MLB Commissioner Rob Manfred told Anderson Cooper on CNN that Major League Baseball would lose up to $4 billion if the 2020 season were canceled, and even more money if 82 games had to be played without fans in attendance. The Detroit Tigers were listed as the least unfortunate team, with a projected loss of $84 million over an 82-game season. Really? Let’s have a look at that claim.
“The economic effects are devastating, frankly, for the clubs. We’re a big business but we’re a seasonal business. Unfortunately, this crisis began at kind of the low point for us in terms of revenue since we hadn’t quite started our season yet. If we don’t play a season, losses for the owners could approach $4 billion.
MLB claimed, according to the Associated Press, that they would lose even more money, $640,000 for every game that is played without fans, if the players insisted on receiving prorated salaries as they had agreed in March.
The New York Yankees alone would have $312 million in local losses when calculating their earnings before interest, taxes, depreciation and amortization (EBIDTA). New York’s figure includes about $100 million toward the bonds that financed new Yankee Stadium, money that already has been paid for 2020.
Detroit would have the lowest negative EBIDTA — an accounting measure used to assess profitability — at $84 million, with Baltimore at $90 million, and Pittsburgh and Tampa Bay at $91 million each. Figures exclude distributions from the central office, which projects to collect $1.34 billion in media revenue.
So, we’re counting payments on real estate loans, but not counting a chunk of national media revenue? Okay.
On Tuesday, the owners proposed a salary structure that would pay players on a sliding scale between 20 percent and 90 percent of the already-reduced prorated salaries. This would leave players that were previously slated to make the league’s minimum salary ($563,500) with about 46 percent of that, or 90 percent of their prorated salaries. Players at the top of the pay scale would receive 10 cents on the dollar for every dollar in their contract above $20 million.
Here is the proposed pay scale:
- First $ 563,500 paid at 90%
- $563,501 to $1 million paid at 72.5%
- $1,000,001 to $5 million paid at 50%
- $5,000,001 to $10 million paid at 40%
- $10,000,001 to $20 million paid at 30%
- $20,000,001 and up paid at 20%
Note: A player’s proposed salary is determined by multiplying each bracket by the corresponding percentage and then multiplying that by the prorated salary, which is .506172 for 82 games.
The players are expected to make a counter-proposal which will keep the prorated salaries, but will call for more games to be played, up to 110 games. The two sides are apparently in agreement on expanding the playoffs.
Here is a rough estimate of what each Tigers player would receive if their salaries were prorated over 82 games, and how much they would make under the owners’ new proposal.
Detroit Tigers’ Pandemic Salaries
Salary figures, including the totals, are provided by Cot’s Contracts for the projected Opening Day roster. I’ve added one player to bring the total to 30, which is the roster size proposed in MLB’s plan, so there may be one minimum salary added to the totals if they play ball. A median figure is used for the 15 players at or near minimum salary.
These totals show that the Tigers would have a total payroll under $50 million if they paid the players a prorated share of their salaries over an 82 game schedule, and just $21.4 million if they adopted the owners’ proposal.
Prince Fielder would become the highest paid player in MLB according to the owners’ proposal, receiving an insurance payout through the Texas Rangers and a final payment of $6 million from the Tigers. Miguel Cabrera and Jordan Zimmermann would receive salaries of under $5 million.
One report from The Athletic suggested that the players could agree to play more games and receive 50 percent of their contracted salaries (sound familiar?). Agent Scott Boras blasted the owners’ proposal, suggesting that the owners want the players to bail them out of their payments due on real estate investments. Others have suggested that the owners have a cash flow problem, not necessarily related to baseball expenses, rather than a revenue problem. In that case, a deferment of salaries would seem to be a more appropriate remedy.
The bottom line is that Tigers are not going to lose money by reason of having to meet a payroll of $50 million. Even if local and national revenue were cut in half, there is more than enough there to meet that reduced payroll. If the owners want to cry poverty, they need to open the books and demonstrate how playing games will cost them money. Otherwise, pay the players and get the season underway.