There is a battle raging on between millionaire athletes and billionaire investors that seems almost tone deaf with over 40 million Americans having filed for unemployment during the pandemic. As the quarantine carries on with economic uncertainty, it is even more difficult for the average American to comprehend the large numbers with too many zeros being discussed in these negotiations.
What goes largely unnoticed, though, is the ripple effect caused by this very circumstance, as it will undoubtedly impact industries, perhaps even your own, if not handled carefully. To put it bluntly, this is one of the most important wager negotiations currently taking place in the country and, believe it or not, the fight is still between the big guy and the little guy.
Negotiations between players and owners were made with haste in response to the pandemic that effectively put Spring Training and the season on hold. The MLB players’ union had agreed to a prorated salary in March that would honor player contracts based on the amount of games played in the case of a shortened season; however, a small clause in the initial agreement indicated that if fans were unable to attend games, then MLB would have the right to renegotiate the terms “in good faith.” Language that leaves much room for interpretation. With a very realistic expectation that fans will not be returning to seats in any sport this season, MLB is now presenting the players with additional pay cuts that have left players “livid’ and “very disappointed” as reported by several outlets. The union has decided to disengage MLB regarding any discussions or proposals concerning further pay cuts. This is where we are today.
To bridge the gap of disconnect that many are feeling towards players right now, a few statistics must be considered. A player on average has a career length of 5.6 years to make all of his money for himself and his family for the rest of their lives. Most players do not have a college degree and have nothing to fall back on after their baseball career. The median income is about $1.5 million dollars for MLB players as reported in 2018, and 65 percent of players are currently making $1 million or less. Most of the gaudy contract money you read about goes to a very, very small percentage of players. In the 151 year history of the game, there have only been 19,960 players ever to play even a single MLB game. To say a player, who has dedicated their life and sacrificed relationships, health, and more to play a sport for the enjoyment of others, should be paid a premium for an incredibly hard skill and sought after talent would be an understatement.
Now let’s look at some numbers that may make you scratch your head just as the players are doing right now. It should be noted that these numbers are all estimated because MLB, as a private entity, does not have to report their earnings to the public. As players – most notably star pitcher Max Scherzer – have suggest, these numbers may be lower than their actual values. MLB reportedly made an estimated $9.9 billion in revenue last season, with each team of the 30 teams generating an estimated total of almost $330 million. On top of that, Manfred publicly stated on CNN’s airwaves that across all teams there would be a total net loss of $4 billion if zero, not one game, were to be played this season. So that means roughly $6 billion should be left over to support the players, front offices, etc. on a prorated salary. Moreover, projections showed that television ratings could be at an all-time high if the sport were to resume even in the waning days of the pandemic.
So it may seem that owners are trying to emphatically stiff the players. But why? Why now during a pandemic when no other sports league is doing the same with their players? Even the NFL, the league in the most similar position to that of MLB, has come to terms with the fact that their games will likely be played in empty stadiums for the majority, if not the entire, season.
This is a microcosm of something much, much bigger approaching. The player Collective Bargaining Agreement (CBA) ends in 2021, and the largest issue in negotiations with the next CBA will be a salary cap. Owners want to establish a salary cap moving forward as some players are seen to be making far too lucrative of long-term contracts. Phillies outfielder Bryce Harper set the highest standard for a free agent most recently with a 13-year $330 million contract (only to be outdone by non-free agent Mike Trout). These superstar contracts continue to grow and grow exponentially, a trend that is showing no signs of slowing. By playing hardball with the players now and establishing more salary cuts, the ownership group will effectively have a decisive victory that may be used as grounds for a salary cap in baseball when the CBA ends in 2021.
The owners’ intentions seem to be a system similar to the NBA that will promote more team friendly contracts that will not only encourage players to engage in more self-branding, but to promote movement around the league to other teams. This seen as good business practices, and that is why the owners are billionaires and I am not.
Collectively the players could, in theory, profit more as a whole too if money previously spent on large contracts is distributed equally to other deserving players. The overall median in earnings in MLB would then rise. But also consider this: is a salary cap ethical and does it conflict with the ideals of capitalism? Especially when owners will be profiting off of top talent more while paying them less…
A salary cap works in the NBA and maybe could work in MLB, but the NBA is different in many ways. A main dissimilarity is there are far less players on a roster to be paid than MLB. MLB also has 162 games played in a regular season while the NBA plays an 82 game season. Yet, the most notable contrast is how the NBA itself does a great job of promoting it’s players to set them up for self-banding, while MLB is notoriously bad at doing so, even having their best overall player Mike Trout being known by non-baseball fans as some guy that they think maybe plays baseball or something. Still, though, it is not difficult to see why owners would want a salary cap. Again, it’s just good business.
Now hopefully you’re starting to see the big picture. Imagine if this happened everywhere, including your industry, to you or your loved ones. Does it seem justifiable? It becomes clearer to see why players are taking a stand and why owners are trying to force their hand, and remember, they have a relatively small earnings window.
I recommend everyone continues paying close attention. The result could set a standard that can causes a butterfly effect throughout industries. Adding to the dilemma, businesses, including my own, will be forced to add to the unemployment numbers by letting thousands of more people go if baseball does not happen this year as well. The money is there, the right decisions just need to be made by both sides.
