According to the Associated Press, MLB told the MLBPA that players’ prorated salaries would contribute to a loss of a projected $640K per game if they are still able to play an 82-game season with no fans in the seats. The same report breaks down each team’s projected losses in such a scenario, and the Milwaukee Brewers are projected to lose approximately $139 million. That places the Brewers just about in the middle of the pack in terms of revenues lost even if half a season could be played without fans in attendance. According to Craig Edwards of Fangraphs, the average revenue loss incurred by a team is $147 million and the median loss is $135 million.
The AP accessed this information from a document presented to the MLBPA titled “Economics of Playing without Fans in Attendance.” This document was an initial step in negotiations with the players’ union. The document suggests that MLB would lose $4 billion and give players 89% of revenues.
Rob Manfred went on CNN and suggested the losses will be devastating for MLB and its teams. Manfred went on to throw out the losses at $4 billion. However he indicated that amount would be without a season being played.
"If we don't play a season, the losses for the [club] owners could approach $4 billion," MLB commissioner Rob Manfred says about the economic impact of coronavirus on the sport.#CNNTownHall https://t.co/e4xneYOMDI pic.twitter.com/glHTd4XkHo— Anderson Cooper 360° (@AC360) May 15, 2020
Of course the information presented to the MLBPA from MLB is an opening salvo in the negotiation process. As Ken Rosenthal and Evan Drellich lay out there is distrust between the two sides that might hamper negotiations:
...the more contentious challenge for Major League Baseball and the Players Association might be resolving player salaries for a shortened 2020 season. It seems almost unfathomable that an economic dispute might prevent a season from occurring, but the parties currently are entrenched in their positions. The union believes a resolution already is in place, while the league has yet to offer an alternative.
Nearly one week after the two sides met digitally, the familiar distrust between the sides already is coloring the talks. The league, pointing to language in the initial March agreement to navigate the COVID-19 pandemic, says the union needs to drop its stance that the salary matter is closed before it makes a new proposal. The union does not think it should discuss sacrificing additional pay until the league demonstrates its financial distress with hard evidence — never mind the idea of a 50-50 revenue sharing system, which the union equates to a salary cap.
It is obvious that MLBPA is skeptical about the projected losses announced by Manfred and MLB. As a result the players’ union has asked MLB for documents that would provide hard evidence for such losses beyond just assertions.
Craig Edward of Fangraphs assessed whether MLB owners were apt to actually lose $4 billion. He suggests that owners will not lose this level of revenue if games are actually played. First these figures exclude distributions from the central office, which projects to COLLECT $1.34 billion in media revenue. That of course should drop the lost revenue projection below $3 billion.
There are also revenues earned from network contracts with teams and MLB to be considered. In MLB’s assertion that owners would lose $640K per game, they leave out a huge amount of regular season national television and central office MLB revenue that gets distributed to teams, and that does not include revenues enjoyed from the playoffs. There is a great deal more that Edwards goes into, and I recommend it for a provocative and insightful read.
The release of the information in “Economics of Playing without Fans in Attendance” is an obvious attempt to convince the MLPBA to take less money and to move the needle on public opinion to leverage the players’ union into a so-called 50-50 revenue split.
The optics of this for the players are apt to be that the commissioner’s office and the owners are once again not being transparent. This could result in an impasse that reinforces an environment of distrust. That environment of distrust might just result in players not agreeing to a renegotiation of salaries and to owners choosing not to have a season. Both sides would certainly lose in such a case.
Both sides are also likely to lose in the future if they are unable to work this out. MLB and the MLBPA have an opportunity to bring baseball back in some way in 2020 barring a major spike in COVID-19 cases and deaths. If they cannot come to an agreement, the fans might look negatively on MLB and the MLBPA and not come back to baseball in 2021 in much the same way they stayed away in 1995.
The level of distrust from players to ownership might just lead to more contentious labor negotiations in the future too. The result could be a labor stoppage that might be ruinous to baseball.
On the other hand, if the two sides can come to an agreement about player salaries as well as safety protocols, Major League Baseball could set a standard for other sports. That could be a big win for baseball and create a great deal of good will among hard core and casual fans alike.