Major League Baseball owners made their economic proposal for a potential 2020 season to the MLB Players Association on Tuesday afternoon, seeking pay cuts beyond the salary reductions to which players agreed to two months ago. Players immediately expressed their dissatisfaction with the proposal, thereby starting a critical phase of the negotiations in the efforts to launch a season by early July.
The sides agreed March 26 – roughly two weeks after spring training camps were shut down – that players would be paid a prorated percentage of their salaries based on the number of games played. In the case of an 82-game season, that would result in more than $2 billion in lost salaries to which the players had already committed.
However, MLB believes further reductions are in order. MLB revenues in 2020 are and will be hammered by both the shortening of the season and the inability to have fans in attendance due to the COVID-19 pandemic. According to MLB’s projections, the league’s revenues will drop from a projected $9.97 billion to $2.87 billion in an 82-game season played without fans.
The league’s owners insist that both the discussions leading up to and the language contained in the March 26 agreement made clear that the sides would revisit the economic feasibility of playing games if fans could not attend. (Tickets, in-park concession, and merchandise sales normally account for roughly 40 percent of MLB revenues.)
At this point, restrictions on mass gatherings will prevent games from being staged in front of paying customers for the foreseeable future. As such, MLB feels that players need to make further concessions to make a season economically viable, resulting in Tuesday’s proposal.
“We made a proposal to the union that is completely consistent with the economic realities facing our sport,” an MLB spokesperson said in a statement. “We look forward to a responsive proposal from the MLBPA.”
The MLBPA and some of its players and agents, however, have expressed the opinion that the March 26 agreement already established the blueprint for player compensation regardless of whether fans attend games. The union sees the desire of the league to adjust salaries further as a baseless mechanism for having players subsidize team losses.
According to multiple industry sources, owners did not include a revenue-sharing proposal in the plan – a concession to the adamant objections of the union to ever accept such an earnings structure, which the MLBPA views as tantamount to a salary cap.
Instead, owners proposed trimming player salaries using a sliding scale akin to a progressive tax. All players would take pay cuts, but the best-paid players would give up the largest percentage of their salaries.
ESPN.com reported that a player with a $35 million salary would instead make roughly $7.8 million (about 22 percent of his full salary; 44 percent of his prorated salary); a player making $10 million would get about $2.9 million (29 percent; 58 percent); and a player making $1 million would receive $434,000 (43 percent; 86 percent).
The net effect of those reductions, according to one source familiar with the negotiations, would be players receiving salaries (including signing bonuses and buyouts/termination pay) and pension/benefits (a fixed cost of $198 million) of roughly $1.7 billion in an 82-game season – down by about one-third from the $2.55 billion players would receive for an 82-game season under the March 26 agreement.
The proposal did not include a proposal to expand the playoffs, but left open the possibility of such a discussion.
The union expressed significant dissatisfaction with the opening of talks. An MLBPA spokesperson suggested that the proposal represented massive additional pay cuts on top of an already sizable salary loss and described the union as extremely disappointed with the proposal. The union also characterized the sides as far apart on health and safety protocols.
Despite the expression of dissatisfaction, however, MLB’s proposal represents the start of talks. Following the meeting, MLBPA leadership planned to review the proposal with players and to determine next steps.
The sides have little time to waste if they want to launch a season in early July. With a spring training of at least three weeks needed to prepare for the season, sources have set an informal negotiating deadline of June 1 to give players and staffs enough time to assemble for spring training by June 10.