MLB owners and players must sort out differences for the good of the game

Many people will recall the cancelled 1994 MLB season when players went on strike, cancelling the whole post season. The reason for that strike centered on salaries and the players' unwillingness to accept a salary cap and team owners unwilling to proceed without one. Both sides were entrenched on their positions and the season went up in flames. In the end the fans blamed both parties and attendance at games and baseball TV viewership suffered for years following. Estimates indicated that the two sides lost almost a billion dollars in revenue due to their stubbornness.

We now face a new situation that could once again cancel the Major League Baseball season. The dispute this time is also about money and like in 1994, it is almost certain that the fans will blame both sides if a season isn't played and like before they will almost certainly stay away for years to come.

What's happened so far

For those unfamiliar with the current situation, on March 26th, the day MLB was supposed to start its regular season, the league owners and the Major League Baseball Player's Association (MLBPA) came to an agreement that if fewer than 162 games were played in 2020 then players would receive prorated salaries based on the number of games played during the year. With the uncertainty of the Coronavirus the owners also agreed to allow players to bank service time if fewer games or even no games were played in 2020. That concession meant that players would not lose their free agent eligibility if they had to sit out the year for any reason. That was March.

Within a month the realities of how dangerous COVID-19 was created a whole new reality. Prior to the World Health Organization declaring COVID-19 a pandemic most people in the United States, including the government, believed the Coronavirus was just a bad flu that would eventually go away, but after thousands were becoming infected daily and deaths threatened to overwhelm the hospital system, it was evident that this was no flu. The Coronavirus was highly contagious and could be easily spread through close contact, so almost every North American sports league felt they had no choice but to shut down their seasons until they could learn more about the new disease and decide how to safely proceed. One realization was that any resumption or start of a new season had to include strict infection control, including the taking of temperatures, wearing protective personal equipment and playing without fans. Disease experts like Dr. Fauci even reiterated that comment on various sports shows.

Realizing that the games would have to be played without fans and could also be limited to certain states, MLB commissioner Rob Manfred announced to the players that it could not honor the previous agreement because their revenues would be slashed without ticket and concession sales. Consequently, the owners proposed an 82-game schedule, including playoffs, and a 50-50 revenue sharing plan between the owners and players. The MLBPA immediately shot that proposal down since revenues would be paltry without fans in attendance and insisted on prorated salaries as was agreed to in March. The owners, however, said that under that plan they would lose money and would not be held to an unrealistic salary scheme. To add fuel to the fire, the baseball owners recently proposed a sliding scale for salaries whereby players making the most would have their salary levels cut dramatically, while the players making the least would lose the least. So, players making over $30 million a year would get about 1/4 of their salaries while those making the minimum would still get their full $500,000 salary. The logic for the owners is that those who can least afford the salary losses should be punished the least. As one baseball writer stated on social media "why should a person at McDonalds making minimum wage take a similar pay cut to the CEO of McDonalds?" The players, on the other hand, have stated that they are the ones at risk of injury, or even catching COVID-19, and it does not make sense for them to risk life and limb for a paltry salary. MLBPA even said the sliding scale proposal was so ludicrous they wouldn’t even officially respond to it. The union also said it wanted proof from the owners, including financial records, to prove why the union should even consider additional pay cuts.

Season slipping away

In the meantime, the clock keeps ticking and the opportunity to start the baseball season is dwindling. Players want a guaranteed 100+ game schedule with full prorated salaries, while owners are now countering with a 50 game schedule where teams only play teams within their division and all games are played at a few hub cities to cut down on travel. If only 50 games were played, then players would earn even less than the proposed sliding scale. It appears the league wants to start the season in July with a shortened spring training, end in late September and play a shortened playoff. And reports from ESPN’s Buster Olney suggested that some owners are willing to scrap the season and may even be hoping for a cancelled season since they know they won’t make money without fans. Avoiding paying player salaries will also mean they can suspend contributions to the player’s pension plans saving the owners even more money.

Where we are now 

The players and owners again are at a standstill like they were in 1994, but this time fans may be indifferent and almost certainly will be less forgiving if the season is cancelled. Over 108,000 people are dead from COVID-19 in the United States and almost 7,400 have died in Canada. People have been in lockdowns for months and unemployment in both countries are at record levels. Many Americans and Canadians are relying on government welfare to sustain them and small businesses are relying on loans and subsidies to help them survive. Industries like airlines, hotels and some major department stores are on life support and front line health care workers go into the hospitals to work not knowing if they will be struck with the disease next and possibly pass it on to their loved ones. To make matters worse, the United States is now in turmoil after the death of George Floyd in Minneapolis at the hands of police officers, and a new anger over systemic racial discrimination has led to rioting, looting, violence and the use of the National Guard in many cities. Plus, the President of the United States has effectively declared civil war by threatening to use the military to quash any protests, whether governors want it or not. And many health experts have warned that the lack of social distancing or mask wearing at the protests will almost certainly cause a second wave of the Coronavirus. Thus, for most people, including baseball fans, whether billionaire owners lose a few dollars or whether multi-millionaire players have to give up some salary is irrelevant. Undoubtedly many fans would love to see some baseball being played to help them refocus some of their financial concerns and anger, but if it doesn’t happen, they have far bigger concerns and won’t lose sleep because Mike Trout isn’t getting his $30 million for the year or Tom Ricketts has to cancel his order for a new diamond backscratcher.

As well, if baseball is not played it's not like fans won't have other options. NASCAR has restarted its season and Indy car begins next week. Golf is scheduled to restart soon and as for team sports, the NHL and NBA seem to have plans in the works to play over the summer without fans. It seems they were able to work out their differences and come up with a solution that satisfies the players and owners. Plus, the start of the NFL season isn’t that far off. So, sports fans are not going to be without options and in the end the only ones who will lose if a MLB season is not played are the owners and players themselves.

What is the solution?

It seems to depend on who you ask. The player's most recent concession has been to defer salaries so that owners can pay them their full prorated salaries at a later date, but the owners are uninterested in that proposal. There has also been some suggestions that the league will want to revisit the integrity fee and force sportsbooks to pay the leagues a percentage of their revenues, at least during the pandemic, to help offset some of their costs. And they also talked about renegotiating fees with FanDuel and DraftKings to force them to provide more money from fantasy sports to help pay the salaries. But it's doubtful that any of those companies will agree to do so, not to mention that casinos and the fantasy sports sites have been hit hard during the pandemic as well.

Regardless of what baseball decides to do, the worst solution would be to cancel the season. Unlike 1994, doing so could ultimately lead to the death of Major League Baseball.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!