Baseball owners hide the books, expect star players to cover losses

Updated Monday, June 1, 2020

All around us, we see America reopening, even if coronavirus is not retreating.  The NBA, NHL and NFL are well on their way to playing games this year, but Major League Baseball is standing still.  The more the baseball owners and the players’ union negotiate, the farther apart they seem to be.

In March, when it became apparent that a 162-game season was impossible, the ballplayers agreed to have their salaries reduced on a prorated basis.  But when it became apparent that the games would have to be played without fans in attendance, the owners said a new agreement is essential.  They wanted to limit the players to 50% of the revenues, which with the absence of ticket sales, parking and concessions would result in a 75% salary cut for the work force.

That inspired this now famous rant from Tampa Bay pitcher Blake Snell, on Twitch: 

“Y’all are gonna be saying, ‘Yo, Blake, play for the love of the game.  Money should not be a thing.’  What do you mean?  It should a hundred percent be a thing.  I’m risking my life.  . . . For me to lose all that money and then go play and be on lockdown and not with the people I love?  For me to take a pay cut, it’s not happening, because the risk is through the roof.  If I get corona I’m damaged for life.”

Tony Clark, director of the Players Association, said the 50-50 proposal amounted to a salary cap, which would never be acceptable.

So the owners scrapped the salary cap and replaced it with something that would have almost the same effect: a salary scale that would knock Snell’s pay from $7.5 million to $2.1 million. 

It’s a soak-the-rich scheme, with the highest-priced players, such as Mike Trout and Gerrit Cole, getting cut 77%, while a player salaried at $1 million would take just a 57% hit.

 The idea is to create class warfare within the union. About 65% of the major-league players are salaried at $1 million or less, and these are the players who need their salary the most.

The owners are hoping a majority will vote for the salary scale that Snell and other star players will reject.  Which is why this is a terrible idea: it’s designed to drive away the athletes we most want to see.  There are 133 players salaried at $10 million or more.  Most will conclude, as Snell did, that they don’t need the money badly enough to risk infection from COVID-19 that could jeopardize their careers.  Doctors report that most people who contract the virus suffer long-term damage to their lungs and/or other organs.

The owners think they will capture the bulk of their television/radio revenues, with ratings perhaps rising in a period when fans are unable to attend any games in person and are desperate for sports.  But you have to wonder how the networks will respond if half the stars are absent.  Lawsuits?

The response from the players is two-fold: (1) Reduce the costs to the owners by deferring part of the stars’ salaries, and (2) raise the revenues by increasing the season from the proposed 82 games to 114 games.

The deferral is a good idea. By 2021 it’s likely the pandemic will be much less a problem than it is today, and the bottom line for all sports should be improved.  

But the 114-game offer points to greed by the players.  This format would push the entire postseason into November and December.  Forget New York, Boston, Chicago, Cleveland, Minneapolis, Washington.  Most playoff series would have to be played in neutral warm-climate locations.  

This battle between owners and players is reminiscent of the disastrous 1994-95 labor war that resulted in the cancelation of a World Series.  

The players won in the courts, but the owners won in the court of public opinion.  Which turned out to be a defeat for everyone.  Fans were angry with the players, and attendance and television viewership lagged for the next four years.

Now, as then, Major League Baseball claims enormous financial losses but  refuses to reveal its books.  Max Scherzer, hero of the last World Series, tweeted: “MLB’s economic strategy would completely change if all documentation were to become public information.”

Not that there’s doubt Commissioner Rob Manfred is truthful when he says more than $4 billion will be lost if a baseball season cannot be played.  But the owners seem to think they’re entitled to a profit every year.  Perhaps they should try for a $2 billion loss instead of a $4 billion deficit.

The incredible escalation of franchise values indicates owners make far more money than they admit.  Which is why they hide the books.  They enjoy a monopoly protected by their unique antitrust exemption.  They force taxpayers to provide them stadiums to discourage them from fleeing to another city.

The Chicago Cubs dug themselves into a short-term financial hole by borrowing heavily to make ballpark improvements.  We live in an era of cheap debt, where corporations consider it bad business to store money in the bank as a reserve for unexpected catastrophe.   

When coronavirus strikes, the baseball owners call on the players to bear most of the cost and all of the health risk.

The most prosperous player agent, Scott Boras, recommended: “Players should not agree to further pay cuts to bail out the owners.  Let owners take some of their record revenues and profits from the past several years and pay you the prorated salaries you agreed to accept or let them borrow against the asset values they created from profits that players generated.”

Whatever happens, it needs to happen this week.  Beyond that, it will be nearly impossible to have training camp, a regular season of any size and a postseason with any meaning.  Fans will be furious.  They will hate the players, but they won’t feel much empathy for the owners.  

The long-term damage could be even worse than it was in the Nineties, when there was much less competition for sports and entertainment dollars than there is today.  NASCAR is booming again; golf and international soccer are resuming.  Baseball is thriving in South Korea and is restarting in Japan.   

Even before COVID-19, baseball in America was skidding, burdened by cheating scandals, slow play, and stars lacking charisma.  It’s a sad irony that those who run the most enduring of our sports are incapable of thinking beyond short-term bottom line.