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The tune may change but the song never ends

Now that there are losses to be had, they must go around to all parties?

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MLB Opening Day postponed Due To Coronavirus Photo by Jonathan Daniel/Getty Images

If you have ever discussed the economics of Major League Baseball with someone, you have likely fielded this general question: how can you support players getting paid millions when so many people do not get paid adequate wages? Sometimes it gets deployed as a ‘gotcha.’ Much more often, I think, it is posed in good faith. Why do athletes deserve to be paid so much?

My response to this question is always the same; in the context of the current system, the trade-off is not ‘if players get less, then teachers/firefighters/etc. get more’. The trade-off in the current system is ‘if players get less, then owners get more’. In Major League Baseball, specifically, the owners are nothing more than glorified investors who sit and watch their investments appreciate. The players deserve the fruits of their labor, and the owners do not deserve more.

In truth, this fight is one that underpins the very fabric of our society. Suppliers of labor vs. owners of capital.

Without suppliers of labor, MLB would have no product to sell. Without the owners? Players could form some type of a co-op, the public sector could nationalize the league, etc. Without the owners, the show could still go on, albeit at a (likely) smaller financial scale.

It is important to understand that the role of an ownership group in Major League Baseball is to serve as an investor. They are there to make money and get out when their investment horizon is met.

They did not start their team, and they appoint executives who run the day-to-day operations. Outside of some controlling owners, many are nothing more than investors with a title that tells the world their input for their regional sports team actually matters.

The non-financial part of the job includes hanging around professional athletes that must treat you with respect, being the first recipient of every award the team wins, and facing the public whenever the PR department says so. The title tells the world that you are, in fact, different from the people who share their sports-related thoughts on talk radio. You know, the folks who yell into the void without making an annualized return on their investment higher than that of the S&P 500. In terms of day-to-day responsibilities, that seems to be the brunt of it.

The financial side of the job entails spending ungodly sums of money and making even ungodlier sums of money. For almost a decade, deploying capital in this manner has allowed teams to cash in on large annual operating incomes and rapidly increasing team values. Some owners sold their teams and cashed out. Some used their cash to expand into different revenue streams outside the purview of revenue sharing calculations. In deploying capital, teams have hidden behind the concept of risk to justify pocketing the large returns — all the while consistently working to depress the players’ share of revenue.

The owners of capital have pocketed all the money from the sale of a proprietary technology built on and for baseball. The owners of capital have pocketed all the money tied to real estate investments, which make money specifically because of their proximity to the baseball parks that many municipalities paid for. The owners of capital have pocketed all the profit from Regional Sports Networks (RSNs) where they hold a stake. The owners of capital have pocketed all the billions of dollars that come from selling a team and/or RSN.

At the same time, the owners of capital hold an anti-trust exemption. They get to pay minor leaguers the equivalent of nothing. They get publicly funded stadiums which are upkept by municipalities. Above all, they know that if they lose too much money, the league will bail them out. None of this is new but, so long as the games continued, it worked to ensure the owners of capital faced almost no financial risk.

The entire theoretical underpinning for why owners have exorbitantly, obnoxiously used Major League Baseball to expand their riches is the concept that, at any given time, they could potentially lose money. But with all the benefits and none of the negatives, owners never thought it would be their investment horizon where the hit occurred. The game of hot potato was never supposed to end.

Now, at the end of a decade where owners made ridiculous financial gains, they refuse to accept any associated losses. The truth is that the owners never planned to see the other side of the risk scenario anyway. Why? Because no large company in America has ever planned to see the other side of the risk scenario. Risk, after all, is only useful for owners on the way up. On the way down? Well, that is a responsibility everyone must share.

Now that there are losses to be had, they must go around. For owners, this cannot be a risk story. It must be a story of mutual sacrifice on the part of stakeholders, not shareholders.

If history has taught us anything, it is that those in power never let a good tragedy go to waste. It is exactly in these moments, when memories of the past give way to the priorities of the present, that bad faith actors shine. In moments of tragedy and hardship, it is easy to forget about the prior context of a situation in favor of a solution for the problems we have right now. Seeing an opportunity to reinvent themselves, this group of MLB owners has moved swiftly to present themselves as having all the solutions to all the problems.

In this moment, owners are no longer a caricature of what Scrooge McDuck dreams he could become. They are not a group of people who have spent decades exerting significant downward pressure on the players’ cut of revenue. They certainly did not keep all the profits that came from expanding into revenue streams the players were locked out of. They are now, instead, just a bunch of scrappy Mom-And-Pop’s having to deal with a union full of selfish, overpaid athletes. You see, owners are the ones who truly care about baseball! After all, the owners just want to bring baseball back for the folks they relate to the most, the Real American Worker, or so the story goes. After all, if the owners are accepting losses, the players must, too.

Forget that ‘baseball is a business’ stuff. Baseball is a staple of American life! Baseball is needed to get things Back To Normal. Normal not for the sake of the owners, no! For the sake of America itself. That is why players must accept even more drastic pay cuts than the pro-rated salary cut they agreed to at the end of March. Oh, and if the players do not agree to take one for the team? Well, team executives have already made it very clear that owners will pass the losses to players one way or another. Clearly this is an example of the owners of capital loving baseball, not unimaginable sums of money, so darn much!

Owners do not just see the opportunity to recoup potential losses, they see the opportunity to work through some of their long-standing priorities before having to bargain with the union following the 2021 season. The idea that the owners are pushing new ideas tied to MLB’s survival and not, say, a continued and documented history of aggression toward labor is…naïve, at best. The Players’ Association clearly feels that the proposed 50-50 revenue-split is a disingenuous way of enacting a hard salary cap. Can you blame the union? To accept the owners at face value is to willfully ignore just how much time and effort owners have spent in the last 20 years chipping away at the players’ share of league revenues.

The one major through-line of MLB’s current financial situation is that the owners, exercising remarkable class solidarity, are ruthless opportunists. No matter how much they work to convince you otherwise, owners are not just going to walk back the concessions they win after the pandemic passes. That is because changing the setting and the topic does not change the overarching goal: hoard capital so that others cannot. Anyone who has followed Major League Baseball (or American life, for that matter) for the past decade knows that capital has nothing but an insatiable desire for more.

In 2018, BtBS-alum Emma Baccellieri wrote about MLB’s assault on the players’ share of revenue — falling from 56 percent in the early 2000s to around 40 percent in 2017. At the Ringer, Ben Lindbergh wrote a retort soon after, using league data that found the players’ share to have fallen around 1 percentage point (51 to 50 percent) from 2010 to 2017. Lindbergh also cited findings from MLB’s Blue Ribbon Panel in 2000 that showed, before benefits, “…annual shares [ranged] from 51.3 percent to 54.0 percent from 1996 to 1999”, as well as a SportsBusiness Journal article reporting that “…the players’ share peaked in 2003 at 63 percent”.

At Baseball Prospectus, Rob Mains wrote a review of both, essentially finding that, since 2003, franchise values and team revenues have substantially outgrown player compensation. Chipping away at the players’ share of revenue, as well as enacting a hard salary cap, has been a longstanding goal for MLB owners since the strike in 1994-95. Accepting the owners at face-value also means accepting the premise that all league revenues are accounted for in the current 50-50 revenue-split calculations, which is wholly untrue, and we discussed above.

After years of living in a world with almost no risk and extremely outsized reward, owners do not want it to stop. As part of the game where owners get to reinvent themselves, they are trying their very best to paint the players as greedy, money-hungry oafs. There is a reason that the owners publicly approved their plan before showing the players. There is a reason why MLB is leaking more to the national press than a broken faucet. It is not just happenstance; it is part of the process. In professional sports, labor negotiations are as much a PR battle as anything.

But what is this all for? So that owners can service their debt obligations as they wait for this to pass? For much of this public spectacle, the owners (through leaks or people in power with similar class interests) have argued that it is in-fact the players who need to take one for the team. That because the owners of capital are now facing the downside of financial risk, the players must face real, actual risk to help them recoup. All this being done in a country where the testing capacity is lagging. Not to mention the fact that, in MLB’s outlined safety protocols, “…uses of saunas, steam rooms, hydrotherapy pools and cryotherapy chambers are prohibited”, which means players are going to have less access to equipment they use to help lower the risk of injury and stay physically healthy for a long, grueling season.

Not only is this morally wrong, it goes against the very concept of risk that the owners championed to begin with. In trying to entice the players to supply their labor and risk their long-term health, the owners have not offered hazard pay or some other form incentive — they have offered only deeper cuts.

For players, this has always been about baseball and safety. For the owners, none of this is about baseball. None of it is about accepting losses to help heal a struggling nation. None of it is about ensuring total safety for their players and team employees. For owners, both things happen because they must happen to turn the revenue spigot back on. They do not care about the millions of people out of work and struggling during this time. These are millionaires and billionaires with 9 or 10 digits in their net worth. Their main priorities at this moment are to recoup as much money as possible, service debt obligations, and score free PR against MLBPA one year before CBA negotiations.

In this war between suppliers of labor and owners of capital, only one side is ever asked to make sacrifices for the Greater Good. The players never signed up for this, but the owners did. They chose greater leverage, exposure, etc. for the prospect of greater returns — which they kept for themselves. Now that this model has blown up in their face, it is not on the players to bail them out. The owners made this bed, they know what comes next. It is about damn time the owners of capital realize the downside of risk, something they knew was there the entire time. If the profits are theirs, so too should be the losses. If the losses are for everyone, so too should be the profits.