There’s an ongoing battle, so to speak, between Major League Baseball and the Major League Baseball Players Association. While there’s a large focus on the monetary issues – the two sides seem to be about a billion dollars apart in their proposals – the players also want some of the health and safety issues addressed in the plan put forth by Major League Baseball earlier this week.

Tucker Barnhart is the Cincinnati Reds player rep for the union. He was on 107.5 The Fan in the Indianapolis area where he’s from and talked about some of what’s going on. This is from The Indy Star, who quoted Barnhart from the interview:

The union has sent a document request on, I believe, May 13, asking, Hey, we would really like to see these documents, basically asking (the owners) to open their books. Not all the way, but in a way that proves that it is not economically feasibly for them to play without fans in the stands because that’s what they’re talking about. And it took them 10 days to respond.

Not to give documents or anything like that, it took them 10 days to just acknowledge the document request was sent. And then when they did acknowledge, they sent like, three documents — and I’m ballparking here — on roughly a 100-document request. … I don’t understand why, if it is cut and dried for them, if it’s so damaging to play without fans in the stands, why not show your cards?

There was some more to it, and you can click on the link to read more of that particular area if you would like. But Barnhart noted that he thinks baseball will gt it figured out this year and get on the field at some point.

This is much bigger. And that’s why I think that we will. I think everybody involved understands what’s at stake. The long term effects would be terrible if everybody went off and we didn’t, just because of monetary decisions.

But let’s talk a little bit about what Barnhart and the players association is asking about. They want to see more financial documents from the owners to prove what they are saying is accurate. And as of now, the owners have not done that.

Kurt Badenhausen of Forbes.com wrote an article today showing just how much their estimates are for team profits, and let’s note that those numbers don’t include profits from team-owned regional sports networks (19 of the 30 teams are at least partial owners and 18 of the teams got that partial ownership in exchange for lower cash paid for broadcasting rights of baseball games) or any mixed-use developments owned by teams that surround their ballparks. In the last decade Major League Baseball owners have made $8,000,000,000 in profit according to their numbers.

Within the article, Badenhausen notes that teams aren’t sitting on piles of cash from those profits.

With the above spending, owners are not sitting on a pile of cash. They are actually facing a liquidity crisis, as my colleague Mike Ozanian has written. It’s 2008 all over again and each MLB owner owns a dozen condos in the financial crisis but is struggling to meet their monthly mortgage payments.

Here is the big sticking point. The owners may not have cash reserves sitting around to tap into. Of course, they could always get loans, sell some stuff if needed, in order to get them carried over until things get better. This goes back to what Scott Boras said the other day:

The owners’ current problem is a result of the money they borrowed when they purchased their franchises, renovated their stadiums or developed land around their ballparks. This type of financing is allowed and encouraged by MLB because it has resulted in significant franchise valuations.

Owners now want players to take additional pay cuts to help them pay these loans. They want a bailout. They are not offering players a share of the stadiums, ballpark villages or the club itself, even though salary reductions would help owners pay for these valuable franchise assets. These billionaires want the money for free. No bank would do that. Banks demand loans be repaid with interest. Players should be entitled to the same respect.

We’re going to see how this plays out. While Tucker Barnhart isn’t at the very top of the players association, as a team representative, he’s nowhere near the bottom, either. That he’s confident that the season will be played is probably good if you want to see baseball this year.

Still, there’s a very large gap between what the players and the owners are proposing to each other right now. It’s basically $33,000,000 per team if we break it down evenly. But that’s not how it works. Some teams are claiming that they would lose a lot more money than others would. It’s going to be real interesting to see how things progress in the next few days. Hold on tight, it may be a bumpy ride.

16 Responses

  1. ClevelandRedsFan

    Whether they should or not, MLB owners are not going to open up their books. No business wants to do that, especially ones that are in the immediate spotlight.

    Owners know if they open up the books to take a short-term win in negotiations this year, they will then arm the MLBPA with information, which will be used in future negotiations and over time it will hurt them.

    On top of that, owners know all the information will be leaked. Can you imagine the average fan knowing the profits of each team? How is that going to impact perception when buying expensive tickets?

    At the end of the day, this may be a game to the fans, and even some players, but it’s a business to the owners. Opening the books is not a savvy business move. Not playing a 2020 season is a better move.

    So if MLBPA is refusing to negotiate until owners completely open up the books, then owners need a new proposal. At that point, MLBPA will know the owners’ reports are bogus. That will then hurt owners once again in the long-term.

    Players are more likely to focus on the short-term season than owners. Whether we agree or not, MLB in 2020 only happens if players accept some type of pay cut or revenue sharing. Deferred payments may be a compromise. However, they are in the same boat as the owners. If they cave this year over the fear of not playing at all, owners can steamroll them in the next CBA.

    Welp…see you all next year.

    • RedNat

      I agree to an extent. I do think though if there is no 2020 season baseball really becomes a fringe sport. I am talking like in between wnba and boxing on the espn menu. Just think how bad the 1994 strike hurt the game. Baseball dropped from number 1 to number 3 in American popularity overnight And let’s face it, we basically needed the steroid era to stabilize the number 3 position.
      A strike this year would really drop baseball out of the top 10 in popularity. And i actually think the owners realize this more than the players do. I believe they will have no problem using replacement players if they have to.

      I agree with Tucker there will be reds baseball this year. But the real question is will tucker be behind the plate or Hendrick Clemintina?

      • Doug Gray

        Baseball hasn’t been #1 since the 80’s.

      • #Disgusted

        I hope the owners do use replacements. Get players who want to play because they love the game. Pay them a fair wage and have fun. The overpaid, big contract guys can stay home and count their millions.

      • ClevelandRedsFan

        Here is a Gallup survey on favorite sport to watch: https://news.gallup.com/poll/4735/sports.aspx

        Without an MLB season in 2020 (and fears of a strike after the 2021 CBA ends), soccer will definitely be more popular than baseball. The optics alone on owners vs. MLBPA is hurting its popularity.

        MLB really had a chance to be the first sport to come back and potentially only major sport on TV. That could have boosted popularity and benefited both parties. Buuuuut….money happened.

        Editorializing now: I blame the owners for waiting so long to get a proposal to players and starting the negotiations with a ridiculous cut.

  2. CFD3000

    The optics are pretty bad right now. I’m more on the “owners need to compromise more” side of the argument, but both sides need to move to make this happen, for many reasons. In the end I do hope Barnhart is right and we see real baseball in 2020.

  3. #Disgusted

    I’m beginning to have my doubts on there being a 2020 season. Crybaby billionaires and spoiled millionaires fighting over money while millions are out of work. Either play because you love the game or get out.

      • #Disgusted

        Not for free. I blame both sides. But players should be willing to help out. So should owners. The fact that they are arguing about money, again, just ticks most fans off.
        How about the owners offer a share of the club with the players? Like stock options? If players were part of ownership, maybe they would see things differently.

  4. Colorado Red

    If the owners are really hurting, they should open the books.
    If the TV revenue is full (and not prorated),. then the players so deal.
    If the TV revenue is pro-rated, and other costs are full, then compromise.
    Note to both side, neither will read this post. DO NOT KILL THE GOOSE that laid the golden egg.
    For certain reason, I quit watching football, and longer miss it, will never go back.
    Please do not make the same thing happen with baseball.

  5. Sliotar

    @ClevelandRedsFan wrote …

    “Players are more likely to focus on the short-term season than owners. Whether we agree or not, MLB in 2020 only happens if players accept some type of pay cut or revenue sharing. Deferred payments may be a compromise. However, they are in the same boat as the owners. If they cave this year over the fear of not playing at all, owners can steamroll them in the next CBA.”

    One of the best paragraphs written by anyone here during this whole mess, IMO.

    Sums up the Players’ tricky situation, which the MLBPA has mishandled and misplayed throughout all of 2020.

    Kudos.

    • ClevelandRedsFan

      IMO: The best thing players can do is come back to the owners and offer:

      1. 10% pay reduction across the board for all players. Owners can defer up to an additional 10% of player salaries with interest, if NO fans can attend games. No sliding scale nonsense.
      2. Full prorated salaries if fans can attend games. Some states are discussing allowing limited attendance around 25%. This would give players a different pay per game. This is all or nothing. So if half the teams can have fans, owners need to figure out how to share that revenue.
      3. 100 game season, effectively giving MLB players more of their overall salaries while “playing ball with owners” on the salary reduction. This will be the biggest obstacle as you’re then extending the season by three weeks. I love the idea of 7-inning double headers once a week.
      4. Full pro-rated salaries if fans can attend the post-season. This would be a huge shared revenue boost for owners. Owners would then have to retroactively increase players’ pay if fans can attend the postseason.
      5. Minor adjustments for future negotiations, such as universal DH and no more service time manipulation.

      I believe that would be a legitimate counter-offer. Owners will have no choice but to accept or make another counter offer. Likely the latter. If owners out-right reject it, then ALL of the blame for a lost 2020 season will be on them. The will be the “bad guys” in the public eye. It’s very possible that players, with increased games played, can get their half-season salaries and owners can get their per game reduction.

      The longer Tony Clark and players wait, the more money they’re costing themselves.

      • Doug Gray

        Unfortunately there’s a lot of contract law issues that come into play with the players accepting, or even proposing anything but prorated salaries and if they do so, it crushes them. I’m not a lawyer, so I can’t explain it very well – but that’s what the labor lawyers are actually saying.

  6. Sliotar

    Tucker Barnhart’s comments make for good material for all of us at RLN … but I can’t imagine it helps with negotiations.

    Based on his comments, the owners have already shown that they will “drag their heels” over sharing financial data.

    The clock is ticking every day to start Spring Training 2 and try and get a season in.

    Is Barnhart going to recommend to his Reds teammates, “We have a deal for 2020, but the owners’ books can’t be fully opened … let’s vote to strike and not play?”

    Doesn’t feel like it, IMO.

  7. TR

    Baseball, and all concerned, are not helping their standing in the sports hierarchy as days go by without something definite regarding a 2020 season. At least a neat soccer stadium seems to be going up in the West End and FC Cincinnati has drawn good crowds for a medium-sized Midwestern town in comparison to much larger soccer cities.

  8. BK

    Kurt Badenhausen clarified this later in his article, but the $8B in profits is quite misleading. The $8B he refers to is Earnings Before Interest, Taxes, Depreciation and Amortization or what is more commonly referred to as “operating income.” Taxes alone would take a huge chunk of the $8B (baseball writers are quick to point this out when discussing player salaries). Interest on capital improvements such as stadiums and some of the other investments would also take another chunk from the profits. “Net income/loss” is actual profit or loss. Operating income is a useful tool for understanding how much cash a company is generating and is especially useful in comparing the health of similar companies. In other words, it’s an excellent tool for evaluating how much one ML franchise is worth compared to another which is what Forbes does in their annual valuation. It can be quite misleading as a stand-alone metric.

    The quote as presented above, “With the above spending, owners are not sitting on a pile of cash. They are actually facing a liquidity crisis, as my colleague Mike Ozanian has written. It’s 2008 all over again and each MLB owner owns a dozen condos in the financial crisis but is struggling to meet their monthly mortgage payments.” is very misleading.

    Here’s the link to Ozanian article … there’s no mention of non-baseball related investing mentioned:

    https://www.forbes.com/sites/mikeozanian/2020/05/28/memo-to-max-scherzer-much-of-your-money-has-already-been-spent/#1857518c5ea2

    Investing in stadiums and areas around ML ballparks builds total baseball revenues. Take a look at the St. Louis Cardinals that rebuilt Busch Stadium and developed a block of downtown property to have sightlines of the stadium. When I lived near St. Louis, it was reported that the development, just outside the stadium produced $20M in profit. The Cardinals have consistently maintained a payroll far above their relative market size. Likewise, their valuation is far better many teams with bigger markets. So of course teams are trying to emulate the Cardinals. There will be far more money to go around if teams do. No one is reporting MLB owners are diverting earnings to buy condos. I think his point is that it’s tough to unload large assets during a significant downturn, which is true.

    MLB is just like so many other companies right now. The problem is not with their business model, the problem is they are unable to generate cash flow to cover expenses for what may be a one to two year economic downturn caused by a pandemic.

    I think it’s fair to argue that a $10B+ revenue generating business shouldn’t be so heavily in debt, but that can’t be fixed right now.