MLB Proposal Seeks Bigger Cuts From Premier Players

It's not even close. In a free market, the players could go to any team they wanted. That part is never brought up by those arguing that the contracts aren't "fair" because they get paid no matter how they do. They also never point out that the teams pay them MUCH less than they are worth for the first few years of their time in the majors. Much less.

Keep banging that drum but you cant see the forest for the trees. None of this is all that relevant to if we have baseball this year. It's real simple, if the owners losses are magnified by playing, we probably don't have baseball. I say probably because they might decide the best long-term solution is to cave right now and then hold out for terms that recapture those losses over the next several years when they renegotiate the CBA. In other words, we will likely miss another season. We might even have replacement players. So go ahead cheer for the players to cling to they want every dime in their contract but don't be surprised if we don't have baseball this year.

To Chief's point ... take a look at an inflation calculator. Then, tell me how MLB players have done in terms of compensation increase. I can't think of another group in this country that has fared anywhere near as well as MLB players over the past 30 years. Compensation has increased by roughly 750%. To say they have not participated in profits requires an exceptionally blind view of the facts. What actually happened is player received steady huge increases in pay as revenue increased. Now that the revenue is not there you and some of the players are saying just pay us anyway, the players deserve to get paid as if revenue is as it has been. 

agreed that the phrase is a sound bite. Make no mistake, the CBA negotiation has begun.

However the concept of risk/reward is legitimate here.

Ownership has previously earned a profit based on accepting risk as an investment, now finding the risk greater than ownership is willing to accept has tried to spread that risk among the players. The players already had made their own risk/reward decision by accepting a minor league salary at the reward for a major league one. Being this is new risk (business failure)for the players shouldn’t they ask for a cut of the profit?

In a free market I forgo job security but get to negotiate with competitive employers to increase my earnings. In this case, players have only one league. Negotiation of free agent contracts is basically just back pay, and the teams are one league competing inside of itself.

I disagree. Getting paid less and taking a loss are two very different things. When the players have to pay out of their pocket to play that would be sharing in the losses. There is no doubt owners are going to pay well over $100M on average for the privilige of owning a MLB player. Players are not going to pay a dime which is very different from not profiting.

Players also have guaranteed contracts. If they were willing to accept the risk associated with giving the owners the right to terminate that contract, I am quite sure teams would be willing to pay considerably more if the risk of non-performance was nullified.

the players did take an opportunity cost “loss”. They earned less than minimum wage for 6 years as minor leaguers, many leave MiLB in debt because the wages don’t cover the cost of training and travel in the offseason, let alone cost of living. If they had gotten a job at Home Depot, it would have been banked income over those 6 years, and they would have been able to negotiate higher wages with other employers over that time as well. What percentage of minor leaguers make it to the bigs? Maybe 5-10%. It’s a real cost/benefit calculation.

I feel for the milb system and am amongst the VAST MAJORITY of us here who have advocated for change there. And I'm not going to bring up that debate again except to say that I don't think financial "loss" is accurate. Players in MLB today "paid their dues" to arrive at their goal. They received millions to a couple thousand dollars for signing and then a salary to play, unfair though the $ may be. But they never lost $ to play, unless they chose to turn down $ in another career area to peruse their dream.

Not picking on your post as you and mostly agree on all things, including this conversation, just trying to be clear headed and accurate while trying to make some additional points and using your quote as a place to start.

When something hits a business hard, such as this pandemic, losses are also generally spread out from infrastructure to salary cutbacks. Most people I know, fortunately for them, have remained gainfully employed, though have lost bonuses or various forms of extra pay they may have earned. But they are still employed and still earning $. But it obviously hasn't been the same for a lot of people who are temporarily or permanently let go. Someone mentioned a chef, I believe it was, as an analogy of someone being asked to take a pay cut to work. While that stinks, at least that chef would still be able to work and earn while the business was carry out only, no in house customers, and now maybe partial in house customer occupancy. But that restaurant owner was still paying rent, utilities, taxes, benefits for his employees, and salaries for as many employees as they still could, even if there were cut backs.

Taken to a big picture scenario, this is where baseball finds itself right now.

When most anyone joins a business or a company, they start at a lower level and work their way up in regard to salary and title. This is generally true from a recent college grad to a fry cook who becomes a restaurant manager. Even if salaries are absurd, ML players have earned their contracts via the structures in place. And I can be appreciative of them and their talent and earnings, While also being a bit jealous, but I don't begrudge them their $. And IMO, they are being asked to make less $, but truly, they are not being asked to "lose" money the way MLB is expected to lose. (Or at best maybe break even).

Now, where I think ownership is making a mistake is IF they are still trying to find profit here. It's one thing to mitigate losses or break even, but it's another situation entirely if they're still trying to eek out said profit in their "side investment/hobby" at this juncture.

Another area where ownership could be POTENTIALLY making a mistake is the lower percentage of $ paid to the higher market players. If they are going to lose $ as the entity that is MLB, perhaps losing a bit more to adjust higher values to those players could be seen as a good faith offering, especially with the CBA around the corner. Business wise, agreeing to a bigger loss may not make sense, but for better labor peace it could pay eventual dividends.

In regard to MLB, and owners, asking for assistance to mitigate losses but unwilling to share in additional revenue, i am utterly perplexed. Before THIS CRAZY SITUATION, the players have enjoyed great financial rewards over the past couple of decades. So they HAVE shared in tne revenue growth of the sport. Further, while final numbers may be fluid, I find it very interesting that tbe owners proposal includes bonuses paid out to the players based on post season and WS revenue. Perhaps I read it wrong, but my impression was that would be league wide.

To the players I would simply add, they are smart enough to know this pandemic situation is going to have far reaching affects over the next few years in regard to everything from extensions, arbitration and FA. But for the good of the sport, the union, the players themselves, a little more hurt for 2020 might somewhat somewhat soften the blow over the next few years. But again, I'd offer up to ownership that a little more loss and cooperation with the union now may lead to a better CBA going forward.

the players did take an opportunity cost “loss”. They earned less than minimum wage for 6 years as minor leaguers, many leave MiLB in debt because the wages don’t cover the cost of training and travel in the offseason, let alone cost of living. If they had gotten a job at Home Depot, it would have been banked income over those 6 years, and they would have been able to negotiate higher wages with other employers over that time as well. What percentage of minor leaguers make it to the bigs? Maybe 5-10%. It’s a real cost/benefit calculation.

I agree completely that MilB players should be paid more or at least paid more consistently instead of unproven players getting multi-million dollar signing bonuses. However, I don't agree that poor pay during their development has any merit here. I went to college and grad school for 7 years and paid for that education. MiLB players are not paid enough but its a lot better than paying for developing the skills necessary at the next level.

Once again you are still completely missing the decision scenario present here. The owners decision is to cancel the remainder of the season or play. At full scale they no doubt increase already enormous losses. They can just cancel the season or they can ask the players if they are interested in playing at less than full-scale. The net result is still likely a loss but apparently they are willing to accept the more palatable losses under this scenario.

The players option is to accept less than full scale or opt to not play and get nothing. In other words, the net result of the season is the average team losing in excess of $100M regardless of if they play or not. Under the proposed split, assuming $3B in revenue, the average player receives $1.5M. (1.66 / 900 players). Those poor bastards having to work for an entire half season for a wage equivalent of 33 years income for the average American worker. How could they be accept this inequity?

I disagree. Getting paid less and taking a loss are two very different things. When the players have to pay out of their pocket to play that would be sharing in the losses. There is no doubt owners are going to pay well over $100M on average for the privilige of owning a MLB player. Players are not going to pay a dime which is very different from not profiting.

 

Players also have guaranteed contracts. If they were willing to accept the risk associated with giving the owners the right to terminate that contract, I am quite sure teams would be willing to pay considerably more if the risk of non-performance was nullified.

Owning is a bad word choice. just sayin...

Owning is a bad word choice. just sayin...

Hopefully, it was obvious I meant MLB team. Player makes absolutely no sense. The context was loses associated with a team so it should be obvious I meant to say team. I should proof read and often I don't.

Honest pay for honest work, be it owner, player, or beer vendor is fine by me. I have no problem with the negotiation. I just think that the players have a contract and a contract is a contract.

I struggle with the macro economic theory being thrown around, when we’re really talking about a market. The scale is off, especially when mixing in market definition of loss...

My points of opportunity cost is just my way of putting the players perspective out there, and it seems like none of us want to tread on the little guy, but I digress, we’ve had a bit of a misdirected analogy.

If I think of my own manufacturing organization, it is currently trying to reduce overhead cost, improve cash flow and reduce cost of goods sold. Parts of the business cater to industrial firms that are reeling, parts of the business cater to pharma and business is booming. Much like the MLB, Pharma (the Yankees) doesn’t cover all of the gap of industrial (the marlins) so, shrink and grow, yay!


Overhead in our scenario would be the same in my factory, management furloughs. Twins have said they are paying the FO through June, so overhead isn’t a concern here. With the “factory” a publicly funded stadium still not a big cost when the lights are turned off.

As you are keenly aware in a factory, improving cash flow and reducing COGS at the same time is a difficult proposition as lot sizes and RM costs are the main drivers. Cancelling purchase orders can improve cash flow, but resulting inventory shortages makes it difficult to deliver on time to collect on invoices and makes for smaller lots, driving up COGs.

Players are the inventory. Vendors (MLBPA) don’t like to deliver when you cancel POs and the PO does include price and quantity (contract value and years).

Vendors frequently cut off their nose to spite their face, if only to maintain price over time.

This is my last comment on this subject. You keep throwing out a bunch of losely related concepts which have little relevance IMO as to if we have a season or not.. Once again, the choice is play or don't play. You seem to have a basic understanding of business drivers. Based on paying players full scale which increases loses over not playing at all it's likely the owners just cancel the season. What would your employer do? There is no question, they chose the scenario with a better financial outcome that is obviously better. This is not exactly complicated business theory.

It's quite a different scenario for players. They have no exposure to loss. There choice is to make less or make nothing. Some of you just can't get off the premise the owners should just accept whatever loss is necessary to pay the players in full. This is a incredibly bias as well as a naive position. The average fan will not side with the players if they are unwilling to play 3 months of baseball for the equivalent to 33 years of wages for the average American, especially given the massive losses the owners are willing to accept under the scenario that pays the average player $1.66M for 3 months work.

I actually doubt the majority of players have a Blake Snell attitude. At least I would hope their union would provide them with a report or video detailing the estimated financial income for both sides under the proposed scenario. I just find it difficult to believe most players are going to expect the owners to play this  season under a scenario where playing means they lose substantially more than not playing. At that point I would hope they say a million seven on average is better than nothing. I would really by pleased if they thought about the fans that are responsible for their massive income potential.

I’ll start this by saying I dislike Manfred about as much as a fan can dislike a commissioner....and beyond. The guy is as crooked, clearly. From attempting to cover for A-Roid with coercion to his imbecilic responses to the juiced ball to attempting to cover up the cheating scandal with blatant faux investigations. Just an awful commissioner and human in general. Worst thing to ever happen to baseball.

He set this up by taking his own pay cut. Conveniently, I can find his exact number. I can only find that the league office is taking an “average” of 35%.

So, he thought it was a brilliant idea to then say, “the people who actually generate the revenue that is used to pay my office will have to take cuts in excess of 50%.”

Meanwhile, the players also have to travel and potentially expose themselves to the virus (I won’t get into personal feelings in the virus).....cut to Manfred and his cronies watching the game in opulence from the safety of an isolated MLB office somewhere.

Who could have an issue with that?

A real leader would come out and set an example with his pay cut, not try to minimize it and sneak it under the rug. I’d put a wager that Manfred’s salary is just supplemental to outrageous kickbacks anyway (no indication..but knowing Manfred).

Also, where are people getting that owners are going to suffer if they have to pay their players a fair ratio of their salary? That’s just false. Since when is ticket revenue the main driver behind anything? Why don’t they publish the unrealized appreciation owners have benefitted from (they can leverage that value in many ways until selling and cashing in a realized gain of a billion freaking dollars).

Good for the players. I’d push back too. I’m not playing a game out of charity for some of the richest, sleaziest men in the world. If I’m Mike Trout, you’re giving me my damn money that you agreed to.

The owners have that right, of course. But then, why do they expect players to share in the losses, but not in gains when revenues are higher than expected? 

 

They will play half the games, why are the players taking less than half the money? When they go back to regular, and a team makes way more revenue than planned, will they pay the players more than their contract? Of course not. 

Well, if the players agreed to 50-50 split they would share in the revenues when they are higher, but players refuse to do that.  Which means they want more than a 50-50 split, or they are not willing to accept any risk for loss of fans or revenue.  Of course the players do not want a cap, but that means no floor either.  They want to be able to make as much money as possible, and who would blame them.  However, the owners claim, no knowing how accurate it really is, is that without fans they are are expected to take a 40% budget loss.  They are asking the players to take additional cuts based on fact the budget will be at a great loss.  I would imagine for some ballparks the percent from gate and concessions may be lower than others and some are higher.   

For easy math, not an estimate of money, I will lay out how the three plans would basically work.  The estimated payroll for players across the league for full pay is about 4 billion.  So under prorated plan that players want they would take about 2 billion.  If the ESPN estimate of 3 billion is accurate, then that means players get 2 billion of the 3 billion or 66% of the revenue pie.  

Owners countered with a 50 50 split, based on new economics with no fans.  So the players would lose about 500 million under this, based on the estimate of 3 billion.  

The new plan by owners with sliding scale involves a lot more math, but would seem from what I read would be asking the players to take about 40% of the pie and even big hit to higher paid players.  I believe I read the 35 mil plus guys would take only like 7 mil, or 10 mil less than prorated.  but the lower paid players would have much less of a cut to salary. 

So that breaks down the plans.  Of course the players want the top one, and owners the bottom one, but the 50 50 share seems fair, but players say is a non-starter sharing if risk of having a no fan season.  

If the players get their way, then the expectation is the team will cut many costs elsewhere to make up for the differnce.  Now of course no need to pay people for working games or ticket sales, so they will get laid off.  No need for advertising to come to games or other marketing so they will get laid off and any plans to pay for bobble heads, shirt, hats and other give aways, assuming they had not already been purchased would be dropped, so those business can lose out on that money, which could lead to those people getting laid off, or cut hours.  Much of the security staff can be laid off.  Since the minor league players will not be playing they will not get paid so there is savings there and they can go get a job to make up for the loss, of the little amount of money they do get paid.  

Now those things I mentioned may happen anyways, but many teams indicated they would still pay employees for the season, but that may change if the players need to make more money.  Now of course if no revenue is coming in then this is likely to happen anyways.  The point I am trying to make, as the players and owners fight, it is the little guys that suffer, and wish both would just understand how bad for the league this is.  

On a side note, Twins are 17th on payroll just above what is league average. League average is 136 mil Twins are at 137 mil. 

I’ll start this by saying I dislike Manfred about as much as a fan can dislike a commissioner....and beyond. The guy is as crooked, clearly. From attempting to cover for A-Roid with coercion to his imbecilic responses to the juiced ball to attempting to cover up the cheating scandal with blatant faux investigations. Just an awful commissioner and human in general. Worst thing to ever happen to baseball.

He set this up by taking his own pay cut. Conveniently, I can find his exact number. I can only find that the league office is taking an “average” of 35%.

So, he thought it was a brilliant idea to then say, “the people who actually generate the revenue that is used to pay my office will have to take cuts in excess of 50%.”

Meanwhile, the players also have to travel and potentially expose themselves to the virus (I won’t get into personal feelings in the virus).....cut to Manfred and his cronies watching the game in opulence from the safety of an isolated MLB office somewhere.

Who could have an issue with that?

A real leader would come out and set an example with his pay cut, not try to minimize it and sneak it under the rug. I’d put a wager that Manfred’s salary is just supplemental to outrageous kickbacks anyway (no indication..but knowing Manfred).

Also, where are people getting that owners are going to suffer if they have to pay their players a fair ratio of their salary? That’s just false. Since when is ticket revenue the main driver behind anything? Why don’t they publish the unrealized appreciation owners have benefitted from (they can leverage that value in many ways until selling and cashing in a realized gain of a billion freaking dollars).

Good for the players. I’d push back too. I’m not playing a game out of charity for some of the richest, sleaziest men in the world. If I’m Mike Trout, you’re giving me my damn money that you agreed to.

Although I agree that some of the decisions Mr. Manfred has made in the past aren't what I would have liked, your reference to him as "crooked" is uncalled for. Then you double down by referring to the owner's as the "sleaziest men" in the world.

I am surprised that the moderator's haven't removed your comments.    

Fascinating discussion and many points well taken and thought out from both player and owner perspective. And if these were able to be taken in a bubble,I might even be able to muster sympathy or empathy for either side. But at the end of the day, for me, they are still merely millionaires and billionaires squabbling over how to cut the million and billion pie, while most of this country are trying to figure out how to divide their unemployment check, their stimulus check or keep their failing businesses afloat in order to pay their monthly bills and feed their families.

Even MLB players making the 'mnimum' will make more than most Americans these days....if the games are played.

I wonder what sacrifices the guy who signed the contract for $20Mil per year and now is being asked to live on a paltry $8Mil....for one season is going to survive? How many fewer BMW's will he have to live with...will that extra vacation home on the Riviera have to be scrapped?

And the owners? Somehow they'll get by. If it turns out they just can't figure it out and no baseball is played...too bad.

Given how many people will never see anything close to what they all haul in...even in the worst of times, this couldn't be a worse time to be airing this tired old crappy laundry. I don't think there is anything more pathetic than millionaires crying over how much money they aren't going to get.

This rant is not meant to belittle any of the posts. Taken in context the arguments make sense. But in the real world of 2020, it just isn't going to garner much sympathy from the majority of the people who would still have to pay big money to watch these guys all get richer, while players and owners and greedy agents pee and moan about how unfair the other side is. We really don't need this right now.

Player salaries as a percent of revenue are dropping. And, that only counts team revenue, not revenue teams make from owning developments around stadiums, or networks, or other things that aren't part of "revenue". 

 

Again, why does the revenue matter? The will provide half their services, why should they be paid less than half their wages?

I am not siding with either, I am trying my best to show both sides of the argument.  The players have a very valid argument.  The owners argument is the pay to the players were based on money coming in with fans coming in to games and paying ticket prices, food, and beverage prices.  The insane mark up on those products.  On a business standpoint, if you hire someone to do a job you are expected to pay them for the services.  However, in contract world of law, there are areas where when situations that were not expected by both sides, then the contract is not fully covering because the situation is not expected by either side.  I doubt anyone expected orders by governments to not allow fans in stands.  Sure you can expect lower attendance from some years or hope for higher and you accept that risk a team, but when governments order no fans that is a different thing all together.

That is the owners argument, they were expecting to have fans this year to get that money.  They cannot now.  Think of it this way.  Say you contract 10 people to work a catering event that was going to have 100 people at it.  Then government comes along and says you can only have 25 people at it.  The workers you contracted would say well you can still have the event we deserve to get full pay for that event, despite only needing maybe 3 or 4 people for the event.  The other 6 or 7 want full pay.  The contract most likely did not have a clause should government not allow the full gathering this is what will happen.  Both sides have a valid argument.

Yes, the above situation is slightly different, but best I could think of off top of head.  Also, take note of fact that there is expected to be at least 4 additional players at MLB pay level then first expected too.  Again, both sides have arguments that they are right.  My point is if neither is willing to give or both willing to meet in middle then no baseball and we all lose.