Photo credit: Arturo Pardavila III
Major League Baseball Commissioner Rob Manfred
The clock is ticking on decisions regarding the length and format of a potential 2020 Major League Baseball season, and at some point soon the owners are going to have to make a choice to either prioritize the game and its fans or their own financial interests.
We’re now well past the start of baseball’s most recent projected timetable for the 2020 season, which featured players reporting for a second spring training camp sometime last week to prepare for an Opening Day on or around July 4. Under an agreement signed by MLB and the Major League Baseball Players Association in March commissioner Rob Manfred has the authority to set a start date and schedule for the 2020 season, provided teams are willing to pay players their full pro-rated salaries for the portion of the season contained in that schedule. To date he hasn’t done so, instead seeking further concessions from players on salaries.
The league’s first three proposals to the players contained different schedule lengths but all centered around the same number: As Mike Axisa of CBS Sports noted, the 82, 50 and 76-game plans all led to player payrolls around 33% of their projected 2020 figures. Owners and the commissioner’s office have presented the illusion of attempting to compromise, but the bottom line never moved. Their latest offer included another incentive that’s unlikely to be relevant: Eliminating the “qualifying offer” system from this winter’s free agency. The change would allow teams to sign a free agent that has received a qualifying offer from their previous team (a guaranteed one-year deal around $17 million) without forfeiting a draft pick, but it is at best unlikely that many teams will opt to extend qualifying offers in the current market situation anyway.
Stay on top of the news of the day
Subscribe to our free, daily e-newsletter to get Milwaukee's latest local news, restaurants, music, arts and entertainment and events delivered right to your inbox every weekday, plus a bonus Week in Review email on Saturdays.
Meanwhile, owners almost certainly have lost some revenue this season but they have a challenging task ahead of them if they want fans to believe they’re losing money overall. Cardinals chairman Bill DeWitt Jr. was recently quoted as saying “the industry isn’t very profitable,” a claim which doesn’t align at all with estimates that the league set a record with $10.7 billion in revenues in 2019. Dubious claims about the financial health of franchises have come out so often that CBS Sports’ Dayn Perry created a stock quote to use in response: “It must be noted, however, that the secrecy surrounding team financials makes it impossible to verify any ownership claims of losses, projected or realized."
Revenue at Record Pace?
The pieces of evidence available to the public, however, continue to suggest teams are earning revenue at a record pace. Over the weekend news leaked out that the league has reached a new billion-dollar deal to sell broadcasting rights to portions of the playoffs to Turner Sports. Looking back a few more months, in December we learned that MLB teams had just signed a $1 billion deal with Nike that will see all 30 teams add their trademark swoosh to their jerseys this season. In a related note, the 2020 MLB Authentic jerseys carry a sticker price over $450.
Beyond those two deals lies a larger question: If baseball teams aren’t profitable, then how could their value possibly increase so rapidly? Forbes’ estimated values of all 30 franchises showed an average of $1.85 billion in April, up 4% from the year prior. That was the smallest year-over-year increase in a decade. 29 teams are now valued over $1 billion, with only the Marlins under that mark at $980 million (and that franchise sold for $1.2 billion in 2018). Even baseball’s least valuable franchise was a remarkable investment for its most recent former owner: Jeffrey Loria bought the team for an estimated $158 million in 2002 and saw a 750% return on his investment 16 years later.
For the first time, however, teams’ short term profit-seeking may jeopardize that franchise value spike. Reports about the coming demise of baseball are often overstated (and have been written at various times for over 100 years), but the fact remains that the sport has an aging fan base and faces a struggle to maintain its relevance in a crowded entertainment landscape. Every day that passes where other sports work towards getting back to playing games and baseball doesn’t is one more day where the sport is out of sight and out of mind.
