MLB’s Economic Proposal To Start Season Would Hit Star Players Hardest

This was the week when the real movement to get the pandemic-shortened MLB season was supposed to happen. Instead, it appeared to take a step back.

On Tuesday, Major League Baseball delivered their much-anticipated economic proposal to the players in an attempt to come to an agreement on an 82-game season that would start in July. It was received with the same enthusiasm as a four-hour rain delay.

For two weeks, leaks from management had outlined the want of a salary cap system around baseball-related revenues. The players said the deal would be dead on arrival as they are seeking prorated pay for what is likely to be a half-season.

The plan provided on Tuesday, and first reported by USA Today, was received as “extremely disappointing” by the union for the players.

The proposal would seek a percentage of the prorated salaries of the players for the remainder of the season. The system proposed would see the highest cuts given to those earning the most, while being less for players earning under $1 million. Under the plan, all players would see cuts.

The players have been steadfast in saying they had a prior agreement in place that would see them play for prorated pay for the number of games played based on full season pay. The owners have said the agreement made clear that should no fans be in attendance – as this season will be due to the pandemic – the players would engage in good-faith negotiations around salaries.

The plan delivered by the league is bound to act as a wedge between the haves and have-nots in the league. While great attention is given to the stars of the game that earn mega-contracts, 65% of the total earn less than $1 million per season. Cuts to the highest-paid players could come in at just 20% of the prorated salaries for half the season while a player earning the league minimum of $563,500 for a normal full season of pay would see 90% of the prorated pay. If an 82-game season is played, that would come to $253,575 before taxes which include the tax structure where home games are played, and the tax systems for locations played on the road.

For someone like Mike Trout, the cuts would cut deeper.:

Going after the star players is an interesting strategy as pitcher Brett Anderson noted

As an incentive, the league has offered a larger percentage of postseason revenues to the players in the form of bonuses. According to ESPN, there would be $200 million total in playoff bonuses, $25 million for the completion of the division series, $50 million more for the league championship series, and an additional $125 million for the World Series. A significant amount of the postseason bonuses would go to higher-paid players, with minimum-salaried players receiving $5,512.

This year would see an additional four teams added to the mix for a total of 14 for the postseason- - nearly half the league’s 30 teams. With the additional games, postseason media rights revenues are expected to be approx. $1 billion.

With time running short, and the union rejecting the proposal, they are expected to counter with an offer to play a longer season which would allow players to potentially take cuts, but earn ostensibly the same amount as their prorated pay. The owners have said that they are losing money for each game played, thus leaving little hope that the league would accept the offer. The concept of deferring 2020 salary over into 2021 is seen as unattractive to the league given it is widely understood that the effects of the pandemic will still be felt next year.

To add insult to injury in the eyes of the players, the Oakland Athletics announced that minor league players in their system would no longer be paid $400 a week after the end of the month.

The email to the players came by way of general manager David Forst

The A’s are owned by John Fisher, who is valued by Forbes at a net worth of $2.1 billion. Calculating the cost of the $400 shows that if the A’s were to continue to pay all their minor league players each week June-August it would cost approx. $1 million.

While MLB Commissioner Rob Manfred has said that the league could see losses as high as $4 billion if the 2020 season is lost, he is referring to just baseball-related revenues. While the league will undoubtedly see the bottom line hit, additional revenues not counted will offset revenues for some teams in the league through ownership of regional sports networks, dividends through a 15% ownership of Disney+ and ESPN, and more.

The contentious negotiations play against a short window in which to get the season underway. The league paid $170 million to the players through April and May, but that money stops heading into June without a new deal. Should the season be canceled, players would not see any additional pay but would retain service time.

This mini labor deal for just the 2020 season sets the tone for larger issues when the current collective bargaining agreement expires in December of 2021.