This post has been updated to reflect the MLB Players Association informing MLB on Tuesday, June 23 that players will comply with commissioner Rob Manfred’s imposed outline for a 2020 season.
Despite recent announcements of professional athletes and team personnel testing positive for COVID-19, most professional sports leagues are moving forward with their plans to either restart or start their seasons – including National Basketball Association (NBA), National Hockey League (NHL), Major League Soccer (MLS), National Women’s Soccer League (NWSL) and Women’s National Basketball Association (WNBA).
The lone holdout, Major League Baseball (MLB), will wait a few more days for the MLB Players Association to vote on the most recent 60-game proposal from the league’s commissioner. The MLBPA decided to wait, in part, because a number of teams announced players and personnel tested positive for COVID-19.
Joel Maxcy, PhD, a professor in the LeBow College of Business, spoke with the Drexel News Blog about why the MLB and its players union have struggled to agree on the conditions of playing the 2020 season.
To start, can you give some background on the negotiations between MLB and the MLBPA?
The pressing matter in the current conflict is, given the pandemic, whether and how the 2020 MLB season will be played. And if the season resumes with a shortened schedule, the dispute is basically about the players’ compensation. There is also a long-run issue, as the current collective bargaining agreement (CBA) expires after the 2021 season and the outcome of this battle will set the stage for those negotiations next year. MLB, which through the 1960s-90s had the most contentious union-management relations, has had 25 years of relative labor peace. So, this skirmish is noteworthy because it may lead to a bigger war.
The current issue, not surprisingly, centers on players’ pay for what will be, at best, a much shorter season. Each side is looking for an outcome that maximizes its earnings (players) or profits (owners). In late March, when the league announced the season would be delayed indefinitely due to the pandemic, a contingency agreement was reached that, among other facets, stipulated that MLB players would receive their full 2020 salaries, but prorated for a shortened season of less than the standard 162 games. For example, should the season be cut in half and limited to a schedule of 82 games per team each player would receive 50.6% of their contracted salary for 2020 — a $10 million contract would pay out a little more than $5 million.
By May, it became clear that if the season were restored, games would not resume as normal, but be played without fans in empty stadiums. Likely there would be no home games, but contests would be held at one, or a few, controlled locations as primarily made-for-TV events. Without a live attendance, stadium revenues – mostly the gate (money from tickets sales) and also revenue from concessions, parking, sponsorship signs, etc. – largely cease to exist. Stadium earnings comprise the largest single source of revenue for MLB teams – about 40% of a team’s total revenue, on average. So, games without fans represents a significant loss of income for owners. The owners looked to back out of the March agreement, claiming that deal did not give consideration the possibility of games without fans.
On May 11, owners proposed instead to offer salaries based on a share (50%) of the actual revenue earned this year over an 82-game schedule. The union immediately called foul and formally rejected that proposal on May 21.
Two factors were important for their contempt. First, a charge of “bad faith” bargaining – the March agreement stipulated a salary cut for players and the league was reneging on that with the revenue sharing proposal. Moreover, the union did not trust the owners’ estimated claims of losses given no-attendance games or trust them to fairly report the actual revenue to be shared. Second, a mandated revenue-sharing agreement forms the basis of the salary cap structure that the MLBPA has successfully avoided over its history, and the players did not want an agreement on this to carry over to upcoming CBA discussions.
The owners backed off on revenue sharing and serious negotiations began in late May. The union offered a counter proposal on May 31 of a 114-game schedule and full prorated salaries. Owners first countered with 50 games at full prorated salaries and shortly thereafter with 80 games at 70% of prorated salaries (which amounts to very little difference in player pay).
The union rejected both proposals and threatened to file a labor grievance if the Commissioner ordered the season be played on the owners’ terms. The back-and-forth over the past two weeks has mainly centered on season length (more games is more money for players) and the percent of the prorated share to be paid.
As of June 18, it looks like a settlement of 60-70 games, plus expanded playoffs at full prorated salaries and playoff bonuses is pending. With an agreement, the union will drop its grievance threat.
Updated: On Monday, June 22 the player union’s executive board voted down the league’s offer of a 60-game season with expanded playoffs. The owners then voted unanimously to proceed with the 2020 MLB season under the terms of their March 26 agreement with the MLBPA — with no expanded playoffs but some modifications mostly relating to health and safety protocols given the pandemic. On Tuesday night, the union came to an agreement with the league, on the final details for a return to play a 60-game schedule that will run from from July 24–September 27 and be played in empty stadiums. Playoffs will be the same 10-team format used in the past. Players will receive their full pro rata salary, about 37% of their full-season salaries. The MLBA is expected to file a grievance against the league for not staging as full a season as possible per the March agreement.
Why do you think MLB is struggling to start whereas NBA, NHL and MLS (as well as women’s professional leagues) have all been able to set start dates?
In the case of the NBA and NHL, they are resuming play in seasons that were already 80% completed so it’s a much simpler financial situation to resolve. The players have already been paid about 80% of their salaries, and most are willing to add to that and also want the chance to play for a championship. It is clearly in the owners’ best interest to play the games and collect the TV revenue the playoff tournaments will generate. Also, as indoor sports with fewer players, the logistics of facilitating the events to one location, as the NBA is doing in Orlando, is easier.
As for the MLS, NWSL and WNBA, I would argue that the players are so poorly paid by comparison to MLB, NBA and the NHL (in terms of their relative share of league revenues) that as long as there are broadcasts and TV revenue it is profitable for those leagues to run their seasons and the owners, who have all the leverage, have done all they can to make that happen.
Do you think MLB and the players will come to an agreement to play?
Yes, it was always in both sides’ best interests to settle and unsurprisingly, despite the posturing, they have basically agreed in principal. Now it is just a matter of ironing out the details. If it were only a labor dispute, we would most likely see baseball by late July.
However, the pandemic is threatening to be more serious with reports late last week of several players testing positive for COVID-19 and the immediate closing of training facilities in Florida and Arizona, including the Phillies facility in Clearwater, Florida. That could lead to a further delay or complete postponement of the 2020 season.
The union would file a grievance if the Commissioner unilaterally imposes a short 48-game season, which he can do, at full prorated salaries, given the March agreement. If they agree as expected to 60-70 games full prorated salaries, plus playoffs and accompanying bonuses, the union filing the grievance is very unlikely.
What do you think is the best way forward for both parties and for there to be a season in 2020?
Playing the season in some form is the best outcome, unless the pandemic worsens so that any resumption of play becomes too risky. Playing is surely best for the short-term interests of the players — a full year of lost salary is a big hit — but also for the long-term interests of the game, and therefore the owners.
There is a perception that labor strife turns away fans; if they don’t play games then MLB fans may be turned off, switch to the other sports that do play and not come back. That should matter to owners as their all-important franchise values are predicated on expectations of future financial returns. At the same time, next year’s CBA negotiations are critical and both sides will be motivated to assume the upper hand entering those talks. The labor wars may get nasty anyway.
Media interested in an interview with Maxcy should contact Annie Korp at 215-571-4244 or amk522@drexel.edu.
