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Standoff between MLB owners and players could jeopardize baseball’s return

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How to compensate players this year is already becoming an issue.

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2017 Major League Baseball World Series Game Two: Houston Astros v. Los Angeles Dodgers

Like most industries, baseball will have to make huge adjustments for the coronavirus pandemic this year, but many of those changes will require agreement from the player’s union. Owners have outlined their proposal to resume play in July to gain union approval, but according to Ken Rosenthal and multiple reports, the union is taking serious objection to how owners plan to reduce compensation.

Owners and players agreed back in March to pro-rate salaries based on the number of games played, with owners also agreeing to advance $170 million worth of salaries, so players will already be set to make half of what they typically make. But as it becomes clear that baseball will not be able to resume with fans in the stands, possibly for much or all of the season, the loss of revenue has caused owners to ask for pay to be reduced even more. Rosenthal reports that owners have proposed a one-time 50/50 split of revenues with players, but the proposal has been met with stiff resistance from the union.

Said MLBPA executive director Tony Clark: “A system that restricts player pay based on revenues is a salary cap, period. This is not the first salary cap proposal our union has received. It probably won’t be the last.

“That the league is trying to take advantage of a global health crisis to get what they’ve failed to achieve in the past — and to anonymously negotiate through the media for the last several days — suggests they know exactly how this will be received.

“None of this is beneficial to the process of finding a way for us to safely get back on the field and resume the 2020 season — which continues to be our sole focus.”

There would be no explicit cap under the proposal, no maximum payroll ceiling limiting spending, rather overall spending would be pegged to revenues, just as the salary caps in the NFL, NBA, and NHL are pegged to overall revenues.

How revenues would be determined is not clear from the reporting. Revenues can be difficult to ascertain in baseball, as many teams have equity stakes in the regional sports networks (RSNs) that televise games. That may lead to less-than-fair market revenues in exchange for the equity stake, or teams can use the RSN to hide revenues from the ballclub. There is also the question of whether revenues from MLB Advanced Media (BAMTech) and real estate developments around stadiums would count.

From the owner perspective, the dramatic loss of gate revenue will require belt-tightening all over. According to Rosenthal, an estimated 40 percent of overall league revenue comes from stadium ticket and concession sales and other gate-related revenues. Forbes magazine estimated the Royals made about $49 million in gate-related revenue last year, less than 20 percent of their $251 million in overall revenues. The Yankees, on the other hand, made an estimated $287 million at the gate, out of $683 million in total revenues, or 42 percent.

From the player perspective, the owners and players came to an agreement back on March to pro-rate salaries, which will likely leave players with half of what they expected to make this year. Owners never agree to split revenues 50/50 with players when the sports has an unusually profitable season, so players shouldn’t be asked to shoulder the load when times are bad. And revenues may not be all that bad anyway if there are expanded playoffs with the revenue added games would bring and if teams still retain most of their television revenues.

This isn’t even getting to the issues relating to player safety, of which no specifics have been reported yet. Players will have to sign off on any precautions and protocols teams take to protect players from contracting the virus. Some players have already expressed concerns, particularly those with underlying medical conditions.

Owners and players have had growing tensions between them over the last few years and this has the potential to widen the divide. The owners seems to be out-playing the players in public relations, getting a proposal out first so if the players object, they seem like the ones holding up baseball from resuming.

However players will likely need to make some concession. Employees all over the country are making sacrifices in extraordinary circumstances, ballplayers will likely need to do the same. If there is some revenue-sharing plan, the union needs to make sure that all revenues are accounted for and split evenly, to avoid situations where labor takes a paycut, only to see management take advantage. Another solution may be to defer some player salaries, to make players whole once revenues are back up to normal levels.

Both sides will need to posture for negotiations, so these proposals and statements do not mean all is not lost on a baseball season in 2020 yet. But this just shows that the coronavirus itself is just one obstacle to getting back on the field this year. Owners and players will need to come together for a workable solution that is safe and fair so that we can all enjoy the game we love once more.