League considers revenue split with players


Jose Altuve #27 of the Houston Astros attempts to turn a double play as Adam Eaton #2 of the Washington Nationals slides into second base during Game 1 of the 2019 World Series at Minute Maid Park on Tuesday, October 22, 2019 in Houston, Texas.

Alex Trautwig | MLB Photos via Getty Images

Major League Baseball is expected to continue discussions with its players union on a plan that outlines steps to starting the 2020 regular season, which was interrupted by the Covid-19 pandemic, officials informed CNBC.

Multiple people familiar with the discussion said the league gave a presentation to the Major League Baseball Players Association, or MLBPA, on Tuesday. According to one of the individuals, the two parties met for more than three hours, discussing player safety, testing and medical guidelines for a return. The parties did briefly discuss economics of resuming operations, but the MLB did not submit a formal proposal that’s been in the works.

The individuals who confirmed the talks spoke to CNBC on condition of anonymity, as they aren’t authorized to discuss the matter publicly. 

The MLB isn’t expecting the players union to accept any recommendation immediately. One of the individuals said Tuesday’s meeting is the first exchange of what is expected to be a lengthy dialogue on plans to start the season. The sides will not meet on Wednesday, but more talks are expected to be scheduled, the individuals said. 

The Associated Press reported team owners signed off on a proposal on May 11 that said clubs would resume spring training programs in June to prepare for a July start to the season. But the big issue is that owners are reportedly seeking a 50-50 revenue-sharing plan, which ties player compensation to league profits.

But the MLBPA will most likely balk over revenue-sharing provisions in any plan.

Revenue concerns

The union already agreed to a pro-rated pay system for players in March that includes a total of $170 million that will be distributed to players via a tiered system. Historically, players have been against any revenue-sharing agreement to determine salary. If it is considered, it’s likely the players will request financial information from the league and individual teams before approving any such change.

The last time MLB owners attempted to install a revenue-sharing system — or a salary cap — it led to the 1994 strike, which lasted more than seven months. That work stoppage cost the league $1 billion

An ESPN report also suggested owners could offer to share TV revenue with players. The MLB brings in roughly $1.6 billion per year from media deals with ESPN, Fox and Turner Sports.

Marty Conway, who spent time as an advisor to the MLB and Baltimore Orioles, said owners do risk financial health in the long term if a season is canceled. Though owners would save now, the losses could be too extreme to resume normal operations, which includes paying higher salaries to players.

“Next year, they’ll be in a regular economic format. Will they be able to afford that without going much deeper into debt?” said Conway, now an adjunct professor at Georgetown University’s McDonough School of Business.

“I think that’s why they’ll have to come up with something creative, only for the rest of this season, and will have to allow both sides to come away face-saving but also protecting the longer-term ability to finance the game,” he said.

The plan also calls for games to be played in home stadiums with no fans or partially filled parks that follow social distancing guidelines. Other parts of the MLB’s proposal would change team schedules to eliminate long-distance travel. The new format calls for division opponents to compete more throughout the season, and regional play would include teams from the opposite league.

Under the proposal, the number of postseason teams would increase from 10 to 14 and more roster spots would be added. Also, the 2020 All-Star Game in Los Angeles, scheduled for July 14, is in jeopardy as questions about the future of large gatherings in California remain

But again, numerous hurdles remain before the MLB can get any plan into action, including how the league would provide daily Covid-19 testing for players and staff associated with games. It’s a big reason the league and MLBPA used Tuesday’s presentation to discuss health protocols before shifting to any payment agreements.

Washington Nationals pitcher Sean Doolittle hinted he would be against proposals that don’t address detailed protocols to ensure health and safety for players and other “essential staff” of the game.

“Baseball requires a massive workforce besides the players; coaches, clubhouse staff, security, grounds crews, umpires, gameday stadium staff, TV & media…we need to protect everyone,” Doolittle wrote in a Twitter thread.

“And that’s before we get to hotel workers and transportation workers (pilots, flight attendants, bus drivers),” he continued. “They are essential workers. We wouldn’t be able to play a season without them, and they deserve the same protections.”



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