The hope for having a Major League Baseball season appears extremely bleak. I don’t expect we will have one. The owners and the MLBPA don’t appear to be on the same page about how to have a season with greatly reduced revenues. Millionaires fighting with millionaires over money at the near peak of economic despair caused by the COVID-19 pandemic.
Back in March, the owners and player’s union agreed to pro-rated salaries based on the number of games that they could squeeze into the rest of the 2020 calendar year. But that agreement was under the assumption of games having no restrictions on attendance. Not the current dynamics of spectator-less games or being played at a certain percentage of capacity to adhere to social and physical distancing requirements.
The owners say that they cannot move forward paying pro-rated salaries on an 82 game season if they aren’t getting any revenue, or greatly reduced revenue, from gate receipts or concessions. Instead they proposed a 50-50 revenue-sharing plan between teams and players. The player’s union has rejected this idea.
MLBPA boss Tony Clark “A system that restricts player pay based on revenues is a salary cap, period.”
Absolutely a shocking statement that makes no sense or takes into consideration the financial damage that has been done already in the US with an unemployment rate that is the highest it has been since the Great Depression.
Last year, MLB generated $10.7 billion in revenue. The main issue here is television revenue. The national television contract only generates about $1.7 billion in revenue which is split evenly among 30 teams. Then another $1 billion comes from MLB central offices from revenue generated from MLB-owned properties like MLB.com, MLB TV and MLB Network. The rest of the broadcast revenue is generated at the local level and is not shared with other clubs like the NFL. This puts small market teams at a disadvantage compared to the New York and Los Angeles markets.
As far as revenue generated from the gate and concessions, for the 2019 season, gate receipts accounted for $2.86 billion. Concession revenue was estimated to be about $1.75 billion in 2015. So, gate receipts and concessions combined, this works out to be $4.61 billion or about 43% of total revenue.
So this is where the owners have a point. $10.7 billion (2019 total revenue) multiplied by a fraction of the season (82/162) works out to be $5.4 billion in revenue if we have a partial season with no restrictions on attendance. But if games are played in empty stadiums, then the revenue falls to about $3 billion since gate receipts and concessions account for roughly 43% of total revenue calculated earlier.
The average MLB player made $4.36 million in 2019. If the players took a cut in proportion to reduced revenue (3 billion/10.7 billion), the average MLB player would still make $1.22 million for roughly half a season.
If the MLBPA cannot accept another salary reduction in light of having to play in spectator-less venues, then MLB owners need to just cancel the 2020 season. The arrogance and insensitivity displayed by the MLBPA is absurd for a sport that already has waning interest from Millennials. Physicians, nurses and other hospital personnel are having to take 5-25% salary cuts across the nation due to this pandemic while putting themselves in harm’s way.
I ask myself often, when will they ever learn?