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Category: Management Bullshit
Unlock with PatreonDebt service, and MLB’s obfuscation racket
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Major League Baseball is concerned that the COVID-19 pandemic, and the drop in revenues that will come with a shortened 2020 season, is going to make it more difficult for teams to pay off their debt. You might be familiar with the debt service rule in MLB: it arose from the collective bargaining of 2002, and was an attempt to make sure that teams actually had the money to pay their bills by limiting their debt to 10 times their annual earnings. You might also not be familiar with it at all, because it’s barely ever mentioned by the teams or the media, and even now it being brought up is more a negotiating ploy than a real thing to be concerned about.
Keeping in line with the debt service rule isn’t something that’s going to get teams in trouble with some financial authority like a bank: it’s just an internal MLB thing that’s meant to keep teams from promising to be able to pay more than they’ll be able to. And yet, despite the institution of this rule in 2002, nine clubs were in violation of the debt service rule in 2011. MLB didn’t go after most of those teams: they did go after the Dodgers for violating the debt service rule, though, that was because everyone wanted Frank McCourt to get kicked out of the league. The Mets were in violation at the same time, thanks to the Wilpons’ involvement with Bernie Madoff, but they were allowed to keep their team, because then-commissioner Bud Selig and the rest of the owners didn’t despise the Wilpons like they did McCourt.
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MLB’s return plan doesn’t guarantee player safety, and they’re fine with that
While the occasional article is free for everyone, the vast majority of this content is restricted to my Patreon subscribers, whose support allows me to write all of this in the first place. Please consider becoming a subscriber! -Marc Normandin
MLB wants to return without absorbing any of the fallout
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Major League Baseball might lose money this year if the season were to open up without fans, and players were to be paid prorated salaries based on their current deals and the number of actual games played. “Might” is the key word from the previous sentence: MLB says they’ll lose money, but all we have is their word. We certainly don’t have access to the data saying this is true, given they don’t open up their full books to anyone, not even the Players Association, and the year-end rankings for revenue that come by way of Forbes are essentially stitched together from reporting and sourcing.
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MLB’s owners want the players to shoulder their financial burden
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A few weeks back, Peter Gammons published a piece at The Athletic that focused on how the road back to normalcy in MLB was going to be three years’ long. COVID-19 is and will wreak havoc on MLB’s finances, so, the answer is, according to one anonymous Red Sox executive, to essentially ignore everything the Players Association would consider important in negotiations, in the interest of getting baseball back to normal as quickly as possible.
This isn’t some hyperbole coming out of me, either, check out the actual quote from the exec:
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MLB’s teams need to pay their concession workers, too
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On March 17, Major League Baseball announced that each of its 30 teams would set aside $1 million to pay stadium workers during the postponement of the 2020 regular season. With the COVID-19 pandemic here for an indefinite stay, it’s unknown when America, never mind MLB, will be able to return to business as usual. That $1 million is a start toward making sure those sports workers impacted by the postponement of the season — who usually make less than $15 an hour — are taken care of.
The emphasis there, though, should be on how this is a start. That $1 million per team isn’t going to last very long, not with the sheer volume of employees needed to run a stadium on an administrative level and to keep its grounds in order. Outside of that, though, are also tens of thousands of concessions workers. While MLB and its teams pulled in positive press for the headline-worthy assistance package worth $30 million, it doesn’t even begin to cover all of the workers that make live baseball possible.
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Here’s how the Lakers qualified for a Payment Protection Program loan
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The program that is supposed to keep small businesses afloat during situations like that of the COVID-19 pandemic is the Payroll Protection Program, or PPP. It’s not exactly doing its job — at least in terms of what you might imagine that job to be — for a number of reasons, one of which merits mention here, thanks to the NBA’s Los Angeles Lakers.
The Lakers received a $4.6 million loan from the PPP. The Lakers, who are worth $4.4 billion according to Forbes, who generated nearly half-a-billion in revenue (and $178 million in operating income) just last season despite being a garbage fire, received nearly $5 million from a government program, and at the expense, hypothetically, of some Los Angeles-based business or another that isn’t worth 10 figures.
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MLB and the MLBPA negotiated 2020 salaries, or so we thought
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Major League Baseball and the MLB Players Association spent some time early on in the season postponement discussing vital topics, such as how service would work in a shortened or canceled season, or how players would be paid whether there was baseball to play or not in 2020. It seemed as if the latter was a finished issue, but according to published reports, that might not be how MLB’s team owners see things.
To recap the talks that have taken place, MLB and the MLBPA agreed to a few key conditions. The first is that $170 million was given to the MLBPA by the teams in April and May, to be dispersed among its members: if baseball were to return, that $170 million would be cut out of what the teams still owed players for the season. Then, if there was a shortened season, players would be paid prorated versions of their existing salary agreements, minus whatever their cut of the $170 million was. Last, if there were no baseball whatsoever, players would only be paid whatever they got out of that $170 million, and in exchange for the service time agreements the two sides came to, would not sue for their full wages.
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MLB will reportedly get their wish for a shrunken MiLB
Minor League Baseball, for over a year now, has been fighting Major League Baseball about shutting down or disaffiliating over one-quarter of its teams. It appears that fight is at an end, and if you were rooting for MiLB, you’re going to be disappointed.
Baseball America reported on Tuesday that, when talks resume on Wednesday between the two sides currently negotiating the Professional Baseball Agreement that governs their relationship, that MiLB will give in to MLB’s demands that they shrink to 120 affiliated clubs. It always felt like it was bound to happen, even before the COVID-19 pandemic, but that sealed the fate of 40-plus clubs. Federal, state, and local governments were going to be the greatest ally of these potentially disaffiliated minor-league teams, and with all of their attention now focused on handling a pandemic, MLB has MiLB right where it wants them: in a corner, alone.
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Apparently, sports will save the economy
While the occasional article is free for everyone, the vast majority of this content is restricted to my Patreon subscribers, whose support allows me to write all of this in the first place. Please consider becoming a subscriber! -Marc Normandin