MLB Proposal Seeks Bigger Cuts From Premier Players

If both sides end up scuttling the 2020 season and get portrayed as greedy pigs unable to split a $3 billion pie then they will lose many fans.

Ask the players and the owners how losing a season of baseball did for their overall profit? How long did it take last time for baseball to rebound? Gimme a break.

The players are getting backlash from this but I think they are right to stand up to the deal.

Yes MLB salaries are ridiculous, someone making 20+ million dollars a year to be great at a game is logically stupid.  Despite that the salaries are that high because it still makes the owners a massive profit to pay them.

The corporations/ people that own professional sports franchises are insane money, maybe the virus has their profits down but they can suffer for year and still reap the benefits of being the first major sports league to be televised.

Assume you are a sous chef somewhere and business reopens.  You get offered less than what was your salary rate to work in special conditions.  You tell them to go pound sand.

I guess we know your position as far as the owner's are concerned, Ted.  The reason I say this is because of your promotion of the idea that the owner's are going back on their earlier deal.  Have read in too many places from reliable sources that there was language in that deal for further discussions should the games be played without fans in attendance.

As for the offer?  Does anyone think the owner's original offer was their best offer?  Or even anything close to what they eventually hoped to get?  If it was, their negotiator should be fired.  The important take from it is that they didn't include revenue sharing which would have been a non starter for the players.

As for this format, makes a ton of sense to me.  Have been thinking for some time that there should be some type of sliding scale with all players making the pro-rated minimum with some percentage of their contract's salary above that.  Looks like that may be the case after they negotiate the actual percentages.  Also wouldn't surprise me that at some point the $170,000,000 players already received is no longer included in their compensation when games begin.  

Companies all over America are doing this exact thing with management and all employees taking substantial cuts of 15%, 20% or greater.  

The players are getting backlash from this but I think they are right to stand up to the deal.

 

Yes MLB salaries are ridiculous, someone making 20+ million dollars a year to be great at a game is logically stupid.  Despite that the salaries are that high because it still makes the owners a massive profit to pay them.

 

The corporations/ people that own professional sports franchises are insane money, maybe the virus has their profits down but they can suffer for year and still reap the benefits of being the first major sports league to be televised.

 

Assume you are a sous chef somewhere and business reopens.  You get offered less than what was your salary rate to work in special conditions.  You tell them to go pound sand.

Agree with much of what you say Raoul. 

But wanted to comment on your sous chef example. My son is with a major restaurant company where every employee in the company is sharing in the pain, taking cuts of roughly 20%...or higher at senior management. Everyone was furloughed for over two months, even though many continued working while not paid. They are just now starting to get some of the central office people back with restaurant re-openings approaching 50% of their locations.  

To me the owners are trying to split the union to get votes. Since this is a unique season we need unique solutions. I was thinking maybe for this year only that these big market owners could carve into their high revenues to help out the lower markets & help cut a more favorable deal w/ the players. If there is still a hardship of any owner, hopefully they can negotiate some kind of deferred                     payment.

Because of this covid fiasco, baseball has suffered tremendously this year & years to come. Those who will suffer the most are minor leaguers, owners, MLB players & die hard fans. It`s out of minorleaguers & fans hands, so it`s to everyone`s advantage for the owners & MLB players to limit this damage! Or baseball will further diminish & it`s effect on society

Imagine your boss asking you to cut your salary by 75% so that he can pay the intern 95% of theirs...

 

How would that go over? It's not both sides, and it never has been. Economics are bad in baseball because the owners are routinely a group of knuckle-dragging ding dongs.

Right Ted. They have been the most successful business people in the country in spite of your assumed complete ineptitude. If only they had your exceptional financial acumen and business aptitude. So, as someone with business skills superior to that of ignorant MLB owners, tell us how you would resolve the present dillema. That dillema being cancelling the season costs on average $127M per team according to reports. Therefore, cancelling the second half costs roughly $63M. Playing at full wage for players costs $80+ billion. 

I would love to hear why they are the idiots you portray in your comment.  

Like it or not, it is the owners with all the leverage. Player careers are finite - owners careers exist to the grave. Players generally make 100% of their earnings playing the game - owners generally have other business interests to feed themselves.

Comparing the business of baseball with other business in America isn't apples to apples in any way. If I don't pay my managers and my staff proper competitive wages, they will end up at my competitor.

I believe players will need to do the caving here and they should hurry up. No 2020 season hurts the individual players far more than the owners. No service time and depressed wages in winter free agency - too much supply, and not enough demand will dominate the off season. It is a mess and we shouldn't expect the owners to be kind and gracious. They are the side willing to play hardball and walk away. 

Let me also go on record as being disgusted by what I've just written. But I believe this to be our reality. I am still keeping my Hulu account just in case, but I am losing hope.

You always say they get the big money because they take the risk. Well, here is the downside. If they don't take it, there is no real risk, which we already know, because teams never go under in the US.... So, which is it? They take the risk, like you always say, or they don't?

Let’s break this down based on the fact we know the 1st half of the season is cancelled. Players loss = 0 unless you don’t know the difference between a loss and break-even.

Teams are going to lose $63M+ on average.

Players break-even (don't get paid)

Under the proposal for the 2nd half.
Teams would lose another $63M best case scenario. 
Players would make less than their contract.

Teams lose $126M on average. Players have a net gain smaller than normal. Please explain to me how the owners don’t absorb all the risk? BTW … I doubt I ever said owners make big money because they take on risk. My position has been that players have contracts that assure them 100% of their compensation regardless of their performance. That does not happen in the rest of the working world. Perhaps that precedent is why they feel they should receive full comp even if it's not economically feasible.

People with contracts actually do get 100% of their money, during the term of the contract. That's very different than most employment, yes, but people with contracts get their money.

 

The players will work half the year, why don't they get half their contract? That's all they are asking for.

Actually, Mike, people with contracts don't always get their money. Almost all employment contracts have language in them under what conditions the employee doesn't get all or any of his/her compensation. There would be lots of reasons ranging from malfeasance to fraud to conduct unbecoming to acts of God and probably global pandemics. I expect it is that language that is enabling the teams to withhold salaries if games aren't played. 

Now the owner's have said to the players, we will try to get in a half season if you are agreeable to certain changes in your compensation because fans won't be allowed to attend games. If they can come to an agreement that is acceptable to both parties, we will have baseball. If they can't, we won't have baseball...at least major league baseball. I expect the owners have discussed how much they will lose with no baseball and aren't willing to go beyond, or much beyond that number to resume play. It is reasonable, in my opinion, for the owner's to take this position as it is reasonable for the players to negotiate to get the largest share of their salaries as they can.  

Ted, you've completely ignored the 70% drop in revenue.

If revenues go from $10B to $3B, it's not unreasonable for owners to demand players salaries drop massively.

And as Nick mentions, taking more from higher salaried employees than lower is a pretty reasonable and standard business practice.

This article is not well thought out. In fact, it's ridiculously biased.

So, you are OK with Owners wanting to be privatizing the profits but socializing the losses....

I support scaling salaries up the ladder to help owners pay for the massive influx of MLBPA players that are expected in the 2020 season now. That should only be something like 5% at the top. Those are unexpected labor costs that benefit members of the MLBPA.

I do not support this concept with 47%ish cut from the top. You assume the risk of owning a business when you become an owner. All businesses owners do, whether investing in a publicly traded company or a privately held business. Contracts are honored regardless, unless settled in a court of law. 

That said, this is an initial offering and is fully understandable as such from the owners perspective, regardless of how ugly the optics are to the public. There does need to be negotiations though as the original agreement in March was to renegotiate pay should games be played with no fans. The MLBPA needs to honor that agreement and renegotiate, which I suspect they will. 

There seems to be a bit of overreaction by fans that this is some sort of final proposal when it is a starting point, albeit a one-sided proposal. Still, when I negotiate out large contracts for my business, I will often start with something extremely beneficial to my company and move down from there.

The team owners are business people first and foremost. This one-sided rough draft should not surprise anyone.

So, you are OK with Owners wanting to be privatizing the profits but socializing the losses....

That's a Boris quote and he knew that he could get this past fans that would blindly follow a cute quote. A loss suggests a net result of less than zero. Making $5M instead of $10M is not a loss, it's less profit. 

Socializing losses is not an actual thing in a free market economy, it's a soundbite so Boris attempted to define something that does not actually exist. Players participating in actual losses would suggest the owners pay the players nothing and ask that they take money out of their pockets and contribute to mitigating their losses. Of course, his compensation is directly tied to player compensation so he just might be looking out for his own bottom line.

I will try to be as neutral as possible when I post this.  First, from what I have read, many players already like the formal proposal with the sliding scale over the revenue sharing.  Do I think the purpose of this proposal was to get votes from the lower paid players that most likely need the money to live, yes I do.  Do I think the players have a legitimate argument that they should get a full compensation for the contracts they signed?  Sure.  However, I doubt anywhere in any provision of the contract was there a clause saying, Should games be able to be played but with no fans due to pandemic situation the compensation will be X.  

Do the players also have a valid argument that they entered into an agreement in March on what will happen when games start back up?  Yes they did and it is valid, however, the Owners also have valid argument that their understanding was this was under normal conditions.  I have not seen the word for word agreement reached, but from what I have read in articles I believe both have a valid argument.  It makes sense that the expectation would be a prorated pay, but when the contracts were made it was with the assumption fans would be at the games and that financials were considered when agreeing to the contract.  Of course, the team assumes the risk that attendance would be down regardless, but I doubt either side would expect zero fans at all games.  

The players argument is they signed to play a game, regardless of how many people watched.  However, they had to understand that if fans do not watch there is no reason to play the game.  The players will argue the owners are trying to screw them and are greedy, well sure they are greedy, but the players also are greedy are they not?

The owners are trying to look like the good guys coming to the table with options to make financial sense across the board, and players, as of now keep saying no deal we want full pay for play.  Which this sounds reasonable.  

People who argue the owners are billionaires they can afford it, shows you have never and will never run a successful business.  MLB is not a charity for entertainment for people.  For the people who side with pay the players the prorated contract amount and make the owners take the hit, this means you believe business should be willing to operate at a loss, because they can and you want to keep going.   Just because the owners have billions does not mean we should expect that they lose millions so we can be entertained.  I mean if I ran a business at a loss, I would raise cost to public or cut internal cost, like labor costs.  Else eventually I would go bankrupt.

My question, how many years should owners take losses?  How much should they be expected to lose?  Of course we do not see their books and will never know how much they make or lose each year, but players will continue to seek the same level or higher salaries, but for all we know stadiums will never be able to operate at full capacity again, unlikely but we do not know how long reduced attendance will be required.  Will players accept a cut in pay under those conditions?  

Maybe the players can get their prorated pays, and to make up for lost attendance revenue, we start a go fund me for the teams?  I mean the real people that pay the players are the fans.  Sure it comes from the owners, but it is the fans that pay, because no fans means no games.  

I personally would be fine with owners say no games and players get no pay.  MLB could just fold up and say we are done.  What would the players do then?  The owners have all the power, but they understand making some money is better than no money, but if they are asked to lose money they will close and I would not hold it against them.

If I ran an entertainment business and not enough people were coming to pay my bills I would either raise prices and make the people that were coming to cover my costs or I would close and have the people that were coming lose out on that entertainment.  That is just how business works.

Both sides do need to understand though, the more they fight over money the worse they both look and will lose fans, which will hurt both of them.  While both sides fight over the pie, we are the ones that hold the pie and we can take it away from both of them.  If we stop watching or going to games, when we can go again, then owners make no money, and players will make no money.  We have the power, we just need to assert it. 

Rounded slightly, as a whole, MLB brings in $10B to pay for the sport. (Obviously individual teams $ varies). Only half a season is played, total revenue becomes $5B.

Your $20M player's prorated salary is now $10M. Simple, right?

Now, half a season without fans, and expected MLB revenue becomes $3B, or so is estimated. That means a half season, fan less, is 1/3 total income. Your $20M salaried player now earns slightly more than $6.5M. In other words, not far off from the $5M proposed in the chart above.

Now, there is some debate/confusion as to language in the original agreement between both sides. This could all be media fed hype, but it would sound logical that the reported clauses to re-address the original agreement once more information was gathered ring true.

The debate then becomes very different. Lower salary players earn less, but make a higher percent of their 100% target. Are the owners just trying to save more $? Are they trying to be more equitable and fair to lower salary players? Both?

You don't have to answer that, I'm just tossing out thoughts. Kind of puts some of the onus on the players to agree amongst themselves. But really, at least as an initial proposal, what ownership has presented doesn't sound all that illogical or impractical to me.

this isn’t a free market

http://twinsdaily.com/topic/36938-zulgad-is-mlb-really-making-return-about-dollars-and-cents/?p=965912

That's fine but you are still missing the point. Socializing the losses is a designed to be a sound bite. The whole privatize the gain and socialize the losses makes no sense and it's misguided propaganda.