MLB, Owners Trying to Expand Playoffs, Delay Season, (Apparently) Drive Away Fans

[The Wise One]

 

Owners are not taking a loss. Baseball America did some great reporting in April on revenues. The estimate is attendance accounts for 30% of teams revenues. Forbes reported that MLB saw $10.7 billion in revenues in 2019, and players were set to have been pad a little more than $4 billion entering 2019. Of course, those salaries were prorated to about 37% (60/162).

 

Seems to me the math is still working out very much in favor of the owners. I think they're gonna be fine. If they don't agree, any MLB owner can cash out for a cool billion dollars any time they'd like. 

 

The player's salaries are not guaranteed, and their careers have limited earning life. Owners, on the other hand, can gain wealth from their franchise for generations. Keeping things local, Carl Pohlad bought the Twins for $44 million and they're now estimated to be worth $1.3 billion, per Forbes. 

 

(and per this inflation estimator $44 million in 1984 comes out to about $110.2 million in 2020)

The long term math works out in favor of the owners only when they sell.

In the pandemic the math still sucks. According to Forbes the Twins had gate receipts of 79 million. That is close to what the 30 percent of revenue. Further down you see revenue per fan is $48. At 2.3 million fans for attendance that comes out to 110 million in revenue  Forbes lists operating income. A full season without fans in 2019, using Forbes numbers, would result in a 67 million loss.  I don't think that many people could withstand losing real cash

[twinfan]

There should be no reason not to plan for a full season now that the vaccine is here. They can always have an alternative number of plans if teams get hit by the virus. All teams have lost money and will continue to lose money as long as they can't get at least 25% of the stadiums filled. They will then gain money once this is all over in 2022. If owners weren't so stupid to pay marginal players bunches of dollars, they wouldn't have lost as much as they (presumably) have.

[prouster]

That street runs two ways. If an average salary of 4.43M is not adequate or the working conditions too harsh, perhaps MLB players should find another form of employment. I think they have fared exceptionally well compared to the rest of us. If the median income of Americans grew at the same rate as MLB players over the past 50 years … the median household income would be $3.17M. Median household income is actually 68,703, a little less than 2% of what it would be if income for all Americans grew at the same rate as MLB players over the past 50 years.

 

Had MLB players income grown as the same rate as other Americans since 1970, their average salary would be $95,775. In other words, MLB player income has grown at a rate 46X greater than the average American since 1970. To suggest they have been treated poorly is rather fanatical thinking IMO.

 

Any reasonable person adjusts their spending if their income takes a substantial hit. This is pretty straight forward stuff that anyone here would agree to if their circumstances were such. However, owners try to circle the wagons and somehow a portion of fans can’t understand why they won’t spend like nothing has changed.

The players don’t seem to be making moves to actively suppress the income of the owners.

[specialiststeve]

 

If they don’t like risks they should sell their teams.

 

I take it you have never been in business.....

 

just giving the employees their requests with something coming back is not great business and over time will be a problem for the owner of the establishment. I like others love baseball "the game".... but we have to be real and understand that just going out and risking recourses without responsibility is just not smart. Don't be emotional about this ... is just part of the deal. We should be happy as our current ownership and front office have shown to be fiscally responsible while still putting a very competitive team on the field.... 

[prouster]

I take it you have never been in business.....

 

just giving the employees their requests with something coming back is not great business and over time will be a problem for the owner of the establishment. I like others love baseball "the game".... but we have to be real and understand that just going out and risking recourses without responsibility is just not smart. Don't be emotional about this ... is just part of the deal. We should be happy as our current ownership and front office have shown to be fiscally responsible while still putting a very competitive team on the field....

It’s a fallacy to equate owning most businesses with owning a MLB team. There are only 30 of them, they are not bound by anti-trust regulations, and every owner and ownership group are unfathomably rich. When people get into financial distress, it’s very common for them to sell things. If I was in a bind and owned a $1.5 billion asset, that’s the first thing that would go!

 

Their greed and shenanigans are going to lead to a work stoppage.

[Major League Ready]

 

It’s a fallacy to equate owning most businesses with owning a MLB team. There are only 30 of them, they are not bound by anti-trust regulations, and every owner and ownership group are unfathomably rich. When people get into financial distress, it’s very common for them to sell things. If I was in a bind and owned a $1.5 billion asset, that’s the first thing that would go!

Their greed and shenanigans are going to lead to a work stoppage.

 

Your right “people” (individuals) sell things off. Companies with viable assets borrow against those assets. MLB teams took on substantial debt to pay for their operating losses last year.

 

https://www.foxbusiness.com/sports/mlbs-debt-8-3-billion-2020-season-coronavirus

 

What's interesting is that the borrowing that took place is clear evidence of how much team's lost, There are still people insisting they did not have operating losses. Scott Boras claimed very recently that MLB made less profit but they did not have losses. It does not take exceptionally advanced financial skills to know this is NOT true. Therefore, Boras either is not all that financially sophisticated or he does not mind making statements he knows to be false to advance his cause. I am betting on the latter.

[DutchFarmer]

I used to be a mega-fan, commonly listened to nearly every game on the radio and - as is likely the case with most in the Twins Daily community - could name most minor leaguers and for sure every member of the active roster, including most of their stats. Despite that, last season I only watched/listened to parts of about 3 games. I just generally lost interest due to the shutdown teaching me I didn't really need sports, plus the Twins/baseball getting political, plus the rule changes. I still check in from time to time (hence my comment here) but I've gone from checking Twins Daily everyday (no pun intended) to once every few weeks. 

 

Get the game back to what it previously was and I might come back...

[rdehring]

 

The players don’t seem to be making moves to actively suppress the income of the owners.

No, the players aren't doing anything to suppress owner's income, COVID-19 is.

 

Depending on which report you read, it appears the typical team went from earning anywhere from say $20M to $50M, or a lot more for a few teams, to operating losses of as much as $100M in 2020.  No matter how rich they are, those magnitude of losses cause problems...just ask the owner of the Mets who has sold his team.

 

The players didn't absorb any losses, rather, their income was reduced by about 63%. Yes, they made less money, but they still made 37% of their anticipated earnings by working about 37% of the time they were expected to work.  Really no different to the waiter who had his hours cut by two-thirds but still makes his $25/hour when working one-third of the time.

 

Losing $100M when you expected to make $10's of millions is a lot different than staying home two-thirds of the year, but getting paid your regular rate for that one-third you were at work. 

 

And although there may be two vaccines available later today, let's not kid ourselves that this pandemic is over. That's the problem owners and the league are facing as they try to plan for 2021. Can they open spring training on schedule in less than two months? How much of the public will be vaccinated by then? Will COVID and States allow fans in the stands on April 1? So many questions with so many unknowns.

 

Should they push opening day back a month it is likely the vaccination program will be much further down the road. But what type of season can they fit into a schedule knowing that once the calendar turns to November you don't want to be playing ball in many of their markets. Yes, all those issues need to be discussed and agreed to with the MLPA, hopefully, both sides will be reasonable.   

[Brock Beauchamp]

[prouster]

Your right “people” (individuals) sell things off. Companies with viable assets borrow against those assets. MLB teams took on substantial debt to pay for their operating losses last year.

 

https://www.foxbusiness.com/sports/mlbs-debt-8-3-billion-2020-season-coronavirus

 

What's interesting is that the borrowing that took place is clear evidence of how much team's lost, There are still people insisting they did not have operating losses. Scott Boras claimed very recently that MLB made less profit but they did not have losses. It does not take exceptionally advanced financial skills to know this is NOT true. Therefore, Boras either is not all that financially sophisticated or he does not mind making statements he knows to be false to advance his cause. I am betting on the latter.

Lots of energy wasted on what was obviously a tongue in cheek remark in the first place...

 

I don’t care about owners’ business interests. I really, really don’t.

[Major League Ready]

 

Lots of energy wasted on what was obviously a tongue in cheek remark in the first place...

I don’t care about owners’ business interests. I really, really don’t.

 

Don't worry, your prejudice was evident. 

[Squirrel]

I wish they'd just sit down with the MLBPA instead of the power play press releases.

It’s called negotiating in bad faith. I’ve been on the wrong end of that before and it is not commendable.

[Major League Ready]

 

I wish they'd just sit down with the MLBPA instead of the power play press releases.

 

While I agree in general, we would have really been misled had the MLB not leaked the infamous memo. The MLBPA was very broadcasting everywhere that the MLB owners  had agreed to pay prorate salaries and that they were negotiating in bad faith by presenting other offers. Fans (including me) and the media were starting to come down hard on the owners.

 

As it turned out, the two sides had agreed in no uncertain terms that the preliminary agreement assumed fans were present. There was an agreement to renegotiate if fans were not present. Had that information not come out the MLBPA would have gotten away with exceptionally misleading communication. It looked like the owners were just ignoring their agreement when it was the players who not only ignored the agreement but they were also purposely misleading in their communication.