10:00 AM ET
ESPN MLB insider
Author of “The Arm: Inside the Billion-Dollar Mystery of the Most Valuable Commodity in Sports”
Here are some truths about Major League Baseball right now.
The league and players have spent the past two months bickering, not listening to one another and prioritizing self over sport. Their only job was to figure out how to get the game back on the field as soon as possible. They failed.
The public faith in baseball is at its lowest point in a quarter century, and every last bit of damage done is self-inflicted. It did not need to be this way.
Unless there is a drastic change in the relationship between league and union leaders, baseball will spend at least the next two years stuck in an endless pattern of fighting, ugliness, pettiness and counterproductivity.
In the middle of a pandemic with no end in sight, amid unemployment reaching Depression-era levels, as the country finally begins to grapple with the festering wound of racial injustice, baseball is fighting over money.
The person with control over the sport’s schedule has suggested he will choose a season with fewer games over a season with more games. When it comes to playing games, less is not better than more.
Know what can save baseball? Baseball. Players in uniform. Actual games. Which should be the case already. If all had gone according to a very workable timetable outlined by MLB, players would have reported to camp five days ago. By July 4, games could have been played. Instead, all we’re left with is questions — 20 of them — on what should have been, what actually is and how this mess that didn’t have to be came to be.
Is there going to be baseball this year?
Probably? Last week, commissioner Rob Manfred said “unequivocally we are going to play Major League Baseball this year” and put the chances of a season at “100%.” Those are not adverbs and percentages a commissioner uses unless he intends on standing behind them.
Probably and 100% are not the same thing.
This is true, and we may finally get the answer in the coming days. There are a number of potential impediments to baseball restarting, and they begin with the infamous March 26 agreement between the league and players. The deal, which was agreed upon around the time Manfred could have invoked the national emergency clause in players’ contracts and suspended the contracts, sought to outline parameters for the sport’s return. It’s simultaneously funny and sad that some of MLB and the union’s deepest disagreements have involved … an agreement they negotiated together.
Both sides acknowledge that the agreement gives Manfred the ultimate ability to set a schedule for the season — and the league has explored options in the 48- to 54-game neighborhood. On Saturday, as it rejected the league’s latest return-to-play proposal, the union did not bother countering. In a statement, MLBPA executive director Tony Clark said: “It’s time to get back to work. Tell us when and where.” A letter from the union’s lead negotiator, Bruce Meyer, said: “If it is your intention to unilaterally impose a season, we again request that you inform us and our members of how many games you intend to play and when and where players should report. It is unfair to leave players and the fans hanging at this point, and further delay risks compromising health and safety. We demand that you inform us of your plans by close of business on Monday, June 15.”
So is MLB going to inform them of its plans?
Here’s where it gets complicated.
First: Some owners are incensed at the hard-line stance the players have taken regarding salaries, according to sources. Never mind that owners have taken every bit as hard-line positions and that their incremental bargaining did as much to calcify the union’s position as anything the players themselves did. Owners are angry, and Manfred works for them, so if their support for a season wanes, that adds a not-insignificant layer of potential peril.
Second: If the league abides by the March agreement, setting a schedule isn’t as easy as just presenting one to players. The agreement calls for the parties to meet in good faith to discuss a number of issues — including “the economic feasibility of playing games in the absence of spectators,” a key issue for owners who say playing games will add to losses already in the billions. The union has requested information from the league to support such claims, and in his letter Saturday, Meyer wrote: “(T)he league has continued to obstruct the Association’s efforts to obtain even a modicum of financial transparency.”
In other words: The sides need to talk before MLB sets a schedule. And while they’ve done a lot of things, talk isn’t one of them. These have not been discussions. A discussion necessitates conversation, and the leaders rarely converse. This was not a negotiation, either. A negotiation needs back-and-forth responses, and the players’ and league’s proposals have acted like the other party does not exist.
Scheduling follows a process, and according to a copy of the March agreement obtained by ESPN, the process goes accordingly: “Based on that feedback received from the Players Association, the Office of the Commissioner will construct and provide to the Players Association, as promptly as possible, a proposed 2020 championship season and postseason schedule (or multiple schedule options) using best efforts to play as many games as possible, while taking into account player safety and health, rescheduling needs, competitive considerations, stadium availability, and the economic feasibility of various alternatives.”
Now, it’s possible that Manfred could suggest a pair of different paths: one with one set of games and terms (say 50 with 10-team playoffs), another with another set of games and terms (60 with playoffs expanded to 16 teams). The choice could spur discussion, negotiation — even settlement, the optimal outcome, for the further ugliness it allows the parties to avoid and for the reality that if the union is involved in setting the schedule there will absolutely be more games than if MLB were to choose a season of its desired length.
It also could keep burning clock, which cynics on the players’ side believe the league is trying to do so it can implement a shorter season simply because it’s all the calendar will allow. The union asking the league to set a schedule was its best defense against any sort of four-corners strategy.
What do the players want?
To prove a point. To stand on principle. To end a pattern of what they see as mistreatment by the league and teams.
Yes, this is about money, but only inasmuch as money is the easiest conduit to prove their point. Recently, during a video conference call held by the union, a veteran player finally started to understand. For months, in individual conversations with other players, he had wondered whether the union’s unyielding approach was smart, practical, right. He had questioned players’ insistence on receiving a fully prorated portion of their salary, figuring a slight pay cut might get players back on the field instead of in Zoom chats. He had worried the MLBPA was backing itself into a corner against an unrelenting opponent.
Listening to player after player on the call, hearing their tone and their words and their anger, it dawned on him. This was not bluster. It was not narrative and it was not breakable and it most certainly was not a bluff. This was the players taking a stand.
Years down the road, when the fallout from this tussle and the increasingly likely labor war following the 2021 season undergoes an autopsy, these past two months will be seen as the moment that the players found religion. Stirred by a number of factors — what they see as disingenuous bargaining by the league, tone-deaf statements by owners and a desire to be paid what they bargained for — they have coalesced around the idea of full pro rata.
OK, can you please explain what full pro rata means since you say it, write it and tweet it like 5,000 times a day?
Take a player making $1 million. In a full 162-game season, he would make $1 million. In a season that pays full pro rata, he would make $1 million multiplied by the number of games played divided by 162. In a 72-game season, that’s $444,444. In a 50-game season, it’s $308,642.
In each of its three proposals, the league has asked players to take significant pay cuts off their pro rata salaries: a minimum of 30%, 25% and 20%. In both of its proposals, the union has asked for its full pro rata — something that the March agreement says it will receive “(i)f and when the conditions exist for the commencement of the 2020 championship season.”
No wonder the union wants the league to start the season, even if it’s without an agreement.
The exact interpretation of the language may find its way into the hands of an arbitrator if it goes down that path, but, yeah, that’s the union’s view: When Manfred starts the season, the players get full pro rata. It was an idea sold early and reinforced with frequency. It turned into a slogan reminiscent of organized labor past: “Players remain united in their stance,” Meyer wrote in his Saturday letter to deputy commissioner Dan Halem, “that a day’s work is worth a day’s pay.”
The players’ anger stems from a number of areas. There is the present treatment, in which they feel like owners are trying to force them to bear the brunt of business losses when they don’t reap commensurate rewards of business gains. Even more are actions in recent years players find unseemly and at odds with the partnership the league has said it wants to forge with them. The attrition of the middle class in free agency. Service-time manipulation. Salaries not growing with revenues. The so-called punitive renewal, in which teams penalize players who have not reached arbitration by unilaterally implementing a salary if they don’t accept the team’s offer.
Some of these issues stem, directly or indirectly, from a collective bargaining agreement negotiated by the union. That doesn’t lessen the frustration that has burbled for years and found its voice in this fight. To what end? Well, skeptics of the MLBPA’s approach ask that, too, wondering if this is principle for principle’s sake and how sticking together on pro rata will help the union in the even harder upcoming negotiation: for a new CBA when the current one expires in December 2021.
What coalesced them even more, two player leaders said, were MLB’s proposals that fell far short of full pro rata. The closest the league came was at 70% guaranteed and 83% if all playoff games are played. “They should’ve given players a meaningful choice,” one team executive said. Without the option of a much smaller pay cut to tempt the moderates in the union, full pro rata became players’ rallying cry.
What do the owners want?
To stem financial bleeding. Even the most hard-line player will admit that teams forgo billions of dollars in revenue playing games with no fans in the stands. The notion that the league would negotiate the March agreement without some sort of contingency for fan-free games defies logic. The phrases “economically feasible” and “economic feasibility” don’t appear six times on the first two pages of the agreement by accident.
Though the sides continue to disagree on the agreement, Halem, in a letter Friday to Meyer, wrote: “Everyone involved in the negotiations understood that if we could not resume play with regular fan access, the parties would have a subsequent negotiation over reductions to player compensation to account for the loss of billions of dollars of gate/in-park revenue the Clubs would suffer in that scenario. The Commissioner had two conversations with Tony in which Tony confirmed his understanding that there would be another negotiation over player economics if we could not resume with fans.”
What should the owners want?
Not a shorter season, even if they claim the more games they play, the more money they lose. This is doing deep harm to their game — maybe not irretrievably deep but certainly not the equivalent of a paper cut, either. As much as the players make baseball what it is, owners remain in the game far longer than the average player. The duty to shepherd it to the proper place, then, falls on them. And to have taken the tack they have — to have not understood the desires of both players and fans and negotiated the former to satisfy the latter — has been a dereliction.
What could get in the way of a season?
The owners certainly could shut it down. Remember that clause that precedes the pro rata sentence: “If and when the conditions exist for the commencement of the 2020 championship season … ” Well, the conditions actually haven’t come close to being met.
The first says there are no restrictions that will limit teams’ abilities to play in front of fans. There are. The next is that there are no “relevant restrictions on traveling throughout the United States and Canada.” There are. The agreement does give Manfred the ability to overlook the conditions. But that’s just the start.
There remains no agreed-upon health-and-safety protocol, either. The uptick of coronavirus cases and hospitalizations in Arizona, Texas and other states is worth watching over the coming weeks.
Then is the nuclear option that at least some players have talked about, if not outright considered: just not showing up.
Wait. Players can just not show up?
Well, can and would are two different things. Suppose MLB does set a season for 50 games. A significant number of players look at a 50-game season as a joke. “A World Series ring in a 50-game season wouldn’t be the same,” one player said.
While younger players will show up because they can generate a year of valuable service time even in a shortened season, veteran players — especially those who have maxed out their service at 10-plus years — don’t have nearly the same incentive. MLB said in its Friday proposal that it would allow players who aren’t at high risk for severe COVID-19 cases to opt out of the season without salary or service.
But what happens if it’s big names? If those younger players, recognizing they had a season foisted on them, support the players sitting out, even if it’s detrimental to their team? Would MLB truly try to force the players to play if they suggest they’re wary of the coronavirus? Could the league file a grievance?
What is a grievance?
The procedure by which the union and league solve disputes. Rather than a disagreement going to court, either side can grieve to the arbitrator, who can be fired at any time without cause by one party. An arbitrator has ruled on everything from collusion by MLB to the Kris Bryant service-time case.
It’s worth bringing this up because there’s a lot of grievance talk going on these days.
Why else would the league file one?
Because it believes the union has acted in bad faith — a legal term that accuses a party of dishonest dealing. In his latest letter to Meyer, Halem wrote: “We are convinced that the Association has purposely failed to fulfill its obligations under the March Agreement, and has deprived the Clubs the benefit of their bargain in the March Agreement — all while continuing to enjoy the lucrative benefits the Clubs agreed to provide the Association in return, such as $170 million in salary advances and full service time irrespective of whether or not games are played. This failure to act in good faith has caused enormous damage to the sport.”
Games, by the way, can be played during a grievance case. So if a party were to grieve, it wouldn’t necessarily shut down the season.
Why would the union file one?
If the league does impose a shorter schedule, the MLBPA believes MLB will not have fulfilled its duty in the March agreement to use “best efforts to play as many games as possible.” MLB’s response likely would argue that it could not fulfill the “best-efforts” clause based on the caveats included: “while taking into account player safety and health, rescheduling needs, competitive considerations, stadium availability, and the economic feasibility of various alternatives.”
The endgame is twofold. First: Players, who have complained about a lack of transparency in MLB’s financial disclosures, believe the discovery phase of a grievance case could compel the league to turn over financial documents. Second: If the arbitrator were to rule that MLB didn’t fulfill its best-efforts provision, the arbitrator could force the league to hand over hundreds of millions of dollars to players for missed pay.
Meyer, in his letter to Halem, also suggested the league’s desire to end games by Sept. 27 — a date from which it has not moved, like the players with full pro rata — is a smoke screen: “We believe your position is part and parcel of your general bad faith determination to play as few games as possible to punish players for refusing to capitulate to MLB’s demands for massive pay cuts.” A grievance over negotiating in “bad faith” could be filed as well, though between the advice of the league’s coronavirus expert regarding the risk of a longer season and TV networks that around $800 million in postseason money asking MLB not to play into November, a bad-faith claim regarding the season’s end date may prove difficult.
What about the financial documents?
Even if the union didn’t win a grievance, the players believe taking a peek behind the curtain would be worth an enormous sum. Currently, the union simply guesses when it comes to the league’s revenue streams except for the one team that publicly reveals them: the Atlanta Braves, whose parent company, Liberty Media, must do so for shareholders.
In 2018, the Braves reported an operating profit before depreciation and amortization of $94 million. Last year, it was $54 million — though after depreciation and amortization, plus stock compensation, the team showed a paper loss of $32 million.
During a presentation to the union early in negotiations, MLB said its teams collectively have not earned before interest, taxes, depreciation and amortization more than $250 million in a single year over the past decade. “And we’re supposed to believe the Braves, the only team whose financials we see, accounted for 40% of that two years ago?” a union official asked.
The distrust runs deep. And last week, it was only compounded when Cardinals owner Bill DeWitt Jr. told a St. Louis radio station: “The industry isn’t very profitable, to be quite honest.”
The what isn’t what?
The industry isn’t very profitable.
Perhaps it doesn’t need to be said, but just to emphasize this point: People rich, poor and otherwise rarely are in the business of buying into industries that aren’t very profitable. While there is unquestionably an intrinsic value baked into ownership of a professional sports franchise, the idea of a team that sells 3.4 million tickets every year, enjoys incredible community support and owns a mixed-use development adjacent to the stadium not being very profitable is just difficult to fathom. DeWitt is under no obligation to speak the truth about his private businesses publicly, but when players hear that — or Cubs owner Tom Ricketts saying: “The scale of losses across the league is biblical” — they simply won’t abide.
Franchise values. Yes, there is a difference between earnings and franchise value for teams just as there is cash flow and net worth for individuals. And yet even in the midst of the financial downturn and pandemic, there are multiple suitors for the New York Mets. The intrinsic value of owning a baseball team becomes transparent during its sale.
Consider teams bought this decade. Ten years ago, the Texas Rangers were bought for $593 million. Today, Forbes estimates their value at $1.75 billion. The Houston Astros sold nine years ago for $615 million. Today: $1.85 billion. Even though their annual gain in value has been under 9%, the Los Angeles Dodgers have grown from a $2 billion purchase to a $3.4 billion franchise value.
The point players have tried to make is that not-very-profitable companies with biblical losses in the middle of a pandemic still have the ability to pay players their full pro rata.
How do they know?
The union claimed Manfred said it could during a meeting, though the intent of that statement was interpreted differently by the league (a short season) and the union (a longer season). Perhaps you’re sensing a pattern here.
The rest of baseball’s financials are fairly opaque. For example, the regional sports networks that provide teams with billions of dollars in local television revenue have been paying rights fees to organizations. It is not clear how much. And at what point those payments stop, and how much teams may have to return for not providing an inventory of games, is unknown too. The league claims it will make $980,000 per game in local TV money this year. The union says it cannot verify that number.
The revelation Saturday that MLB and Turner had struck a contract extension worth nearly $500 million a year — a bump from its previous figure of $325 million — certainly piqued the interest of the union. Even if the revenue won’t arrive for two years, the MLBPA gladly unleashed it as a talking point — that the business of baseball is going to be plenty healthy and the players shouldn’t bear the brunt of it this year.
It’s worth considering the overall compensation of the five offers thus far to see the chasm between the parties:
MLB Offer 1: 82 games, $1.03 billion guaranteed, $1.23 billion max
MLBPA Offer 1: 114 games, $2.86 billion guaranteed
MLB Offer 2: 76 games, $989 million guaranteed, $1.432 billion max
MLBPA Offer 2: 89 games, $2.24 billion guaranteed
MLB Offer 3: 72 games, $1.27 billion guaranteed, $1.5 billion max
MLBPA: We’re not getting anywhere. Set the schedule.
“Neither of these parties negotiates that much,” one person involved with the talks said. “It’s clunky. It’s like watching a bunch of old guys playing pickup basketball, throwing elbows, doing their juke moves. That’s what makes it hard.”
Whose fault is that?
Everyone. Again: The top priority for baseball was to get back as soon as possible. As much as the union wanted to use the opportunity to strengthen itself before bargaining in 2021, it suffers deeply from any resultant downturn in business or impairment to the brand. As much as MLB wanted to socialize the losses, it couldn’t risk this outcome, where baseball is now the sport that reflects the confusion and division in the world rather than being the salve.
This was never going to be a winning situation. The players weren’t going to win. The league wasn’t going to win. The 99th percentile outcome was to make the best out of a terrible situation. What baseball has right now is trending far closer to the 1st percentile.
Even if the sides can’t agree on the most salient parts of the March agreement, it’s still rearing its ugly head and did so in particularly unpleasant fashion Sunday.
At least 67 undrafted college players, according to Baseball America, signed with teams for a maximum of $20,000.
Part of the league’s willingness to guarantee service time for players and give them the $170 million cash advance in the March agreement was because the union allowed it the right to shorten the draft to as few as five rounds. The league did just that, over the objections of plenty. The league and union also agreed teams could sign an unlimited number of undrafted players for $20,000 or less.
So a player who might have gone in the sixth round last year and been in line for a signing bonus of $237,000 to $301,600 got $20,000. Even a later-round pick who might’ve gotten $50,000? Nope, $20,000 for him, too.
For a sport like baseball, which is already struggling to attract the best athletes, what sort of a message does it send to shorten the draft from 40 rounds to five and then limit those who don’t get drafted to signing for pennies on the dollar? The most troublesome kind: that today is simply more important than tomorrow — and that baseball is impervious to shortsightedness.
Speaking of shortsighted: What happens if a short season does get implemented?
Teams already have called some players and told them to prepare to report to spring training within a week.
Of course, teams were saying the same thing to players in May, and here they are, a month later, still not in uniform, still not back for games on the Fourth of July, still possibly beaten back to live games by the NBA.
Whether the league delivers the schedule or the parties come to an agreement, the next month will be as logistically hectic as any in baseball in years. Get players to spring training sites (for some teams their home stadiums, for others their actual spring facilities), coronavirus test them and family (multiple players have tested positive recently, sources said), launch a totally new style of camp (happy social distancing) to get players into shape in three weeks, run through a few exhibition games and start a however-many-game-season that will either have 10 or 16 playoff teams.
What does the future hold?
This week could dictate that. If Manfred seeks the opinion of the union and sets a schedule that does not result from a negotiated agreement, we had might as well start counting down the days to the lockout after the 2021 season. A work stoppage already feels like a fait accompli, but if things are so bad that in the most important moment in recent memory they can’t work with one another on a deal to help salvage the sport’s reputation … well, that’s quite the illustration of how deeply broken the relationship is.
Already this upcoming winter, because of the seeming lack of revenue, teams are going to make significant budgetary cuts across the board — including on the player side. Arbitration-eligible players will not be offered contracts, sending them to free agency. The glut of free agents could depress the market further. Every team will have built-in excuses not to spend. Maybe there will be a few outliers, but the expected lack of ticket revenue in 2020 and the fear of the same in 2021 will scare most teams away from big-ticket free agents.
“The players don’t know what’s coming,” one longtime agent said, “and it’s going to be terrible. And owning a baseball franchise is an equity play. What does this do to their equity stake? They don’t have a season, or they have a short season and short playoffs and pissed-off players, and good luck.”
At very least a negotiated agreement would allow the parties not to spend the rest of 2020 bringing new levels of aggressive to passive-aggressive. The players and league could partner on broadcast enhancements to ensure that post-return TV games are must-watch. They could set a committee of the best minds on both sides to bandy about ideas and find common ground leading up to 2021 CBA talks. They could illustrate that as far gone as something looks, it is never beyond rescue, so long as the incentives and priorities are properly aligned.
Is there any hope for baseball?
Sure. Baseball, for all of its faults and foibles, deserves better. People inside the game and out love it. They don’t want to see it fail.
But they also wonder if it has to.
One longtime executive saw this coming a few weeks ago. He noticed the burgeoning breakdown of norms — the letters, the name-calling, the public airing of every article of laundry.
“It has to die,” he said. “And then it will come back.”
Die as in fall apart in ugly fashion. Send the sort of shockwave through the system that illustrates what’s actually at stake here — beyond the March 26 agreement, beyond pro rata, all the way to next year, when fighting will be over the tens of billions of dollars to come in future years and not just a few billion this year.
This isn’t a collective bargaining negotiation, and it never needed to act like a proxy. It’s what it always was: an obligation in the middle of a pandemic, a job crisis, a societal reckoning to remind everyone what makes baseball great.