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Money Not Covid-19 Getting in the Way of MLB Start

Written by:
Dan Shapiro
Published on:
May/12/2020

We are starting to feel as if there is a strike about to happen when it comes to Major League Baseball.  With Covid-19 postponing the season, money concerns are now playing center stage.


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Jeff Passan of ESPN.com:

This week is going to be ugly. There's no getting around that. Every negotiation starts at opposite ends of a spectrum, and the chasm between Major League Baseball and the MLB Players Association is wide enough that as they navigate a return-to-play agreement to set the stage for the return of professional team sports in America, a fight is almost guaranteed. 

Where these discussions go, and how the principals involved steer them, mark the most consequential moment for the sport since it barely averted a work stoppage in 2002. The coronavirus pandemic is altering the world. Unemployment is historically high. The future is impossible to forecast. And Monday, as MLB owners rubber-stamped the league's proposal that it intends to share with the union in a meeting Tuesday, the conversation focused on money. 

It's primarily the 50-50 split that now makes the season questionable.

Passan notes that the 50-50 split is a non-starter.

In a nutshell the league wants it because they stand to lose a significant amount of money due to the lack of spectators.

Passan offers an illustration of how the slit would negatively affect players.

Forbes estimated that MLB's industrywide revenues in 2019 were $10.7 billion. Club sources have suggested the number was lower but in that ballpark. Let's use the higher number but use teams' estimate that 40% of local revenue will vanish without ticket sales. That leaves $6.4 billion. 

Sources have estimated that local television revenue is somewhere in the $2.2 billion to $2.5 billion range annually. Because teams under this plan would play only half the games, that's half the revenue -- say, another $1.2 billion haircut. And that does not account for regional sports networks, which pay local TV-rights fees, potentially asking for a discount based on the difference in the product, whether it's because there are no fans in the stands or because teams are forced to play away from home thanks to local government regulations. Ignoring that possibility, we're down to $5.2 billion. 

It gets worse from there.

 

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