have enough information to cast blame here, or enough data to do the math.

 

What I will say is that if there were only one player and only one owner, and each of them had intelligent counsel, then I believe that they would work out a long term revenue sharing deal whereby the players  would share in this year's pain in a percentage that is proportionate to the extra dollars that they would get in a good year under revenue sharing. The owners would have to open their books and the players would likely have to live with salary caps as in the NFL and NBA, but both sides would have an incentive to maximize revenues.

 

It appears that revenue sharing is not on the table and that both sides are going to suffer under every possible scenario. I will be ready to cast blame if and when we find out more about how each side approached revenue sharing.

[glunn]

 

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.
 

Your payroll tax percentage seems high -- FICA cuts off at somewhere around $140,000, and medicare tax, etc, is only a few percentage points. Am I missing something?

[h2oface]

Owners of baseball teams have historically, since the beginning of the game, reaped the rewards and declined sharing any windfall with the people/players who actually make the game happen. Billionaires own baseball teams as a hobby, and use the 'business' rhetoric to screw the players. Always have, and always will. Because they can. No matter what dogma is spewed, baseball is not a normal business, and really has no rules (and unlike other sports, has no salary cap anyway, and allows for them to literally spend whatever they want for owning this hobby). It is time for them to take the hit. Bite the Bullet. Any agreement and any start up could all fall apart in a heatbeat anyway, as irresponsible pig headed fans disregard whatever protocol is set up, and selfishly expose the other fans that respect it. It is happening in every restaurant and every public place I have seen in this 'start up'. The owners could easily take the hit. And they should. They won't be exposing themselves to fans and the masses and will be staying safe, in their opulent digs, either at home, or in the kings box at the stadium. Just like oil companies, who use any random event to justify raising prices in a false option driven market, owners are attempting to make the players share their 'risk' for chosing to own a team and not keep their contractual obligations, but will not be sharing any future windfall, just as they haven't in the past. I am pretty sure that it is in no contract written, that if a pandemic hits, this contract can be renegotiated, just as if someone like Garver has a season that is actually worth 20 to 25 times more than his contract, that the owner will renegotiate and give him a bonus with a smile on their face. It is their time to take a hit, and see if they can get a season in, and hope they can make it safe for the players, who will be taking all the personal health risk, and hope it doesn't all fall apart, and the players are compromised and have to quarantine, and the whole thing is shut down as fast it it was in spring training. They have already made their money, and will again in the future. In Minnesota, they even got the fans/constituents to pay massive amounts for the stadium they played in, and then didn't do what they agreed, and spend more money on the team for about a decade, charged people to park to come to the game they are already paying for, made them pay 5 times the value of any concession, and hoarded the money. Owners are screwing 90% of the players (especially if you consider the minor leaguers), and will every chance they get. This is no exception, only now they want to make it 100% of the players.

[Major League Ready]

 

Your payroll tax percentage seems high -- FICA cuts off at somewhere around $140,000, and medicare tax, etc, is only a few percentage points. Am I missing something?

 

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.  

[Vanimal46]

[Vanimal46]

 

Excellent article by Rosenthal. If you’re still blaming the players, I don’t know what to tell you.

[ashbury]

Excellent article by Rosenthal.

Can't read it. The greedy owners have it behind a paywall.

[Hosken Bombo Disco]

Excerpt:

 

Baseball is a business, we all know that. But it is a business that former commissioner Bud Selig describes as a social institution with social responsibilities, a business that holds an antitrust exemption, distinguishing it from every other professional sports league. Such a business should hold itself to a higher standard...

Of course since Fay Vincent was pushed out, Selig and Manfred have been more like owner representatives than commissioners.

 

On the idea of a 50-game season being floated:

 

The March agreement between the parties empowers Manfred to determine the number of games as long as the league pays players their full pro-rated salaries and plays as many games as possible.

 

...

 

The best commissioners offer statesmanlike presence and superior vision. Few ascribe those qualities to Manfred, and few would argue baseball is in a better place since he took over for Selig on Aug. 14, 2014. Rather than simply enjoy the fruits of the 2016 CBA, a lopsided victory for the owners, the clubs have gorged on them, alienating the players. And once again, they are valuing their own short-term interests over the long-term interests of the sport.

 

Manfred considers himself a deal-maker. He is reluctant to impose his will even to achieve something as simple as a pitch clock. But once union head Tony Clark responded to the third and most recent of the league’s proposals by saying, “It’s time to get back to work. Tell us when and where,” the commissioner effectively was boxed in.

[Vanimal46]

Thanks for the excerpt Hosken. I'll add one more quote because I think it's relevant to the conversation:

 

Manfred needs 75 percent of the owners, or 23, to move forward with a schedule of his choosing. Whether he has that support at present is unclear.

 

“There are definitely more than eight owners who don’t want to play,” one player agent said.

[USAFChief]

https://twitter.com/aarongleeman/status/1272898382986653703?s=21

 

Excellent article by Rosenthal. If you’re still blaming the players, I don’t know what to tell you.

I'm still blaming the players. Completely.

 

If not for the players, they'd be in 'spring training' as we speak. And there'd be games played the first week of July.

 

But they are so greedy they think they're above the economic realities of 2020. Above the rest of us.

 

If you cant see that I don't know what to tell you.

[Vanimal46]

I'm still blaming the players. Completely.

 

If not for the players, they'd be in 'spring training' as we speak. And there'd be games played the first week of July.

 

But they are so greedy they think they're above the economic realities of 2020. Above the rest of us.

 

If you cant see that I don't know what to tell you.

Did you read the article? Like at all?

[USAFChief]

Did you read the article? Like at all?

No. It's behind a paywall.

 

But I dont need Ken Rosenthal's opinion in this case, anyway.

 

Rob Manfred isnt the one damaging the sport.