Sunday, June 7, 2020

So is baseball coming back any time in 2020?


Today was a gorgeous Sunday here in Wisconsin. Sunny skies, low humidity, temp getting up to near 80. But we weren't planning to be in Wisconsin this weekend, at least up until March. We were supposed to be getting back from a weekend here.


Yep, my wife and I were planning to be in Boston this weekend to see the Brewers make a rare trip to Fenway. But then COVID-19 broke our and Major League Baseball shut down, like all other major team sports. But while the NBA and NHL have worked out an agreement on how to resume their season, MLB is still stuck, with no agreement on either how long the still-to-be-started season would be, or how much players would be paid.

Almost a month ago, MLB offered its players to receive 48% of overall revenues for a shortened 2020 season, and players immediately rejected it as a backdoor salary cap (baseball distributes revenues from rich teams to less-rich ones, but has no salary cap.

The players responded in late May with a 114-game season, with the players being paid a prorated salary (around 70% of their total). Owners quickly rejected that, noting that fans would generally not be able to attend (so owners have less money coming in), while they would be still paying players most of their 2020 salaries.

Owners responded with an idea that allows for prorated salaries and no cap, but that's all the two sides are agreeing on, as season length (and how much players are correspondingly paid) is a big sticking point Reports have the owners wantin48 games, and the players wanting 82.

ESPN's Jeff Passan broke down some of the money details in an article this weekend, and said MLB claims that without fans in the stands (who account for around 40% of their revenues), its economic structure is messed up to the point that more games = more money lost.
1. If teams were to pay players a full prorated portion of their salaries, it would cost around $1,674,800 per game. The union and league both accept this figure.

2. In a financial statement MLB provided to the union, the league suggested every game played would generate $980,000 in local television revenue. Over the course of a 162-game season, that would total $2,381,400,000. In a 48-game season, that amounts to $705,600,000 in local TV revenue. For 82 games, it would be $1,205,400,000. While the union disputes MLB's accounting in a number of areas -- and rightly points out that the local TV revenue numbers do not include teams' valuable ownership stakes in their regional sports networks -- it is generally believed that actual local TV revenue is in the $2.4 billion range.

3. The league in its financial statement said that for every game played in 2020, teams would combine to lose $640,000. The union has not validated this claim and has requested documentation from MLB to verify it. A simple equation -- full pro rata salary minus local TV revenue -- leaves a loss of $694,800 per game. Considering teams could generate a combined $54,800 per game in other revenues to bridge the gap between the difference, both will be considered going forward.
Given that reports have games still happening in home stadiums, you wonder if MLB teams will try some kind of limited-attendance plan that allows them to get some gate revenue, but with fans spaced in such a way that they do not have much contact with each other, nor much chance to congregate in walkways.

Are any of us going here in 2020?

But you need to have a season agreed to first. it appears that players are going to allow for an expanded playoffs, letting 7 teams in for each league instead of 5, which gives owners more money from the TV networks (and is fairer to players and teams because the shorter season can lead to more skewed results). Passan then breaks down the money difference between a 48 and 82 game season, and tries to propose a compromise that brings baseball back with both sides having to hurt some.
So here it is, right in between the $460.8 million in losses for the full pro rata at 48 games and the $787.2 million at 82 games: $624,000,000. The players can have a choice: They can get full pro rata at 65 games and make $1,632,930,000 in total salary or they can take an 8.6% pay cut off full pro rata at 82 games and make $1,882,830,000. If the full pro rata is really important enough to the players that they would literally leave $250 million on the table just to make a point, hey, more power to them. Principle, right?

Both options leave the league $624 million in the red on game days. "There's no way the owners will do a cut of under 10%," one front-office source said. Not even if the players could add the extra postseason games this year and next, agree to be miked up as part of an effort to sell baseball amid a crowded sporting landscape and create an event like an offseason Home Run Derby, all of which the union offered in its proposal? The postseason games alone are worth hundreds of millions of dollars over the two seasons. Perhaps they're enough by themselves for the MLBPA to hold firm at full pro rata for even longer than 65 games.

Say this year alone the wild-card round amounts to $100 million in national TV revenue. That would take the losses down to $524 million. The difference between that and the 50-game pro rata losses: around $64 million. Or roughly $2 million a team.
While these seems like large amounts, it's relatively small for a multi-billion dollar business like Major League Baseball. The loggerheads between the owners and players have already cost the sport the big TV ratings that sports-starved Americanns likely would have given them if they would have started around July 4, since that basketball and hockey will not re-start until mid-July. That won't happen now, but if there is no season at all in 2020 due to big-money owners and players failing to come to an agreement in a time of double-digit unemployment, the sport's business may suffer a blow that it never recovers from.

The thousands of jobs that would be brought back in this entertainment industry called MLB would be a welcome Summer boost for our economy, as the one-time bump in jobs for May from PPP and slow reopening of businesses is likely to fade quickly. Empty ballparks along with empty concert venues and many still-empty or lower-capacity restaurants (especially near such venues) is not a combination that leads to a recovering consumer economy. We sure miss going to Steve's on Bluemound as our pregame stop for Brewers' games, but I bet S.O.B's management is more disturbed by MLB's absence than we are.

C'mon guys, figure it out. Come to a 70-game season for 2 1/2 months of baseball, starting in late July and ending in early October, with players taking a pro-rata salary. Owners can then ask for a federally-funded bailout to cover some of their losses (why not? Airlines and other businesses shut down by COVID got them), and given how simplistic TrumpWorld thinks, they'd love to open up the Treasury and have PR photo ops bragging about how he stepped in to allow "America's Pastime" to return to ballparks (BS, I know. But that's TrumpWorld).

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