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Let’s Talk About Revenue Sharing

MLB’s revenue sharing proposal is a red herring. Don’t fall for the hype.

Divisional Series - Minnesota Twins v New York Yankees - Game Two Photo by Al Bello/Getty Images

Baseball media is crowing over the “historic” proposal Major League Baseball is expected to shortly provide to players in the hopes of facilitating a 2020 season.

Major League Baseball owners approved a proposal Monday requiring teams to share 50% of their revenue with the Major League Baseball Players Association should plans to play this year proceed, three people with direct knowledge of the proposal told USA TODAY Sports.

The people, who spoke on the condition of anonymity because they were unauthorized to discuss details, said the historic revenue-sharing plan is integral in order to to address revenue losses with an 82-game season being played without fans beginning in July. MLB officials say that teams are expected to lose about 40% of their gross revenue from ticket sales, concessions and parking.

The proposal is expected to be rejected by the players, who are fearful owners would then push to implement a salary cap during negotiations on a new collective bargaining agreement to replace the one that expires Dec. 1, 2021. The players’ compensation has never been tied to club revenues.

Of course, that’s not entirely true. Nevertheless, Rob Manfred is nothing if not a master tactician - he was a labor lawyer, after all - and his full court press created the desired results. Illinois Governor J.B. Pritzker said this at a press conference earlier this week:

I realize that the players have the right to haggle over their salaries, but we do live in a moment where the people of Illinois and the people of the United States deserve to get their pastime back — to watch, anyway, on television. If they’re able to come up with safety precautions, as has been suggested by Major League Baseball, that works, I hope that the players will understand that the people of our United States need them to recognize this is an important part of leisure time that all of us want to have in the summer: to watch them play baseball, to root for our favorite teams. We need that back. We need that normalcy. I must say I’m disappointed in many ways that players are holding out for these very, very high salaries and payments during a time when I think everybody is sacrificing.

And former Rangers, Angels, and Yankees star first baseman Mark Texieira said this on ESPN radio:

Players need to understand that if they turn this deal down and shut the sport down, they’re not making a cent. I would rather make pennies on the dollar and give hope to people and play baseball than not make anything and lose an entire year off their career.”

…[MLBPA executive director Tony Clark] is supposed to stand up for us and our salaries. That being said, this is unprecedented in the history of the Major League Baseball Players’ Association. And every other year, I would stand together and say ‘The owners aren’t going to do this to us and we’re going to get paid a full fare. If we’re going to put ourselves out there, I’m going to get paid a full day’s wage. The problem is that you have people all over the world taking pay cuts, losing their jobs, losing their lives, frontline workers putting their lives at risk. These are unprecedented times. This is the one time that I would advocate for the players accepting a deal like this, a 50-50 split of revenues.”

“It’s not that crazy. If you really think about it and boil it down to what the players usually get from a revenue standpoint, it’s actually lower than 50 percent of the baseball revenue for a full season. So, if I’m a player, I don’t like it. But I’m going to do whatever I have to do to play and that means taking this deal.

But with all due respect to Pritzker and Teixeira, every word of what they just said...is wrong.

Let’s start with the basics: contrary to what’s been reported, this is not the first time that MLB players would be receiving a share of revenues. After all, salaries and benefits are the share of the revenues that players receive. What is new is that owners have never before guaranteed players a minimum share of the revenues, unlike the other major North American mens’ sports.

The NBA’s CBA requires that players receive between 49 and 51 percent of basketball-related income; in the NFL, players are supposed to receive between 47 and 48 percent of revenue. Baseball players’ salaries totaled more than 56 percent of revenue in 2002, when the luxury tax and revenue sharing guidelines were installed; that has cratered to less than 40 percent in the decade and a half since, as Nathaniel Grow noted at FanGraphs back in 2015.

So in the abstract, a guarantee of 50% of the revenue sounds like a coup for the players. Unfortunately, that’s only half the story, as Gabe Lacques writes. MLB owners say they are expecting losses upwards of 40% as a result of the COVID-shortened season, so what they’re really offering with this revenue sharing scheme is a way for players to mitigate their losses through even greater pay cuts, not a boon for players, the culmination of over a decade and a half of a declining share of revenues for players even as revenues themselves have doubled.

So, Major League Baseball recognizes that what they’re offering the players isn’t a revenue-sharing plan - it’s a way to transfer losses to the players in the only year they’re expected to actually absorb any. Moreover, there’s still no evidence that teams will take losses at all - and I suspect that’s one reason that the league has yet to actually present the proposal to players despite heavily publicizing it as some kind of historic concession. In other words, players aren’t haggling over their salaries - they’re trying to avoid being on the hook for the same amount of losses as their billionaire employers.

Then there’s the reality that owners and players already agreed to a prorated salary rate in the March 26 agreement. That the owners left themselves an escape hatch to get out of that commitment doesn’t change what it is that’s occurring here. The players are asking the league to honor its previous commitment, not to pay more than what was agreed upon.

And there’s one other point that needs to be made: the league still hasn’t provided a means of assuring MLB players and their families will be safe. There’s a widespread myth that MLB players are young and healthy, and therefore at low risk due to the virus. That’s simply not the case for many players.

One of those players is Colorado Rockies outfielder David Dahl, whose 2015 spleen removal following an outfield collision in the minors leaves him more susceptible to contracting the virus.

“It’s definitely scary ... my immune system is pretty bad,” Dahl reportedly told Rosenthal. “But I trust the medical experts, the guys with the Rockies, everyone who will be involved that if we do come back and play, we’ll be safe and taking the right precautions to make sure we aren’t at a greater risk.”

Oakland A’s relief pitcher Jake Diekman, who has ulcerative colitis, an autoimmune condition, is concerned about baseball players receiving preferential treatment for coronavirus testing over the health-care workers.

Then there’s the question of how and where the league will obtain sufficient testing.

But from where? In the United States, we still are not testing enough people, and we have a shortage of critical test materials, and there’s still no plan to correct either problem. As such, owners continue to demand players assume the risk of dying from a viral plague, and do so voluntarily whilst taking a pay cut.

So all in all, what Pritzker and Teixeira are saying isn’t just factually and legally wrong on every level - it’s also dangerous to the point of being literally deadly. Pritzker should know better, but he’s unfortunately siding with fellow billionaires over his constituents. Teixeira should also know better, but his attitude is what happens when the MLBPA ignores its future and former members at the cost of solidarity.

Sheryl Ring is a litigation attorney and Legal Director at Open Communities, a non-profit legal aid agency in the Chicago suburbs. You can reach her on twitter at @Ring_Sheryl. The opinions expressed here are solely the author’s. This post is intended for informational purposes only and is not intended as legal advice.