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Monday, July 13, 2020

Pay Ball! It’s Millionaires vs Billionaires in MLB

The battle of Millionaires vs Billionaires has happened every few years in sports since the explosion of major sports salaries in the 1990’s. Players are angry they aren’t getting enough of the revenue pie and owners are mad because the players want more of that revenue pie. This base issue is not only what drives sports but it also drives change.  The issue of money is what made the owners go to a 26-man roster but made the players give up a 40-man roster on September 1st. Today, I don’t intend to dive into the CBA of the MLB.  I am not here to decide what’s wrong or who’s right for a few reasons. I am not a lawyer, an owner or a player. What I will be going through is a fan’s perspective and what has mystified me for years.

Fans siding with owners over players makes no sense, none at all. I will make this as simple as I can before I go into the specifics. Your boss walks up to you and asks you to work full hours next week for half pay. You agree. Your boss then comes back and asks you to take another pay cut; then walks away without discussion and tells the world you agreed to a second pay cut. You love your job but really don’t think it is right for you or your family to work for that little pay. The outside world does not understand your situation.  It only hears you love your job and tells you to work for the love of the job, not the money.  

It seems a little tone deaf to tell someone to do the same work for less than half the pay, right? Well, this is what the MLB and its owners want to do to the players. The players (MLBPA) and owners had already agreed to half pay because the season was going to be half the games. Then, the owners came back and asked for another pay cut. The fans’ reaction and some politicians’ (J.B. Pritzker, I’m looking at you) complained that these Millionaires were being selfish and already make more money than most regular people will see in their lifetimes. While the part about making lots of money is true, “billionaire” is more than “millionaire” and the Billionaire owners make way more money than the players. 

To understand why the notion of paying players far less or why the whining of the major sports owners is ridiculous, let’s look at how MLB teams make money. The gate (or ticket sales) is only a small portion of revenue for an MLB team. Some of the other forms of income like jersey sales, sponsorships and TV deals make up a larger portion of revenue. 

An example of this is the current crop of national TV deals (Fox, TBS, ESPN) that have the league making 1.5 billion dollars a year. For reference, this is double what the last TV contacts were. Since the MLB has revenue sharing this will give a healthy hunk to teams.  In 2014, each baseball team got somewhere in the neighborhood of fifty million dollars in national tv deal revenue. Let’s simplify  things by saying this is the same today. Keep in mind that there is a small variance for size of market because not every team gets the same revenue share money. For this shortened season, 10 MLB teams will cover 100% of their player payroll costs just on the national TV money.  Which, by the way, has a massive bump coming in the next two years. 

Then there is local TV revenue. The White Sox, for example, make about 750,000 dollars a game on NBCSN Chicago. Since most all of the games for the Sox will air on NBCSN this coming season, we can estimate 61.5 million dollars for the 82-game season that the owners wanted. This is about average for local TV deals.  So now, we have TV money as 111.5 million dollars per team. That means nearly all of MLB teams will be making player payroll with just local and national TV revenue.  That 111.5 million dollars does not count jersey sales, sponsorships or shared revenue.

Shared revenue is estimated to be 120 million dollars for a full year, 60 million dollars for a half year. TV and shared revenue is 171.5 million dollars for 82 games. If the baseball players agreed to take a cut of 50% (the highest payroll in baseball is the NY Yankees at 250 million dollars,half is 125), every MLB team covered player salaries, and then some, with just TV revenues and owner-mandated revenue sharing.  With players salaries covered, they still make additional money on merchandise sales, sponsorships and miscellaneous revenues.  A nice profit remains after player salaries and yet, owners still want to cut the player salaries more?

Something else fans must remember is the potential risk these players face as several have pointed out. For example, Blake Snell could blow his arm out, need tommy john surgery and damage his value heading into free agency for a quarter of what he would normally make. This isn’t right, not in a league with a union.  This is what unions are designed to protect against. 

Another thing I consider when thinking about supporting players versus owners is the lifestyle. Many players have large investments for their future and live on current salaries.  They may not have much readily available cash because they are trying to grow their dollars for the future.  This financial planning is necessary because the average baseball player’s career ends well before age 40 or they may sustain a career-ending injury early. Also, the same way someone with a 100,000 dollar income will have a nicer place than a 10,000 dollar income, these players have homes to maintain and lives to uphold.

The owners have one course of action to get the players to crumble and give in.  That one course of action is to get fans on their side.  This has never made sense to me in any lockout.  Why would the fans, who are by and large working class themselves, side with the Billionaire owner rather than the Millionaire player?  I realize that, to the working class fan, the Millionaires and the Billionaires all seem to have way more money than they do.  But, the Millionaire players take more physical risks and without them, the Billionaire owners would have no income.

Michael Dion
Michael Dion
Limestone Twp native who recently graduated from Western Illinois Univ - Sports Broadcasting. Winner of national and state play-by-play awards. Sports podcaster, writer, fan, gamer. #GoSox

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