I want to be clear from the start. I am now, and I always have been on the side of the players when it comes to salary. They are entitled to whatever they can get. Scott Boras and Gerrit Cole can convince NYY that Cole should be paid $324MM, and that becomes his Fair Market Value (FMV). But Scott has no right to dictate to the owners as a group that they need to open up their wallets if they are not signing his players. It is a negotiation, and not all teams are always willing to meet the price of the player and his agent. It can go the other way as well. Think back to 1993/1994 when LAD 2B Jody Reed was offered a 3 year $7.8MM contract by the Dodgers that he turned down to become a FA. But the best offer he could get after that was $350K plus incentives from the Brewers. That was his FMV.
IMO, the owners are letting a very small minority of owners dictate to them whether there should be baseball this year. There are reportedly 6-8 owners who would prefer to not play this season because they would lose less with no baseball than with baseball. So the other 22-24 owners need to abide with what multiple poorly run franchise owners dictate. That is so very short-sighted. I am guessing that those teams do not have a large fan base to p*** off anyway, and they are not interested in keeping MLB at the forefront of sports audiences, because theirs isn’t.
Somehow those 6-8 owners were able to agree on a 60 game schedule. But they have said NO MORE THAN 60 GAMES. Manfred, you cannot negotiate for any more games. They can hide behind COVID-19, but that is horsepucky. This is all economic. So I decided to take a look at exactly what is being considered. The below schedule does not include $15MM each team needs to pay for player benefits. It is only 40 man salary commitments.
| 10 Game | |||||
| Team | Team Total | 1 Game | 60 Games | 70 Games | Difference |
| _____________ | _______________ | _____________ | _______________ | _______________ | ___________ |
| White Sox | $127,598,500 | $787,645 | $47,258,704 | $55,135,154 | $7,876,451 |
| Cleveland | $94,852,366 | $585,508 | $35,130,506 | $40,958,590 | $5,855,084 |
| Detroit | $106,216,600 | $655,658 | $39,339,481 | $45,896,062 | $6,556,580 |
| Kansas City | $86,126,992 | $531,648 | $31,898,886 | $37,215,367 | $5,316,481 |
| Minnesota | $134,049,311 | $827,465 | $49,647,893 | $57,922,542 | $8,274,649 |
| Baltimore | $63,699,167 | $393,205 | $23,592,284 | $27,524,331 | $3,932,047 |
| Boston | $188,657,969 | $1,164,555 | $69,873,322 | $81,518,875 | $11,645,554 |
| NY Yankees | $246,833,988 | $1,523,667 | $91,419,996 | $106,656,661 | $15,236,666 |
| Tampa Bay | $71,553,833 | $441,690 | $26,501,420 | $30,918,323 | $4,416,903 |
| Toronto | $111,237,471 | $686,651 | $41,199,063 | $48,065,574 | $6,866,511 |
| Houston | $213,149,147 | $1,315,737 | $78,944,243 | $92,101,617 | 13,157,374 |
| Angels | $182,395,036 | $1,125,895 | $67,553,717 | $78,812,670 | $11,258,953 |
| Oakland | $98,268,933 | $606,598 | $36,395,901 | $42,461,885 | $6,065,984 |
| Seattle | $102,944,461 | $635,460 | $38,127,578 | $44,482,175 | $6,354,596 |
| Texas | $152,648,555 | $942,276 | $56,536,543 | $65,959,300 | $9,422,757 |
| Cubs | $189,709,500 | $1,171,046 | $70,262,778 | $81,973,241 | $11,710,463 |
| Cincinnati | $149,127,992 | $920,543 | $55,232,590 | $64,438,021 | $9,205,432 |
| Milwaukee | $100,813,503 | $622,306 | $37,338,334 | $43,561,390 | $6,223,056 |
| Pittsburgh | $56,189,500 | $346,849 | $20,810,926 | $24,279,414 | $3,468,488 |
| St. Louis | $168,351,500 | $1,039,207 | $62,352,407 | $72,744,475 | $10,392,068 |
| Atlanta | $150,290,375 | $927,718 | $55,663,102 | $64,940,285 | $9,277,184 |
| Miami | $72,238,700 | $445,918 | $26,755,074 | $31,214,253 | $4,459,179 |
| NY Mets | $172,842,429 | $1,066,929 | $64,015,714 | $74,685,000 | $10,669,286 |
| Philadelphia | $179,944,462 | $1,110,768 | $66,646,097 | $77,753,780 | $11,107,683 |
| Washington | $174,004,795 | $1,074,104 | $64,446,220 | $75,187,257 | $10,741,037 |
| Arizona | $123,668,000 | $763,383 | $45,802,963 | $53,436,790 | $7,633,827 |
| Colorado | $156,763,000 | $967,673 | $58,060,370 | $67,737,099 | $9,676,728 |
| Dodgers | $224,283,500 | $1,384,466 | $83,067,963 | $96,912,623 | $13,844,660 |
| San Diego | $154,264,900 | $952,252 | $57,135,148 | $66,657,673 | $9,522,525 |
| San Francisco | $158,592,747 | $978,968 | $58,738,058 | $68,527,730 | $9,789,676 |
| _____________ | _____________ | _________ | ____________ | ____________ | __________ |
| Total | $4,211,317,653 | $25,995,788 | $1,559,747,279 | $1,819,705,159 | $259,957,880 |
The 30 teams have an estimated salary foundation of $4.2B for their 30 teams. As the table illustrates, that is almost $26MM per game on a prorated basis. There are the high salaried teams:
- NYY – $1.5MM per game
- LAD – $1.4MM per game
- Hou – $1.3MM per game
7 other teams have a per game salaries in excess of $1MM.
Counter that with:
- Pit – $347K per game
- Bal – $393K per game
- Mia – $446 per game
7 other teams with salaries ranging from $500K to $700K
Over a 60 game schedule, prorated salaries total $1.560B. On the surface, without fans that is a lot of expense to absorb. But they were willing. But MLBPA countered with a 70 game schedule that would require a prorated salary base of $1.820B. Also a very large number to absorb. That is a 10 game difference of $260MM, or $8.666MM average per team.
The three bottom salaried teams would need to absorb the following increase in salaries for those 10 games:
- Pit – $3.47MM
- Bal – $3.93MM
- Mia – $4.46MM
Admittedly I have not seen those teams’ books. However, I am quite sure that each of those three teams can absorb those additional salaries, they just choose not to. If they cannot, they have no business being in MLB. How short-sighted can that ownership group get? I am certainly not in favor of subsidizing the poorer teams, but if I represented one of the “wealthier” teams I would call their bluff and advise those teams that MLB will pick up the additional salaries as a loan. Those teams must pay that loan back with exorbitant interest (make it hurt but stay away from usury concerns), put together a plan showing they can operate fiscally responsible going forward, and that their plans include becoming competitive immediately. If they cannot present MLB owners such a plan and payback, within a year, they must put their team up for sale, and they must complete the sale within 9 months (subject to MLB owners approval). If not, MLB will absorb the team in order to sell it or disband it. Reasonable owners can dictate policy to make it fair for all. They just need to get Rob Manfred out of the picture.
There is a huge disparity between the 30 teams MLB franchise value (per Forbes – April 2020) as well as their revenues. They go from a high of NYY $5B (franchise value) and $683K (2019 revenues) to a low of Miami $980K (franchise value) and $222K (2019 revenues). See table below.
Team | Team Value Per Forbes April 2020 | 2019 Revenues | Average Revenue Multiple |
| ______________ | _____________ | ________________ | _________ |
| White Sox | $1.65B | $285MM | 5.8 |
| Cleveland | $1.15B | $290MM | 4.0 |
| Detroit | $1.25B | $276MM | 4.5 |
| Kansas City | $1.05B | $251MM | 4.2 |
| Minnesota | $1.30B | $297MM | 4.4 |
| Baltimore | $1.40B | $256MM | 5.5 |
| Boston | $3.30B | $519MM | 6.4 |
| NY Yankees | $5.00B | $683MM | 7.3 |
| Tampa Bay | $1.05B | $264MM | 4.0 |
| Toronto | $1.625B | $265MM | 6.1 |
| Houston | $1.85B | $420MM | 4.4 |
| Angels | $1.975B | $377MM | 5.2 |
| Oakland | $1.10B | $225MM | 4.9 |
| Seattle | $1.60B | $315MM | 5.1 |
| Texas | $1.75B | $335MM | 5.2 |
| Cubs | $3.20B | $471MM | 6.8 |
| Cincinnati | $1.075B | $276MM | 3.9 |
| Milwaukee | $1.20B | $295MM | 4.1 |
| Pittsburgh | $1.26B | $273MM | 4.6 |
| St. Louis | $2.20B | $383MM | 5.7 |
| Atlanta | $1.80B | $382MM | 4.7 |
| Miami | $980MM | $222MM | 4.4 |
| NY Mets | $2.40B | $362MM | 6.6 |
| Philadelphia | $2.00B | $392MM | 5.1 |
| Washington | $1.90B | $370MM | 5.1 |
| Arizona | $1.29B | $278MM | 4.6 |
| Colorado | $1.275B | $305MM | 4.2 |
| LA Dodgers | $3.40B | $556MM | 6.1 |
| San Diego | $1.45B | $299MM | 4.8 |
| San Francisco | $3.10B | $452MM | 6.9 |
| _____________ | ________________ | ||
| Totals | $49.180B | $10,374MM | |
MLB franchises have a collective value of nearly $50B. 2019 revenues were $10.374B. That was $474MM more than 2018 and more than $4.5B in revenues for 2008. There should be zero issues with raising the funds (loan or capital call) to finance an additional 10 games with full prorated salaries
For those who have any interest in financial metrics, included in the schedule is a metric that financial analysts look to when assessing the health of a MLB franchise, Average Revenue Multiple. The industry average in 2019 was 5.1.
Perhaps the best financial mind on the LAD roster is Ross Stripling. Before the season, he negotiated a $2.1MM contract and by happenstance, he allocated $1.5MM as a signing bonus. He laughs when asked about the strategy indicating that he had no knowledge whatsoever about any potential delay. It probably had more to do with taxes, as the signing bonus is considered earned in his residence state of Texas. Texas has zero state income tax.
MLB is a high stakes game to be played only by billionaires. But those billionaires need to absorb losses in the down times as well as enjoying the profits in the good times. “For the good of the game” they need to think more long term.
Discussion (61)
Disagree, not disagreeable
Players have to respond by 5 EST today. Enough of the doom and gloom. If they are going to play, play. Pollock said he might not play because of health concerns about a month ago. Not sure if he has changed his mind. A couple of people on twitter wondered if the Dodgers would take a chance and sign Puig for this shortened season as a replacement. I doubt it. That ship has sailed.
Both sides followed The Fart Of The Deal.
Ken Rosenthal:
In the end, we were left with owners who wouldn’t kick in an average of just over $4 million per club to play 65 games instead of 60, and players who for all their newfound unity could have ended up better off in any number of ways by striking a deal. The league’s implementation of a schedule only figures to drive the parties further apart, and more bad will is the last thing this sport needs.
The timing of this dispute, though, is what people will remember most. The bitter email exchanges and tone-deaf public remarks came at a moment when the country was facing not only acute medical and economic concerns, but also in the wake of the murder of George Floyd, conducting an extraordinary conversation about who we are.
Everyone on both sides should look in the mirror and decide: Do you like what you see?
Good write-up Jeff, very thorough. While it may be team valuations that are the foundation of MLB ownership, it is probably cash flow that is far more important. I’m really tired of the ownership/players issue and the battle over money. The country really needs baseball now and the dance is all about money. I’ve already rolled my season ticket money into 2021, but that’s probably where it ends. One more year and I walk as a season ticket holder.
I can watch games on TV and if they have a future work stoppage, I’ll move on. Flying the plane into the side of the mountain doesn’t seem like a good idea, but both the owners and players seem intent on proving some self destructive point.
Hey, if they don’t care about the fans, why should the fans care about them or the game?
Then there is this:
(CNN) – A new study suggests that as many as 8.7 million Americans came down with coronavirus in March, but more than 80% of them were never diagnosed.
From The Athletic:
“It’s absolute death for this industry to keep acting as it has been. Both sides,” Cincinnati Reds pitcher Trevor Bauer wrote on Twitter. “We’re driving the bus straight off a cliff. How is this good for anyone involved? Covid 19 already presented a lose lose lose situation and we’ve somehow found a way to make it worse. Incredible.”
MLB noted in its statement Monday “significant benefits” that players passed on by voting to turn down the 60-game offer, including a guaranteed playoff pool of $25 million in 2020. Players now are to be paid in the postseason as they are in normal seasons, by a percentage of the gate. And it is unclear whether fans will be allowed in parks by then.
The league’s offer also included $33 million in salary forgiveness and other enticements to the players. A $170 million advance paid to players over April and May counts against any 2020 earnings if games are actually played, but the proposal would have allowed players to keep some of the money, which MLB said “would increase the take-home pay of 61 percent of Major League players.”
The Covid-19 Deaths have been the lowest since March 1 the last two days.
There are more cases, but fewer deaths. Some conclude that the virus has mutated to a weaker version. Others say that larger amounts of young people are infected.
The death trail will tell the story over the next two weeks.
3 spring trainings the charm.
In case you are interested, you can go here and see cases and death trends for every state.
There are wild variations:
https://www.google.com/search?q=vcovid-19+by+state&rlz=1C1GCEU_enUS860US860&oq=vcovid-19+by+state&aqs=chrome..69i57.5391j0j4&sourceid=chrome&ie=UTF-8
The best face $aving(s) move now for the owners might be to wait for the first major Covid outbreak in spring training or the season and then in an effort to protect the players cancel the season. Seems like that would be a good defense against the player’s grievance which is sure to come.
Bob Nightengale reporting MLB season will be 60 games, starting the weekend of July 24-26.
Spring Training starts July 1st.
When do we get to vote?!!!!!
33-5 – Players vote NO!
Spokane Bob, I went to live at Hathaway home for children on Ave 66 in June of 1958, I lived there until I was placed in a foster home in May of 1962. I was coming up on 14 years old, and they had a limit where no kid there could be over 14. I went to San Pasqual Avenue elementary school, and then to Luther Burbank Jr High for almost 2 years. Mr.Lingua was my homeroom teacher. He had also been a minor league ballplayer in the Red Sox system in the 40’s. A lefty hitting first baseman. He used to give me his copies of the Sporting News every week when he was through with them. You were a year ahead of me. When I got to my new home in Redondo Beach I graduated Jr High there and went to Mira Costa in Manhattan Beach for my high school.
I’m with you Bobby – I’m sitting here now watching Man City demolishing Burnley – there’s no fans, but they are pumping crowd noise Into the stadium and it’s certainly better than nothing.
Everyone is watching, because there’s nothing else sports wise to watch.
I’m actually quite enjoying it.
I think a shorter season would actually be very exciting because every game would become meaningful.
Really hope it happens.
Bob Nightengale
@BNightengale
Everything appears to be coming to a head today: #MLB and the #MLBPA are trying to see if they can reach a last-minute agreement on a 60-game season this afternoon or Commissioner Rob Manfred will implement a 54-60 game season.
Great information Jeff. You are doing a great job keeping this site alive with amazing content.
It seems to me that for some reason many of the owners of baseball teams are all about the business part of the sport while the owners of NFL and NBA teams are more about winning championships. The valuations of NBA and NFL teams are also going thru the roof but you don’t see their owners being the penny pinchers that MLB owners appear to be.
I personally think that the MLB has too many owners who are billionaires only because of their franchise values and who are perfectly happy pulling out $10 or $20 million from their team per year for “living expenses” – all the while being totally content with a mediocre team. That doesn’t sound like a steward of the sport.
MLBPA is voting today. Personally, I am not at all encouraged by this. To me, this is a wasted year. I see all those billions being made, and I just will no longer contribute to it. I made my mind up about this last week. A couple of days in the mountains made my decision even stronger. I can no longer support either side. It might be a one man protest, but they have made enough money off of me over the years, and none of them have any regard for the fans, so they can all go piss up a rope.
I am not sure what Badger meant by “then the thread was slammed shut”. However, for clarification, the comments are closed on any previous post when there is a new story published. This is consistent with the way that Mark administered the site. William’s post was posted at 8:49PM (PT) and the new article was published at aorund 5:00AM (PT). That is 8+ hours.
Also for clarification, not one person’s post has been censored. Not one word. As happened with Mark, there seems to be a glitch in the software whereby some posts are waiting for approval. I do not live on the computer, so sometimes it may stay unapproved for a bit until I can approve it. But they are always approved.
In addition, no one has been banned, and no one has even been considered.
A couple of thoughts:
1 – I find it interesting how easy it is to spend other peoples’ money. Sure – the owners should just “eat” the losses – they’re rich anyway and everyone knows that it’s OK to hate the rich.
2 – The 10 game difference between the owners and players – according to AC , it’s a quarter-billion in salaries alone.
3 – According to MLB, the loss in revenue from having no players in the stands is $640K per each game played. Multiply times 15 and you’re up to $9.6MM. For ten games played by all 30 teams, it’s $96MM.
4 – The way that baseball owners make money from baseball is from the sale of their franchises. Andy McCullough of The Athletic quoted Scott Boras as saying ““The ownership valuations are the foundation of the game,” Boras said. “And the ownership valuations are all good because teams are not for sale. And the reason they’re not for sale is that when you play the full seasons, apart from these interruptions, the reality of it is that this is a very, very successful business. My God, they’re making almost $175 million a year in appreciation for each franchise.”.
5 – So it’s a profit on paper – you make the money when you sell the team. In the meantime, what’s a billionaire to do?
6 – So the owners are the caretakers of The National Pasttime. And they do owe the game and the paying fans a duty to leave the game in better condition then they found it. How much money does this responsibility mean that they should lose? Is a billion enough? More?
7 – And who says that you (or I) should be the one to decide how much money that the owners have a duty to lose to fulfill their responsibility to the game?
Well done Jeff! As with most negotiations, there is more at “play” than just what we read in the newspaper(does anybody do that anymore?) or online. To be successful, each side has to define and stay focused on its BATNA (Best Alternative to a Negotiated Agreement). Often though, one of the parties chooses to settle for their WATNA (Worst Alternative to a Negotiated Agreement).
The cases are spiking up, but the other part is that deaths are spiking down. Way down. That’s the part they don’t report.
How does baseball shutting down and joining the fight to conquer this disease help? What does that mean. Every pharma company on earth is on hyper drive to develop a vaccine. Shutting baseball down doesn’t affect that. We can’t just shut the world down until a vaccine is developed. The ramifications of that is far more devastating than Covid
William posted this late yesterday:
“How can they be so foolish and selfish? They will never control this unless and until there is a very effective vaccine, and then it has to be distributed. Maybe this will happen by next year, but if it does not, we will be no better off than now.“
He went on about baseball, then the thread was slammed shut. This morning I read that many regions, including the one I live in, have spiking numbers and with that knowledge people are walking around maskless, even eating at restaurants and attending rallies as if all was well.
All is not well. And whether baseball is played or not played this summer should be the least of our priorities now. We can talk about survival rates, and minimize them because it’s only the old, mostly minorities and otherwise weak, but it does not change the reality that people world wide are getting deathly ill from this virus and our leaders have not and are not taking this seriously. For our leaders, and the Uber wealthy they represent, it’s only about the economy. Well it’s my opinion we can walk and chew gum at the same time.
It’s also my opinion that baseball should show some respect, shut it down for the year, and join the fight to conquer this disease. We need to come together, develop a vaccine (and no, it’s not gonna happen in a month) and save as many lives as we can by pooling our resources. We are the United States. If we are, as many of you say we are, the greatest nation in the world we need to step up and lead. So far all we have done is show the world how not to do it.
I’ll join William and be the first to say it here – wait til next year.
That is a great piece Jeff, clearly setting things out.
I still think a much shorter season gives those small market teams a much better chance of winning, if that’s what they want to do?
Great job, Jeff!
I wonder what the COVID-19 impact will be on franchise values going forward. I think it will dramatically impact it.
There are 6+ owners who should be forced to sell.