Tuesday, January 12, 2021

Joe Sheehan Newsletter, January 7, 2021 -- "A Grand Bargain"


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The Joe Sheehan Newsletter
Vol. 12, No. 115
January 7, 2021

You’ve surely seen that league owners have expressed a desire to begin the 2021 season at some point after the scheduled Opening Day of April 1. With SARS-CoV-2 spreading uncontrolled in the United States, and the vaccine rollout unlikely to make an impact on public life for at least a few months, teams would rather push back the start of the season or perhaps shorten it altogether, in the hopes of playing as few games as possible without fans being permitted to attend.

This isn’t an entirely unreasonable position -- it’s a spectator sport, after all! MLB pushed through a nine-week season with zero attendance last year, nearly the bare minimum it was willing to put on without fans in the stands. That partial season resulted in losses totaling eleventeen trillion dollars, by MLB's claims, or about $1.4 billion, per research by Baseball Prospectus’s Rob Mains.

On the other hand, that $45 million or so in losses per team is comparable to the average profit in 2019, and 2019 was at least the 16th consecutive season in which the league ran in the black. That doesn’t include the $2 billion team owners gained by selling off BAMtech to Disney, money that never made it into the baseball ecosystem. Owners and their defenders will tell you that baseball is a business, and in business there is no guarantee of profits or guaranteed immunity to losses. Yet for most of MLB's 21st century the latter had been the case.

The players, for their part, have no interest in a shorter season, certainly not after a 2020 in which they made a third or so of their expected pay. Their interest in a 162-game season in which they make every dollar they have coming to them is no doubt heightened by the impending threat of a lockout in 2022. The Collective Bargaining Agreement expires in December, and the upcoming negotiations have long been expected to be contentious. Nothing that happened in the last 12 months has lessened that expectation.

I’ve been trying to figure out where the middle ground is, at least in the short term. The medium and long term, shaping the business of baseball, we can get to later. The question at hand is how to bridge the owners’ reasonable desire to have fans in the stands for as much of 2021 as possible, with the players’ reasonable desire to get 100% of their 2021 pay. That’s the default setting, remember; the CBA mandates the length of the schedule absent a collectively bargained agreement to change it.

At first I thought about deferral schemes. Players could agree to a shorter schedule but be paid, over an extended period of time, for a full one. Say, a 132-game schedule starting in May; that’s 81.4% of 162. The remaining 19.6% of a player’s salary might get paid in 2022 and 2023, with interest. The players could even agree to a token pay cut as an acknowledgement of the circumstances, maybe instead of deferring it all, take a 5% haircut and defer 14.6%. Maybe a sliding scale that takes a bit more from the highest-paid players while protecting the large and growing number of players who make the minimum or not much more. The structure seems reasonable, and you can play with the amounts.

The more I think about it, though, the more I think taking less isn’t going to fly for the players heading into 2022, and effectively financing lockout insurance isn’t going to fly for the owners. From a labor dynamics standpoint, it would mean that each day of a lockout next March moves the owners closer to those back payments for 2021, payments that would come against a backdrop of no revenue coming in. While I think this would do wonders for the chance of a 2022 season, it’s probably a non-starter for the league.

The pandemic is a problem, but for baseball, 2022 is the problem. The players have to get out from under a bad CBA on the heels of the previous bad CBA. They’ve been working almost a decade now under a rule set that is costing them money every day. For the first time since 2002, it seems likely that it will take a work stoppage of some kind to get to a new rule set. Any decision the players make about 2021 affects their ability to fight a war in 2022. The upcoming labor battle would have been difficult under most circumstances; it is now going to occur after two years in which baseball had total attendance of around 20 million, combined, and revenues of 40-60% of what they were in 2019. Baseball team sold 68 million tickets in 2019, and league revenues were $10.5 billion.

So let’s put 2022 on the table as part of a grand bargain.

The players agree to a shorter 2021 schedule and salary deferrals. The specifics are negotiable, but the numbers above seem like a starting point. Begin a 132-game season in May, with the players taking a small pay cut, one that is smaller than the proportion of the season lost, and deferring part of the remainder into the next two years. We’re guessing as to how many fans will be able to attend games this year, but I think “not very many anywhere, in April” is a pretty good call. Cut the season by much more than that, however -- I suspect the league would happily wait until summer -- and you start to create risks around fan habits, as well as real damage to players’ careers.

In exchange for the shortened season and pay concessions, the owners agree to not lock the players out through the end of the 2022 World Series. This means that deferred payments they would make in 2022 aren’t serving as a lockout fund for the players. It also gets that brutal negotiation away from these two terrible years for the baseball industry, and assures one hopefully normal season, with hopefully normal revenue, before the two sides have to sit at the table.

This isn’t perfect. For one, no-lockout pledges are normally paired with no-strike pledges. In 1994, the MLBPA’s Don Fehr tried to reach a deal with Hall of Famer Bud Selig to avert a war: Agree to not lock the players out in 1995, and the players won’t strike in 1994. Selig refused, because it was his plan to bargain to a false impasse, impose a new system, use replacement players if necessary, and have all of that thrown out of court by a future Supreme Court justice. OK, maybe not that last part.

Conceding the right to lock the players out without getting a no-strike pledge in return would be an imbalance. However, I don’t think the owners are taking a significant risk because I don’t think the players can pull off a strike. This isn’t the union of Marvin Miller and Don Fehr anymore. There is virtually no institutional memory, and not only are there no players left from 1994-95, there aren’t all that many who played with players who went through that.

Baseball alienated many fans last year with its protracted negotiation over what the 2020 season would look like. It has this labor war hanging over the 2022 season. What it doesn’t need is a nasty fight over what the 2021 season will be, or worse, another significantly shortened campaign followed by, potentially, another one in the aftermath of a lockout. You could play 200 games over three years. You could ruin a mini-generation of young players, and ensure that no one for a full generation makes a run at career records, the kind of stories that drive interest in the game. You could become the NHL, a sport that has never fully recovered from its lost 2004-05 season.

An agreement to play a shorter season in exchange for a no-lockout pledge gives the owners a break on playing games without fans in the stands. It retains most of the players’ 2021 pay. It gets everyone out from under the shadow of a lockout, at least for a year. It guarantees consecutive baseball seasons that look like baseball seasons, putting some buffer between a pandemic year and a possible lockout year.