Finally the ugliness is starting to abate. Because strife and discord are foundational elements of the relationship between Major League Baseball and the MLB Players Association, the possibility of them reappearing out of nowhere, like autoimmune diseases intent on wrecking a baseball season, remains palpable. And yet in recent days, the parties have come to the place they were always bound to wind up: ready to actually discuss what a 2020 season will look like.
The long-awaited proposal from MLB on an economic plan for this year will be sent to the union early next week, multiple sources briefed on the league’s intentions told ESPN. The posturing and preening of the past two weeks will subside and give way to a more productive fight — the sort that answers the ultimate question: Will there be baseball in 2020?
While there has been progress on the health-and-safety elements of a return, fundamental disagreements on money endure. It’s the kind of problem that in normal circumstances would take months to address. Baseball doesn’t have months. It has days. And in any accelerated timeline, two overriding elements must exist for a deal to come together: motivation and trust. The first is easy. Both sides recognize that a 2020 deal isn’t just a deal for 2020; the short- and long-term futures of the sport ride on it.
Trust, on the other hand, is hard to come by, and if this thing falls apart — if the absence of a good-faith negotiation dooms the 2020 baseball season — it won’t be directly because of the coronavirus pandemic. It will be because the erosion of trust in recent years among the leaders on both sides poisoned and polluted the landscape to an extent that a deal never was going to happen in the first place. As cynical as that sounds, it’s close enough to the truth to make everyone involved uncomfortable and motivate them to spend the rest of May ensuring the roosting chickens don’t cluck their way to a summer and fall of emptiness.
Transparency and simplicity are the keys. Even if there is disagreement on the true nature of teams’ finances — there always has been and always will be — that hasn’t in the past quarter-century proved an unbridgeable gap. The more information the league offers, the more comfortable the union will be in acknowledging the struggles teams face. Though a deal that covers the next two years before the current collective bargaining agreement lapses would be ideal, it is also unrealistic. “The calendar,” one high-ranking official said, “isn’t our friend.” Focusing on the present, on 2020, on getting players playing and games going, is the only reasonable obligation of the coming conversations.
The ticks of the clock are blaring. The $170 million advance to players runs out Sunday. The time for pretense is over. The baseball season depends on it. Now is the moment — the only moment — to answer the most difficult questions.
Is there going to be baseball this year?
You really had to start with the hardest one.
No one said this was going to be easy.
Fine. How about this: The decision-makers who answer that question are professionally skeptical because they can’t afford to trade in optimism, but they see a pathway to a deal. There will be late nights, countless Zoom calls, horse-trading and compromise. The entire operation is fragile. And the coming days are paramount.
“Everything,” one high-ranking official involved in the discussions said, “is going to happen next week.”
MLB’s labor policy committee, which sets the league’s strategy in these matters, planned to meet Friday. Its decision on an approach — does it abandon any notion of a revenue split, which the union has deemed a non-starter, or continue to forge toward that dead end? — will offer the greatest insight into the viability of any deal.
The committee is cognizant that continuing to suggest a revenue split will be met with a polar-opposite response from the union and only entrench the gridlock. The lack of progress this coming week would all but kill the league’s desire to start spring training 2.0 in mid-June and begin the season in early July. The end of May, or perhaps the first day or two of June, is the target.
So why not just set a deadline for a deal then?
It’s not the worst idea. A deadline places pressure on the sides. But it’s pressure they already feel. If there’s a June 1 deadline and they don’t reach it, negotiations are more liable to implode. If they’re close to a deal June 1 and complete it June 3, the lack of a deadline will have behooved all. No need to add another potentially destabilizing element to already-precarious negotiations.
Let’s back up. Can you please explain what all this is even about?
Billionaires and millionaires fighting over billions.
Sounds like fun.
Oh, it’s a gas. Here’s the Cliffs Notes: MLB, which typically brings in more than $10 billion a year in revenue, is preparing for a fraction of that. Teams, whose cash flow typically comes from gate revenues, won’t reap any of that without fans in the stands. They want the players, who in a March deal with the league agreed to a significant pay cut — they’ll be paid a prorated portion of their salary depending on the number of games played — to take an even bigger haircut. The players believe those terms are ironclad. The league believes a clause in the March agreement calls for further conversation about salary in the event of games played in empty stadiums.
As much as both sides recognize the miserable optics of arguing about huge sums of money in the midst of an unemployment crisis, it hasn’t stopped the bickering.
What is the union’s culpability in that?
The players haven’t done themselves any favors, but they’re also in the unenviable position in which defending themselves looks greedy and playing coy runs the risk of projecting weakness (even if, in reality, it would illustrate a great amount of discipline and canny).
Newsflash: The players are not greedy for holding to the position that the 50% pay cut they’re already due to take is enough. They are every bit as entitled as ownership to protect their money. Why businesses get the benefit of the doubt but labor doesn’t is a mystery that defies all forms of logic, but then here we are, with Chris Russo, who gets paid by MLB, uncorking a hysterical-in-every-sense-of-the-word screed about how the MLBPA can “go to hell.”
Since hell has a two-week quarantine in effect for arrivals, the union will likely decline taking such a trip. Here’s where it should go: to whatever place necessary that ensures players are well-informed not of a segment of the media’s ignorance but about the nature and substance of its strategy — about how, if it is willing to bargain with the league, that give-and-take is elemental and does not show frailty.
The March agreement, for example, has left some players confused. Union leadership has unfailingly told its constituency that it is entitled to full pro rata. This is their interpretation. They are not wavering. The agreement itself was not widely distributed, and three players represented by different agencies said their agents, who are lawyers, wanted to parse the language but couldn’t. This drew particular attention after the New York Post’s Joel Sherman this week wrote about a conversation between league and union officials regarding the economic-feasibility clause in the deal that MLB believes gives it the right to ask for further financial concessions.
The sentiment that MLB is using the pandemic to execute a money grab is at the heart of the union’s attempts to rally its members. It’s a great sales pitch. It has worked. Now comes time for the pivot. However inherent the mistrust, however dubious the players are of the owners, treating them as deeply and irretrievably avaricious is the sort of thing that dooms a season.
And what of the owners?
They are in asset-hoarding mode. The last thing they want is for financial issues in 2020 to imperil their ownership. That said, one person with knowledge of teams’ finances said: “This is not a solvency issue, it’s a liquidity issue.”
Meaning that teams should have less trouble with long-term financial commitments (solvency) than short-term (liquidity). Some teams are saying their liquidity crunch is dire, which prompted the MLBPA to deliver a massive request for financial information from the league. This is another area in which transparency and simplicity could move mountains. If the league offers a greater window into its business that doesn’t necessarily cover the entire scope of what the union seeks, it’s the sort of gesture that reasonable people will appreciate.
In an update to players that was obtained by ESPN, the MLBPA referenced a letter sent by the league to the union earlier this week. The sentiment of it was conciliatory. Both parties will suffer financially. For the good of baseball, now and going forward, it is time to get the framework in place to make a deal.
I get the now part. What does going forward look like?
Trying to focus on the present, buddy.
Humor me.
Fine. You asked for it. The 2021 season has a chance to make this tiff look like a slap fight. If there are no fans in the stands next year and players are guaranteed full salaries, it would provide an even greater stress test on owners’ finances. The presumable move would be to seek salary reductions by players for a full share of games. You can imagine how that will go over.
Hey, remember that whole thing earlier about simplicity. Let’s figure out 2020 before we use potentially unfounded assumptions about spectators to speculate about 2021.
Fine, fine. Back to now. The MLBPA responded to the league’s health-and-safety protocol draft Thursday. What did the union say?
The response, sources said, was cordial and included more questions and desires for clarification than it asked for some sort of a massive policy overhaul. The 67-page protocol was impressively thorough, to the point where a number of players worried that it might be overkill in some places. It needs work, no question, but after tweaks that listen to union and front-office feedback, it could very well serve as a template for all team-sports leagues’ return.
For all the disagreement between the league and union, one place they’ve engendered good will in recent years is health and safety. Between the agreed-upon performance-enhancing drug and domestic violence policies, the parties have managed to find common ground. There is shared interest in ensuring the coronavirus does not spread in clubhouses.
Can MLB test players, managers, coaches and other essential personnel every day, as some players desire?
Maybe. Deputy commissioner Dan Halem told ESPN earlier this week that the league was prepared to process as many as 14,500 coronavirus tests per week. That would constitute anywhere from three to four tests per person a week. The desire to be tested more often by some players isn’t born of fear as much as it is in hopes that more tests would lead to a loosening of some restrictions in the protocol.
2:18
Jeff Passan breaks down MLB’s new safety proposal, as well as a timetable for what needs to be done for the season to potentially start in early July.
The problem with that is the sorts of tests being done. If MLB could install labs in every stadium to process hundreds of point-of-care tests each day, perhaps it would make sense. Point-of-care testing returns a near-immediate result, and if everyone who came into contact with players tested negative, they could reasonably spit and high-five to their heart’s content.
Problem is, there is one lab processing MLB’s tests, and it is in Utah. It will return results within 24 hours. So if there is an asymptomatic carrier inside the clubhouse and players do not follow the protocol, it theoretically increases the chance of an outbreak.
More testing is better than less, sure, so if that’s what the players want, MLB will have to consider it. But unless the tests are rapid, it does little to change the rules by which they’ll abide.
Like the one that discourages them from showering?
You have only 20 questions, and you seriously wasted one on this?
Do you not think hygiene is important, Passan?
Let’s put it this way: If there’s a hill MLB is willing to die on, postgame showers ain’t it. The players will get their showers. And their hot and cold tubs, too.
Can the teams pull this off?
As restrictive as the protocol is for players, it’s almost equally burdensome on teams. Multiple front-office officials said they’ve started planning to expand their facilities to accommodate the social distancing that will make a regular clubhouse uninhabitable for a full team. They’ve also tried to line up extra medical personnel to handle the volume of intake testing before spring training and the additional work during a season. The lead time doesn’t make it any easier, but as one GM said this week: “If there’s going to be a season, I don’t care how hard it is. We have to make it work.”
What are the other holdups at this point?
Consider the case of a young star, who asked to remain anonymous. He believes he eventually will sign a nine-figure deal. This year, after the 50% pay cut, after taxes, after clubhouse dues, he will make somewhere in the $200,000 range.
“That’s a lot of money,” he said. “I understand that. But it’s not $100 million. So why wouldn’t I just sit out this year and not risk getting hurt? [Teams] are going to do everything they can not to pay us. I don’t want to give them an excuse.”
Fundamentally, he’s not wrong, and he has expressed as much privately. He also knows that if he were to do that, his teammates would see him as someone who wasn’t committed to the team’s success, and there is no worse label inside a clubhouse than “selfish.”
So anyone who doesn’t want to play doesn’t have to play, right?
Unclear. This much is clear: In the health-and-safety protocol draft, the language exempted “high-risk individuals” from having to participate in any 2020 season. It did not mention voluntary withdrawal from the year.
Executives are fearful that players, knowing they will receive service time regardless of what happens this season, would opt out because of money rather than any sort of concern about the coronavirus or moral objection to the league’s plan. Players desire the flexibility to do so. The issue of pay for non-high-risk individuals who don’t play isn’t likely to scuttle any agreement, but it could be among the most-discussed issues over the next week and a half.
Hey, got a joke for you.
Shoot.
The Los Angeles Angels.
What the Angels did this week to their baseball operations department, gutting it from top to bottom, was an exercise in how not to act during what’s a treacherous time for everyone in the world.
As the Minnesota Twins and St. Louis Cardinals guaranteed full pay for full-time employees through June … as the Milwaukee Brewers promised no furloughs to their baseball-operations employees and full pay to lower-level employees for the remainder of the season … as clubs followed the examples set by other organizations that have pledged to treat their employees with the respect and empathy owed people whose diligence and hard work built the foundations for successful organizations … the Angels furloughed almost all of their scouts and player-development personnel.
All of it was galling. Particularly gross was how it intersects with the June 10 amateur draft. Angels scouts have been poring over video and filing amateur reports all spring. Most of them will be gone June 1. The Angels told cross-checkers that they’ll stay on through the draft — and then get furloughed less than a week later.
Seriously?
Seriously.
Here’s all you need to know: Angels owner Arte Moreno, who is the ultimate decision-maker in the organization, has a reported net worth of $3.3 billion.
Are others going to follow his lead?
About half the teams in baseball have made known their intentions through at least June. Some, like the Detroit Tigers, Colorado Rockies and Chicago White Sox, have vowed to treat their employees well, which presumably means forgoing layoffs or furloughs. Others, like the Philadelphia Phillies, San Diego Padres and Toronto Blue Jays, have told full-time workers they will remain employed through the end of the season. The New York Yankees this week told those in the ticketing department that they would maintain their full salary and benefits through at least June 15, according to a source.
I know I said earlier that I was done talking about 2021, but this subject warrants a flip-flop. There is an increasing sense of dread around baseball front offices that they are going to look nothing in 2021 like they did coming into 2020. Or 2010 for that matter.
Baseball operations departments have swollen in size over the past decade. And with fear about revenues not just in 2020 or 2021 but what a bear economy may do to the years beyond, it is those spheres with outsized head counts that find themselves most vulnerable.
The expected contraction of the minor leagues will cost hundreds of jobs on the baseball side and thousands more in stadium operations. Player-development departments, a source said, will shrink. At perhaps the greatest risk, sources said, are scouts, particularly professional scouts, whose eyes have for generations been the vital sense in finding baseball players.
Baseball without scouts. How?
First off, scouts aren’t disappearing. Teams currently going through their 2021 budgets have identified areas for cuts, and one happens to be professional scouting. It is a costly endeavor, sending someone across the country (and, in many cases, the world) for hundreds of days a year, and the emergence of analytics has, at the major league level at least, prompted front offices to rely less on scouts.
At the same time, as teams contemplate clearing out their scouting department, perhaps they’ll remember the lesson taught in the wake of Moneyball: scouting complements statistics and vice versa. And when both work in concert with player development, it’s the sort of symbiosis that churns out better baseball players, which, after all, is the goal.
Getting rid of scouts, though a reality, is shortsighted, not just because the art of it can balance the science of analytics but because when the numbers are so ubiquitous, a great insight gleaned from an in-person look — do the kid’s teammates like him or what is his work ethic or any soft-skill knowledge — can weigh heavily on the assessment.
A smart team will recognize that, load up on scouts and try to reap the advantages. That’s how baseball works. Everyone zigs, the creative teams zag. Not even the coronavirus will change that. It may even exacerbate it, turning cookie-cutter baseball into something with fewer resources and more incentive to innovate.
The longer-term implications of this winnowing are what’s most troubling. Tasking fewer people to do the same amount of work as before is a recipe for burnout and disillusionment. What happens when those people, many of whom remain in the game because of its romantic allure or its fulfillment of a competitive fire, simply tire of it? There will always be people who want to work in baseball, but to attract and retain the best and brightest, it cannot deviate too far from the standard it has set in recent years. Otherwise, those best and brightest, the ones with skills transferable to other industries, will see those opportunities, and the brain drain in the game could be far worse than this first wave of job cuts.
Where else are teams going to look to save money?
I opened up Pandora’s box when I said 2021 again, huh?
Yup.
The easiest answer is free agency. This goes back to the earlier point about ’21. Right now, somewhere in the neighborhood of $2.6 billion worth of contracts are guaranteed for 2021. This year, arbitration deals were worth another $700 million-plus, so even if teams are extraordinarily selective with whom they tender contracts, the arbitration market will be, at worst, worth more than $400 million. Which brings us to the tidy number of $3 billion in salaries.
The free-agent squeeze this winter has a chance to be brutal for players. “Teams aren’t even going to have to collude to collude,” one agent said this week, acknowledging that financial issues have been laid bare inside of ownership and front-office circles. Executives know who’s got money and who’s poor. They see who’s cutting staff and who isn’t. It’s far easier to assess a market when it’s clear who won’t be participating.
Let’s use the future to get back to the present. You talked about minor league teams being cut next year. What’s happening with minor league players this year?
It’s unclear. MLB in late March announced that it would pay all minor league players $400 a week through May 31. That is a week from Sunday. The silence has left thousands of minor league players who already are embarrassingly underpaid wondering if they’ll see another paycheck this year.
This point was shown in devastating fashion with your humble narrator as the unfortunate victim. In attempting to make a point about the Twins committing full salaries to their employees, I drew the ire of Mitch Horacek, a 28-year-old left-hander who reached Triple-A last season, who made a point of his own.
I’m a Twins employee being paid 13% of my salary to be 100% ready to play baseball at a moment’s notice.
I’m also locked out of MLB/MLBPA negotiations because MLBPA doesn’t represent minor leaguers. https://t.co/lx5llcj0Y3
– Mitch Horacek (@mhoracek14) May 22, 2020
Yeah. That about covers it. Minor leaguers are nervous, and they should be. For the past two months, they have worked to stay in shape and prepare for a season that may never happen. Even if MLB carries a 30-man major league roster with a 20-man taxi squad, that leaves the remaining minor leaguers without games to play. Do teams expect them to continue working out? Training? Preparing for 2021? Of course.
Well, then pay them. At around 6,000 players and $400 a week, that’s just shy of $29 million for the next three months to cover every minor leaguer. Less than $1 million per team.
You sure love to spend owners’ money, don’t you?
There are certainly worse pastimes than pretending to be a billionaire. And if I’m the faux billionaire who pays his employees and minor league players and big league players because, you know, I have billions of dollars and the people who put everything into making my business successful don’t, well, that sounds like a pretty good billionaire.
More to the point: As potential expenses pile up, it’s worth trying to understand the sort of money MLB has made. In its financial disclosure to the union a week and a half ago, the league said that since 2010, it had not had a collective EBITDA — earnings before interest, taxes, depreciation and amortization or, pretty much, how much money you make — of more than $250 million in a single year since 2010.
The closest facsimile to an independent audit of MLB’s finances comes in the form of the annual Forbes valuations. Now, these numbers are far from the be-all, end-all. They are not sacrosanct. They are the best we’ve got to check against MLB.
Forbes pegged the industry’s earnings in 2019 at $10.5 billion. The league’s figures were closer to $10 billion. Forbes said ticket revenue and other game-related expenses account for about $4.1 billion of that — around 39.3%. MLB says it’s at 40%. Pretty spot on.
To see Forbes’ EBITDA numbers — or operating income, as it says — are staggering. Last year, Forbes said, 29 of 30 teams made a profit. (The Miami Marlins, for the fourth straight year, were in the red.) The aforementioned Angels: $61 million, after years of $19 million, $25 million, $68 million and $42 million. As an industry, Forbes said, MLB teams’ combined operating income exceeded $1.5 billion last season. In 2018, it was $1.19 billion. The year before that, $858 million. And $988 million. And $662 million. The past five years together: More than $5 billion in profit, according to Forbes.
Now, the league has long disputed these numbers, and maybe they are high. But 400% high? At MLB’s no-EBITDA-over-$250 million claim that would mean the maximum number for the past five years was $1.25 billion. The gap there is simply too large to believe that Forbes is overshooting when it’s so spot on with so much of its other math, including its team valuations that have, if anything, undervalued franchises.
So what’s your point?
Major League Baseball owners are really rich, and if they are cash poor and need to borrow money to pay employees and minor leaguers and major leaguers this season, they can and should. Wealth is often built on debt. This debt is an investment in the future of their asset.
Major league players need to recognize that walking into a room — pardon: a Zoom — without a desire to find a comfortable-enough place for all parties involved won’t be helpful. The posturing is over. Deals take flexibility. Embrace it.
All of this, remember, is for fans, who should understand that the nonsense of the past two weeks will be a footnote in history if MLB and the players accomplish in the next 10 days what they should.
The health-and-safety protocol will be there.
The appetite for the game is ravenous.
The time for a deal, for baseball to return, is finally here.
