MLB has begun rolling out an ad campaign to garner public support for when they lock out the players this December upon the expiration of the current Collective Bargaining Agreement. Yes, they want you to support management as they stop baseball. The whole thing is very gross and plays off the idea that it is the Players’ fault that your team isn’t competitive. The whole thing doesn’t make much sense and here’s why…
MLB Level the Playing Field Website
The Numbers
At the core of the campaign is a Salary Cap of $245m and a Salary Floor of $171m with a 50/50 split of revenue. This all sounds great at first glance but doesn’t add up in practice. MLB made around $12.5b in total revenue last year and that is what these numbers are based on. The mean between the Cap and the Floor is $208m. Multiply that by 30 teams and you get roughly $6.25b or 50/50 of total revenue.
That sounds nice until you see that they are mixing apples and oranges. That $12.5b figure is actual cash. the $6.25b is tax payroll, not cash. There’s a difference. While nearly half the league is above and below the tax line, only 11 teams are above the mean cash line. In fact, as a whole, MLB is only on pace to spend around $5.5b cash on the players this season, the lowest amount since 2022. Revenue is going up mind you and will likely be around $13b this season, so these numbers are already low.
Under a cash proposal, 14 teams would need to bring their cash up to the $171m Floor. Could they even do that? We are talking about them spending $790m more than they did this season, roughly $56m per club, with Cleveland making up about $100m of that. The Players know full well that these teams are not going to spend a penny more than they have to.
The Owners
There is not a single team in baseball that is worth less than $1b and only 1 team lost value last year, the White Sox.1 Despite this, MLB wants you to think that their business is broken. It’s not broken, it’s just severely lopsided. Whose fault is that? Very clearly the Owners.
According to the most recent Forbes data, the Yankees and Dodgers made over $700m in revenue (not profit) last year while the Rays, White Sox, and A’s made less than $300m.2 The Yankees and Dodgers are the two biggest brands in the sport and have done their best over the years to keep it that way. Back in the day, when the NFL was adopting a league wide revenue sharing policy, MLB Owners wouldn’t even consider it. They were out for their own revenues. As Owners couldn’t keep up with the higher revenue teams, they were simply bought out and richer owners stepped in. Over the years, things like the luxury tax and other revenue sharing ideas were implemented but this wasn’t a legitimate effort to “level the playing field.” It was just to keep their house somewhat in order so that small market teams remaining very profitable, not so that they would spend more.
For the first time, the Owners are finally suggesting to split their revenue more evenly. This would be local TV, ticket, and merchandise revenue would go into a pot. Guess what, the players love that idea! Done deal, right? No Lockout? Honestly, that should be it, but it obviously isn’t. The owners will only do this if it means they have to pay the players less money to ensure their maximum profits.
By the way, some of the real problems fans have with the current system is the lack of rules, not the lack of a cap. A 15-year contract for Juan Soto? $680m in deferred money for Shohei Ohtani? Opt-Outs that “force” teams to overpay in renegotiations like Manny Machado? Who gave out these preposterous contracts? Oh, that’s right, the Owners did! You can’t get mad for a worker to ask for the raise, get mad at the employer for giving it to him if it ruined the company.
The Players
Essentially, the Owners want to be saved from themselves and are forcing the Players to do it for them. The Players’ do not want to put a cap on their earnings while also motivating cheap teams to compete financially. Well, how do you make a team spend that doesn’t want to? That’s the tough part here. The teams that spend want to spend because they can spend. The teams that don’t spend, do not want to cut into their own profit. Only the Mets lose a substantial amount of money every year and their owner doesn’t care in the least. He’s the extreme minority. The Players will need to propose a system that ties the money made by the big teams to the money spent by the smaller teams.
The big problem for the Players is optics. Considering this is a fight between billionaires and millionaires, you would think the public would be behind the workers rather than management, but that has never been the case. John Q. thinks the millionaire players are the ones raising the prices and forcing their local team off the field. Things like “Level the Playing Field” play into this and it works. Their biggest problems are the things mentioned above: contract length, deferred money, and opt outs. Fans hate that stuff.
What History Tells Us
This is why I believe the owners will eventually fold in these talks. They just can’t help themselves! In the end, owners for the Marlins, Pirates, and other bottom feeder teams want to make a profit and the owners of the Phillies, Mets, and Dodgers want to spend money to win. The ones in the middle would like to do both. These are two completely different end games. As a result, they have put themselves in a position of little to no negotiating room. If the numbers above were an opening offer, where do they go from here? The Floor isn’t going to go any higher and the Cap isn’t going to go any lower. What can they do?
The big solution to everything is the owners splitting their revenue. Eventual both sides will realize that that is the only real way to make baseball more competitive and it doesn’t need to be tied to a salary cap. It will need to be tied to a floor though. The Dodgers and Yankees aren’t going to want to subsidize their competition without a guarantee that it won’t just be pocketed. In turn for this guarantee that the players very much want, they will have to agree to a contract term length, something like 8-10 years or less. Deferred payments will need to die too.
If Owners want to shell out extra money for payroll, then it will come from their own pockets at a loss to the team. This way, revenues still get split 50/50 but individuals are personally responsible for any overages. At $13b in revenue, this comes to a Floor of around $217m per team. You want to pay more than that, it’s out of your own wallet.
Valuation: Forbes
Photo: MLB
- They will see their franchise value skyrocket next year thanks to finally putting a decent product on the field. ↩︎
- Considering the Rays and A’s didn’t have MLB stadiums last year, that’s understandable. ↩︎
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