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MLB’s proposal is actually a $1 billion pay cut from prorated salaries

Major League Baseball offered a $1 billion pay cut masked as a system where higher paid players take larger cuts. It is no surprise that the sliding scale proposal was shot down as soon as it was offered.

MLB: 2019 Spring Training Media Days Jayne Kamin-Oncea-USA TODAY Sports

On Tuesday, Major League Baseball, following weeks of a ‘will they, won’t they’ that would make Grey’s Anatomy proud, finally offered up an economic proposal to the Players’ Association. This marked the culmination of a two-week period where owners, after internally approving a 50-50 revenue split with the players in March, stopped leaking plans/information to the public long enough to send a copy to MLBPA. For now, owners have moved off their 50-50 revenue sharing idea, as well as their proposal for deferrals. Their initial proposal to MLBPA turned out to be one of their newest ideas: a sliding scale salary where higher paid players face higher cuts than lower paid players.

According to Jeff Passan, the sliding scale works like this:

That’s right, folks; the owners produced a plan where higher paid players accept losses just so that the lower paid players do not have to. The owners, worth billions of dollars, created a proposal wherein the richer players pay more into the system than lower paid players. In arguing why the players (not billionaires) should take more of a financial hit, the owners (are billionaires) proposed a system of progressive taxation. If this seems like a cosmic lack of self-awareness, well, that’s because it is.

But self-awareness would lead to learning a lesson, something MLB owners have never had a desire to do. Instead, they want to double-down on becoming some version of an evil cartoon caricature where the schemes are always transparent, the goals are always obvious, and the worst-case is always thwarted. If you do not believe me, let’s break down the actual financials of this proposal.

I used two data sources (Cots contracts and Spotrac player salaries) to run the numbers through the proposed sliding scale. Both data sources contain projected 2020 salaries, although Cots does not contain any player making below $600,000. Regardless, think of the numbers coming from Spotrac as a closer representation of the truth, while the numbers coming from Cots should serve as a minimum. All told, the numbers themselves are almost unbelievable:

Total Player Salary

Salary Level Spotrac Cots
Salary Level Spotrac Cots
Full $4,043,413,092 $3,789,937,474
Prorated $2,046,665,886 $1,918,363,413
Proposed $966,775,659 $868,834,242.40

Major League Baseball proposed a system which lowered full player salaries from $4.04 billion to $0.97 billion — a truly staggering cut. The sliding scale proposal also represented a substantial cut from prorated salaries, which would go from $2.05 billion to $0.97 billion. Both Cots and Spotrac data describe a scenario where the owners aimed to institute a 50+ percent cut from the prorated salaries agreed to in March:

Pay cut amounts

Salary Level Spotrac Cots
Salary Level Spotrac Cots
Total Cut $3,076,637,433 $2,921,103,232
Total Cut (from prorated) $1,079,890,227 $1,049,529,170
Cut Pct (from Overall) -76.09% -77.08%
Cut Pct (from prorated) -52.76% -54.71%
Per team Cut $35,996,340.90 $34,984,305.68

If it were not so nefarious and blatantly immoral, having this proposal be the culmination of a month-worth of saber rattling might almost be comical. Here we are, amid one of the worst time periods many of us have faced in our lifetimes, and the owners have refused to break character, even if for a minute. Commitment to the bit is one thing, but committing to be a cartoonish caricature of rampant, unchecked capitalism is another.

Consider for a moment the figures MLB presented to MLBPA (released through the Associated Press), where MLB projected to see significant, deep revenue losses. In those figures, the players were projected to receive the full prorated salary, over an 82-game season. You know, the salary both sides agreed to in March. When we aggregate salary cuts (using Spotrac data) and line them up against what each MLB team projected to lose, in terms of EBITDA, one thing is clear – the cuts do not actually change much:

Salary cuts don’t temper losses

Team Losses prorated Losses new salary Losses no salary
Team Losses prorated Losses new salary Losses no salary
NYY ($312,000,000) ($247,100,451) ($198,514,410)
LAA ($110,000,000) ($58,175,949) ($21,044,252)
COL ($134,000,000) ($91,999,574) ($57,653,276)
HOU ($148,000,000) ($82,444,436) ($36,094,111)
DET ($84,000,000) ($58,321,249) ($35,561,790)
SD ($172,000,000) ($134,213,600) ($101,895,720)
CHC ($201,000,000) ($148,492,169) ($106,578,012)
LAD ($232,000,000) ($166,392,688) ($117,962,549)
PHI ($159,000,000) ($105,844,983) ($62,765,680)
STL ($136,000,000) ($91,381,146) ($54,316,173)
CIN ($130,000,000) ($93,073,939) ($59,109,647)
BOS ($199,000,000) ($150,095,366) ($110,031,049)
WAS ($166,000,000) ($116,410,619) ($77,403,160)
SF ($188,000,000) ($148,004,634) ($114,026,432)
ATL ($161,000,000) ($120,319,477) ($83,722,656)
MIN ($149,000,000) ($113,745,905) ($77,171,628)
TEX ($128,000,000) ($91,843,318) ($56,679,235)
NYM ($214,000,000) ($160,428,846) ($116,162,694)
TOR ($139,000,000) ($116,579,305) ($92,261,533)
SEA ($113,000,000) ($95,784,919) ($76,352,277)
CHW ($127,000,000) ($94,650,497) ($61,559,445)
CLE ($132,000,000) ($108,996,174) ($84,482,096)
ARI ($107,000,000) ($77,955,851) ($45,982,957)
BAL ($90,000,000) ($76,125,252) ($59,359,241)
OAK ($115,000,000) ($93,252,077) ($67,882,935)
MIL ($139,000,000) ($116,423,889) ($90,743,544)
KC ($113,000,000) ($93,496,059) ($71,722,124)
TB ($91,000,000) ($76,938,915) ($57,976,795)
PIT ($91,000,000) ($80,092,453) ($61,959,346)
MIA ($126,000,000) ($117,526,033) ($102,359,349)

The final column here is the scenario where players get paid nothing for an 82-game season. This scenario will not happen, but it serves to reinforce the point. Using MLB’s own numbers and taking them at face value (you should not, but bear with me), each team is destined for significant financial losses in an 82-game season. No matter what the additional salary cuts could be — 50, 75, or 100 percent – no amount is going to help teams turn positive profits in 2020. Put another way, there is nothing the players can give that would make a dent.

Yet, in this case, an analysis of EBITDA losses only works if you do something ill-advised — take the owners at face value. As I alluded to before, there is no reason to do that. Excluded from the numbers MLB presented to MLBPA are the many sources of revenue that baseball owners have used baseball funds to cultivate for decades. These investment vehicles help temper financial losses in a half-season, particularly a half-season without fans. They are also entirely inaccessible to the MLBPA.

In truth, this was never a serious offer. It was never an offer that MLB expected MLBPA to accept. It was not even one of those really bad initial offers you get from someone who just googled ‘how to bargain’ and followed step 1. This offer was part union busting tactic, part PR move — a ridiculous concoction where the subtext is truly all that matters.

The part union breaking tactic reveals itself when you consider the spread in salary among MLBPA. At the top, a small group of players make upwards of $25 million. At the bottom, most of the pre-arbitration eligible players make MLB minimum. The idea behind the offer was to force the richer, smaller group of players into a bind where preservation of the deal already in place creates tension within the union itself. The goal was to make the richer players look like they are defending their own salaries at the expense of the players who make much less. In this part, it is the owners who are willing to take losses, but it is the richest players who want no losses.

The part PR move works in the same manner. Players at the top-end of the scale who call the proposal terrible are to be painted as greedy and acting in a self-preserving manner. The fans are now provided with a target for all that disappointment and frustration about a season that never happened. In this part, it is the owners who are willing to take losses, but it is those greedy players (particularly the rich ones) who want no losses.

The goal of this offer was to paint the MLBPA as a roadblock to another season of baseball. To offer up MLB’s most well-known and widely loved players as greedy and selfish, unable to play a child’s game at a smaller salary. The goal of this proposal was to launch a bad-faith attack on the very reason MLB exists in the first place — the players.

Quite obviously, this proposal will fail. And it should. If MLB is going to keep all the profits when things are going great, they should own the losses when things are bad. It is this sticking point that the owners have refused to acknowledge, and it is exactly this sticking point that will ensure MLB won’t return in 2020. When considering the proposed additional pay cuts, one thing is clear: the players stand to lose much more than the owners stand to gain.

Shawn Brody is a graduate student and contributor for Beyond the Box Score. You can find him on Twitter @ShawnBrody, where he likes to yell about New York Mets.