DeWitt Claims Baseball Industry “Isn’t Very Profitable”

Cardinals chairman Bill DeWitt Jr. offered some eyebrow-raising comments in an interview with Frank Cusumano of 590 The Fan (audio link). You’ll want to listen to the entire chat for yourself, but we’ll cover some pertinent elements here — in particular, his highly questionable claim that the baseball industry isn’t even a terribly profitable one.

DeWitt says he believes there will be a 2020 season and that the game will be fine in the long haul. Baseball has “always survived and come back stronger,” he says.

But that doesn’t mean it’ll come about through a mutually satisfactory bargaining process. Indeed, DeWitt seemed less than optimistic that the sides will end up agreeing to terms.

“At some point we do have the right to implement a season and pay full salaries and the only way it makes sense is with a shorter season,” he said. “And that’s I think the way it’ll turn out.”

DeWitt insists that the owners want to make the season as long as possible. At the same time, he rejected the idea of pushing play outside the normal bounds of late October/early November. He cited concerns of a second COVID-19 wave and called it “a little bit of a ridiculous proposal” to imagine “Christmas shopping while you’re watching the World Series on television.”

The Cards’ chairman left little doubt as to where the league sees its leverage. “We understand that if we implement a season — a shorter season — that they will get full pay but in total they’ll make less money,” he said. “So it really doesn’t make a lot of sense for them to continue to hold out.”

That’s all interesting enough, but DeWitt’s most notable comments came when he attempted an explanation of the owners’ overarching position that players should share in the downside of a limited 2020 campaign. The host posed the question why players should subsidize losses even when their salaries have declined on average while the game raked in record revenues over the past two seasons.

DeWitt rejected the idea that declining salaries were tied to more profits: “don’t think for a minute that the reduced payroll added money in the pockets of the owners because it didn’t.” Citing the growth of non-player personnel — from 240 to 400 in the past six years, he says — DeWitt claims “It’s a bit of a zero-sum game” because “a lot more is put into training, conditioning, promotional work, front office, analytics.”

One might respond that what the teams are really doing with those alternative investments — given the areas of emphasis DeWitt cited — is looking for more efficient ways to spend their roster-related funds. And to boost the profitability of the existing product.

But DeWitt insists, against all reason, that “The industry isn’t very profitable, to be quite honest.” It’s rather a remarkable quote.

Depending upon how one draws the lines around the multi-faceted business efforts tied to the game, it may be possible to narrowly support such a claim. But surely, when you pull in broader efforts — television, retail, real estate — someone is making money in the industry?

DeWitt even rejects that notion in large part. He referenced the Cardinals’ massive Ballpark Village effort — the second phase of which the team values at $260MM. It’s an opportunity to benefit St. Louis, he says, but for the Cardinals? Per DeWitt, “we don’t view as a great profit opportunity.”

DeWitt went on to suggest that it’s the players’ own historic preference for market-based salaries that is gumming up the efforts to resume play. Other sports are “aligned with the players,” says DeWitt, because “the more the revenue the more the players get based on a formula.” It’s interesting that this viewpoint arose at this particular moment, during a downturn. And it’s not entirely clear why such a sophisticated businessperson suddenly feels he and his fellow owners aren’t able to adequately consider costs and revenues when bidding on talent.

DeWitt notes that there’s “been a little bit of distrust” when it comes to the players believing ownership’s sharing of financial information. Frankly, it’s not hard to see why. Players have indeed shared in the benefits over the years, as DeWitt notes, even as franchise values have soared. Even though many of the league’s main profit-generating efforts have occurred somewhat outside the scope of the arena the players can access directly, they’ve no doubt been able to secure greater paydays as a result. But it’s inconceivable that wealthy investors would continue to tie up billions of dollars into a business that doesn’t throw off profits. Arguing otherwise won’t help rebuild that missing trust.