The newly-formed economic reform committee comprised of five team owners drew some criticism from MLB Players Association executive director Tony Clark, who told The Athletic’s Evan Drellich that “the underlying theme” of the committee is reducing and controlling player payroll rather than any significant reshaping of the league’s business.
“The economic reform committee is not a new idea. They had a Blue Ribbon panel, and even an economic committee that was put together back in 1991….Those two in particular, and perhaps even this third, based on the comments that came out today, is focused in on how best to depress player salaries,” Clark said.
The MLBPA declined to make an initial comment last week when the committee was announced, though it naturally isn’t surprising that the union and the owners would have greatly differing perspectives on economic inequalities within baseball. For starters, Clark feels that “baseball is doing very well,” which seems to belie the existence for the committee in the first place.
“There was a lot of discussion in 2020 about the challenges that the industry had. There were a number of positions taken suggesting that the industry was in harm’s way, and was unlikely to come out of it for years following,” Clark said. “And yet, 2021 (league-wide) revenue was nearly back to what it was pre-pandemic; 2022 is above what it was pre-pandemic. And so the industry is doing well.”
The possible bankruptcy of the Diamond Sports Group is the primary reason for the committee’s creation, as 14 different MLB teams have broadcasting deals with Bally Sports (the regional networks owned by Diamond Sports). This will certainly have a major impact on the revenue streams for those teams, but only in the near future, Clark argues.
“We think, based on the expertise that we’re receiving, that over the long term, growth will still happen,” Clark said. “Live events, sports itself, have still done remarkably well. It’s the [regional sports network] model that appears to be challenged, not fan interest in sporting events.”
While certain teams could be harder hit depending on the specific length of their TV contracts, the potential also exists for those game broadcasts (and thus revenues) to be covered via new deals with streaming platforms, as opportunities could emerge in relatively quick fashion should a bankruptcy trigger a resolution to any pre-existing contracts with the Diamond Sports Group.
To this end, it is possible a good portion of the Bally Sports-related problems could be solved well before the end of the current Collective Bargaining Agreement, which expires at the end of the 2026 season. Given how the CBA was only settled less than a year ago in the wake of a 99-day lockout, much could still change between now and 2026, though the league seems quite likely to continue to push revenue disparities between teams as a prime motivator for an overhaul of baseball’s financial structure in the next CBA.
Commissioner Rob Manfred noted last week that the league’s exploration of the Bally Sports issue has led to a broader discussion between owners of revenue disparities, which is the other purpose of the economic reform committee. A salary cap doesn’t appear to be on the table for now since even the owners, Manfred said, would have difficulty in finding a cap ceiling that would be agreeable to all parties.
That said, Clark reiterated the longstanding MLBPA tenet that “we’re never going to agree to a cap….we’re not going to agree to a cap. A salary cap is the ultimate restriction on player value and player salary. We believe in a market system. The market system has served our players, our teams and our game very well.” The last round of CBA talks did involve the union exploring the idea of a salary floor, which Clark said was “similar to what currently exists on the top” in terms of the current luxury tax structure rather than an actual cap. However, “we have yet to have a conversation with the league that doesn’t include something far more restrictive on the top end. That makes the conversation null and void to this point.”
Unsurprisingly, Clark praised the Padres’ increased spending, which has come under public criticism from some owners (including the Rockies’ Dick Monfort). Though the Padres play in a relatively smaller market, Clark feels the team’s willingness to spend and compete at the upper levels “should be celebrated, not questioned.”
“The question that should be asked in regards to one team’s payroll versus another, is whether or not that team is making a conscious decision to have its payroll there, or whether it has the ability to increase its payroll?” Clark said. “The answer is the latter, and not the former. So at the end of the day, particularly when you see teams in smaller markets — aka San Diego, in this instance, as the best example — provide a level of engagement for their fans, and a level of excitement in being one of the seven smallest markets we have, it begs the question as to why they made that decision, and why others aren’t.”
Returning to labor talks, the union and the league are in ongoing negotiations about another CBA, the first agreement between MLB and minor league players. Though no deal has been reached since the two sides began talks in November, Clark doesn’t feel a work stoppage is likely if an agreement isn’t in place by Opening Day, since “the greater likelihood is that the terms and conditions that currently exist will likely continue as we continue to negotiate.” According to Clark, one of the roadblocks is that the league has again looked to reduce the size of minor league rosters, which the union considers a “non-starter” of a proposal.
So can someone bring me up to speed on the Bally Sports issue? Are they going to continue to broadcast games even after the parent company declared bankruptcy? I’m a little unclear on what happened here. The regional networks signed huge contracts with local teams and then the broadcasts failed to generate enough revenue to honor the contracts? Is that close? So what happens now?
That is not clear yet. I expect them to sell off certain teams rights and to keep the ones they make money on.
But, we shall see. Ballys San Diego was awesome, if you had access to it
They had an interest payment that was due a week ago. They chose not pay it and filed for bankruptcy. They can now try and work out something with their creditors. I think they’re being kicked off some of the cable operators so they’re not getting the revenue they were once getting when FOX own the rights. FOX made some huge deals with these MLB teams.
This is part of what confuses me. Fox operated these regional networks for a number of years. Bally or Diamond or whatever should have had some idea what kind of revenue these broadcasts would generate when they took over. What went wrong? I would think that if anything, Covid would have made he broadcasts more valuable, not less. Something doesn’t add up.
Well going through a merger myself years ago I can truly say, don’t depend on prior ownership revenue numbers when the new groups made up out of idiots! You can ruin a good deal quick with poor management
Sinclair owned Diamond Sports knew what the revenues were, but still paid far more than what anyone thought the RSNs were worth. In addition, they took on $8 billion in debt when they bought the RSN’s from Disney.
It seems they believed they could increase revenue by partnering with Ballys and that assumption was wrong.
Revenue has not fallen much if any at all. They have simply not been able to negotiate larger carriage rates with the cable, satellite, and streaming carriers.
11/11/2022 is what went wrong
So basically it’s like the Merrill Lynch merger where they took on way to much debt from bad government lending programs in the early 2000’s that led to what is now known as the Housing Market Collapse of 2007
People are cutting cable. Fewer subscribers means less revenue. Makes it tough to pay the bills. I have WOW as my provider and they are actively trying to get their subscribers to leave. They sent me several letters telling me how they could help me drop cable. Evidently the best way to cut their losses is to stop providing the service.
There’s 3 components at work on the cost side:
1) rights fees to clubs (also remember these had escalator clauses, so where you might be profitable at 50m in years 1-5, when you jump to 75m in 6-10 or 100m in 11-15 the model keeps costing more, and, profiting less.
2) payments on debt taken on to purchase the rights and any infrastructure
3) ongoing production and distribution costs
Then, you’ve got pullback in a couple areas:
1) broadcasters lost profits when they showed fewer games during the pandemic shortened window. Less games = less add sales = less revenues.
2) cord-cutting, less subscribers to cable means less end-users paying a fee means less in totals of all money-per-user fees flowing back out of the cable company, regardless of whether that customer ever watches the channel. This impacts what or even if cable companies pay to pick up the channel.
3) it’s possible that interest rate environments having changed so much, could have increased the debt servicing costs
4) similar to the servicing costs, you get inflation being a double edged sword – costs go higher for everyone, including production teams, while seeking to cut costs drives #2 even higher.
If you just assign any arbitrary numbers to those factors on each side of the equations in ways unfavorable to bally/rsns, you can see how quickly things turn negative. And with escalating rights costs, you would NOT subsidize a loss hoping to turn it around when pressures and losses are foreseeable to crater your chance at profits further in the future.
The company that employs me is now run by Carl Icahn’s people, and we are run into the ground on a daily basis.
but still paid far more than what anyone thought the RSNs were worth. In addition, they took on $8 billion in debt when they bought the RSN’s from Disney.
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A lot of folks, including business people, under-estimate that price rules. A great business can become bankrupt at a high price just as a bad business can be a good buy at a low price.
It would be interesting to see the numbers on point #3. This could be identical to some of the issues in the mortgage crisis. The ARM loans were all perfect, until the borrowers had to start paying market rates after three years.
Diamond Sports has not filed for bankruptcy yet. They have 30 days to decide if they will file for bankruptcy or make the payment.
They have not been kicked off any cable or satellite operators.
Sinclair Broadcasting bought the networks with billions in loans, created the Diamond Sports Group (DSG) and then saddled the newly created group with the debt. A standard leveraged buyout. Now Diamond can’t make those debt payments due to a variety of reasons.
No one is sure what happens next. Obviously MLB wants Diamond to keep broadcasting, and to keep sending Big Fat Checks to the MLB teams who they agreed to broadcast in the first place.
MLB has stated the games will get broadcasted either way, but surely they don’t want to have to spend the money to take that on.
Diamond is appearing to enter chapter 11, last I heard, which will give them the ability to renegotiate some of the agreements. It’s not clear if MLB or the teams will be open to that (they surely are not about to reveal their bargaining position in public).
I believe that the teams could choose to walk away from the contracts should DSG try to renegotiate. I suppose the teams and MLB could try to strike a deal to get someone else (NBC, Fox, etc) to bid on the rights to broadcast those games, if they are able to walk away. Hard to say what each negotiated contract says about that.
At this time, we aren’t entirely sure what’s going to happen next, but MLB is saying fans of those teams will still get to see games. We don’t know yet how that will happen. Last I read, DSG doesn’t have enough in their checking account to cover the rights fees they owe for 2023.
Hopefully the Braves will be one that can walk away from Bally. They have a terrible deal compared to many others and like others with Bally, offer few avenues to watch.
Hopefully they don’t.
Basically what’s happening here is bally wasn’t able to make a interest payment, they are contractually obligated to pay MLB to have the right to broadcast games, as Chairman DeWitt said “its a fluid situation, were all acting as if nothing is going to happen even though the likelihood is there are going to be changes”
The committee was formed as a way to broadcast Game and now we’re hearing from Tony Clark that billionairs don’t wanna pay millionaires?
I’ve always thought it was highly irresponsible of the owners to expect cable TV to pay THERE employees….
Once it’s in bankruptcy, those contracts and television rights are subject to the Court and the bankruptcy law. Could get messy.
Revenues and profits have an impact on salary. If the teams that have issues collecting from Diamond Sports Group have problems collecting, then it’s going to impact their spending salaries, and e can’t blame the owners for that. I’m a lot less sympathetic to owners who crave a hard salary cap that seeks to make players play for the salaries that the lowest-spending teams want to pay,
I totally agree, man. A measured response from the union (albeit far from perfect) would be to see the real impact of the loss in team revenue, determine how that impacts salaries, and then some to a temp agreement to reduce salaries by certain percentages until the issue is resolved and MLB takes over or the rights are sold to another group.
I know this won’t happen, but I believe goodwill now in lieu of MLB agreeing not to pursue a cap, or more stringent cap-like penalties, during the next negotiation would benefit both sides (MLB now, the players in the next agreement).
When I was younger we went through something similar in the union and were prepared to take a percentage of loss to help out the employer and prevent layoffs. Thankfully it didn’t come to that as the economy rebounded enough to take only a two-year stagnation agreement on salaries.
There will be no loss of team revenue in the long term. MLB is already set up to take over the broadcasts. They own MLBAM, one of if not the largest streaming company in the world. MLB has been prepared for this for years and years.
The RSN’s already have carriage rates negotiated with the cable, satellite, and streaming companies and those companies would jump on the opportunity to negotiate a slightly lower price that only includes the baseball teams and not all the other sports and junk programming that were on the RSN’s.
In addition, the end of the RSNs means the end of the blackouts. MLB could then sell you local packages for your team either on streaming or on the cable and satellite operators.
Once MLB has it all set up, they will then approach someone to purchase the entire broadcast portion from them. while they maintain the streaming rights.
This is going to mean a huge increase in revenue over the next few years and since its likely going to be controlled by MLB and not the individual teams, revenue sharing will be built in.
Wow, that’s really interesting, man. I was not aware that they had that system in place. I’ll have to do some research on that because I am completely uninformed as it pertains to MLB’s capabilities. It also makes a lot more sense because I doubt this is the first MLB is aware of RSN’s problems.
The way to make the players happy would be to take the money each team gets before a pitch is even thrown. Proceeds from the National TV deal, Luxury Tax checks for the dumb, And the proceeds from merchandising that are split evenly. MLB knows these exact figures because it comes from them. Add that up and make every team at least have a talent payroll that equals that amount. It seems kind of weird to me that the Pirates get the same profits from the sale of a Judge jersey that the Yankees do. Teams that are terminally lame already get Compensatory picks for being horrible and extra money for the draft pick pool and cheap out on the talent pool. If they don’t spend that money, they lose draft picks, International money and draft pool money. Works for me.
Disney now owns Bam not the MLB
Disney pays MLB $900 million for remainder of BAMTech, money to be dispersed among 30 teams—This was reported Nov 2022
BAMtech is separate from MLBAM. It was only part of the company and it did streaming mostly for ESPN3 and a few other properties that were already produced by ESPN/Disney.
Even when I agree with what he says, he still comes across as an arrogant d-bag that is going to cause another lockout
There is a difference between blind arrogance and being confident and assertive. Clark strikes me as the latter.
The owners put this committee together due to the problem with broadcast contracts. Due to the circumstances, that seems prudent. This is the owners talking about a problem that will effect owners. While it could possibly effect player salaries, its too early to know what will happen going forward. NO mention of this new committee considering player salaries has been put out by MLB. Maybe there would be less conflict if each side took what the other side said at face value. I would have preferred Clark stating how he appreciated MLB being proactive to make sure salaries of players will continue to be paid in full going forward, in spite of a short term disruption in broadcast fees being likely.
He can’t cause a lockout, he can only suggest a vote for a strike. You’ve clearly never been part of a union.
No, it appears he’s following Putin’s logic. It’ll be the players’ fault if they’re locked out for listening to Clark and not giving into our conditions.
Players of the past deserve all suspicion in world for PED use. They blocked owners every step of the way, ensuring we had a dirty game. They hurt the game so badly it will never recover.
Owners deserve all the suspicion today because they won’t open their books.
Darkness is afraid of the light and no side has the moral high ground.
I wonder if MLB will have TV revenue that is equal for all 30 teams like the NFL Somehow they come up with a platform where all 30 teams. Yes I know all 30 team teams get equal revenue from ESPN, FOX etc.. I’m talking about streaming games that are not on National Networks. Eventually the contracts will expire on those teams that are not on Ballys.
Revenue sharing by owners would solve most of the problems, but NY and other huge markets won’t buy in.
NY and the other large markets already share revenue. They share over 48% of their total revenue along with evenly splitting national TV revenue.
Are you writing that you believe they should share all of their revenue? If so, I get why they wouldn’t want to do that. The Yankees, for example, may hire & pay better people to advertise, spend more money on the business side, and most assuredly pay more in taxes than many other teams. They establish their brand so why should the owner be willing to share all his money?
No person is going to volunteer to share 100% of their profits to competitors, even within their own sports system. It’s why so many were upset that certain owners were not spending revenue sharing in payroll for several years in a row.
Clipper, I think that would be the dreaded C word. Communism isn’t it? I can just see the look on Hank’s face when you tell him that he has to push all his chips into the pot and then have guys like Nutting and Castellini start grabbing. That’d be priceless. I’d love to be there with a camera and snap that one. I’d need a severe red filter though. LOL
Everyone points out the fact NY doesn’t want to play fair with the other teams. What’s going happen if NY doesn’t have any teams to play ball with?How about doing what’s best for MLB?
I’m talking about have every game on a MLB package like the NFL does. The one that’s on Direct TV. They would make Billions from that and every team would get a base equal share. And teams in the BIG markets would get more.
Winslow Leach-You can’t compare the 2 leagues since NFL only plays 17 games vs 162,
Also you-tube has the NFL package now not Direct TV starting next season
Right now, it’s only the teams that are broadcast by RSNs owned by Sinclair (Bally Sports) and Warner Brothers Discovery (AT&&T SportsNet and Root Sports) that would be affected.
Those that are broadcast by an independent RSN like MASN or NESN or one of the 5 owned by NBC Sports would not be part of the bankruptcies. YES is part of MLBAM so it would not feel any effects from the bankruptcies.
The teams that have the RSN that owns the rights to broadcast their games could decide they want to be part of one large entity controlled by MLB. That is what I am thinking will happen.
Owners don’t have to open their books. Unless they are ordered too. They have antitrust exemption
Yes, they don’t have to open their books. And the players did not have to submit to drug testing.
Both sides look out for number one. Neither side has a moral high ground. That’s was the point I was trying to make.
I don’t root for either side, I just want what’s best for baseball.
I like your last statement but obviously (to me) owners are by far more suspect. I don’t like ped use but it is a legit human rights argument that drug testing is a violation of ANYONES rights, regardless of the consequences. Whether I believe that or not I must admit it’s logical that forcing someone to pee in a cup or take a hair/blood test is morally questionable) many more businesses are siding with that stance (despite ironically incentivising and even demanding COVID testing),but MLB gets progressively more strict. MLB “itself” was just as much to blame as players for PEDs. Nobody cares but fans (some), and players who never used the drugs. With players entire careers being destroyed because of links to PEDs (even tho MLB never cared) why would the PA not try to protect their own. There are two sides to this. Both are understandable to me.
Rishi-I thought you were off this site for posting that the the Cubs were a racist organization in a one sentence post that you said took you 5 minutes to compose? Then denying it. Glad you’re back. The Reds, Pirates and A’s apologists need some help. LMAO
Baseball is doing “really well.” LOL… half the teams just lost their TV programming, some teams’ future homes are up in the air, and popularity has been dropping for decades.
And the owners of these teams are still raking in hundreds of millions of dollars. Yawn. They’ll be fine.
How do you know how much money the owners are making if they won’t open their books?? Mmm
Yawn. Still not stating the hundreds of millions they shell out to operate a Major League team? All seems so simple when ignoring costs, but it doesn’t make it all profit because you pretend there are no expenses, other than salaries.
No one is losing a dime. MLB will pick up where the failed networks drop off. If a team is winning, attendance will continue to increase. For someone who seems to not like baseball It’s odd to find you on this site commenting
I love baseball. Doesn’t change the facts.
You haven’t posted any facts yet.
No reason for any MLB fan, let alone a Reds fan, to believe that any of the ballclubs are losing money until all clubs are willing to open their books to the public – like ATL has to do.
@oldguy58
you cant make that generalization look at the rays and the marlins. Even when they are winning (more the rays that are usually in the thick of things) their attendance has been bottom 5.
For bigger markets that would be true but not all markets especially the smaller market teams. My opinion is if you collect revenue sharing you have to open the books else you dont get revenue sharing.
They get revenue sharing because they have opened their books to the only authority they are required to: MLB.
Are they? You have every right to suspect that because the owners won’t open their books and I have every right to suspect Kirby Pucket was on PEDs because that generation of ball players refused drug testing.
Still revenue has increased in the BILLION$ every year. So much for losing popularity.
You talk about total revenue that lie mostly in the large markets and revenues increase with inflation. Doesn’t prove much.
Open your eyes and look around. How is attendance in between coasts compared to the past? What is the average age of the baseball fan? Do you see kids playing baseball like in the past?
The clues are all around you if you pay attention. The sport is dying.
This league certainly does NOT belong to the Reds… good riddance when they get contracted.
No one has lost their TV programming. And they won’t. More people are watching MLB baseball around the world than ever before. They may be watching on their phone or tablet instead of a TV, but they are watching. Pay attention.
Try explaining that to the Pirates, Reds and A’s fans. You might as go to the top of Mount Everest and talk to a goat. Any goat would get it. None of those fans would. They’d just say, Forest for the trees or something equally dumbed down.
Due to TV contracts signed in 2022 with TBS and ESPN every team receives over $60 million annually just from those 2 networks. Local TV contracts bring in at least another $40 million. Not bad before a single ticket is sold. It’s great to see a team in a market like San Diego spending money trying to win
Oh Oh Oldguy. I feel a muting coming on from the Reds , Pirates and A’s fans. You wanna watch talk like that. Castellini in particular. He’ll have his dream next year when Moose and Votto will come off the books. A 26 man roster of guys making less than a million bucks because everyone else will be traded. Their biggest contract next year will be the 3.5 million a year they owe Griffey until he dies apparently. Teams like the Rays, Guardians and Brewers and Padres who compete every year despite being in the same size markets should be commended. And the others should be sold off for parts and their owners barred.
MLB is becoming mostly contracts and finances talk like the cnbc stock shows. I think I’d rather watch a little league game.
MLB is becoming mostly contracts and finances talk like the cnbc stock shows.
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Nobody forces you to engage in the financial talk. There are games on right now; just go watch them.
And now we hear thar WBD wants to shut down ATT SportsNet SW, the network that carries Astros games.
I wish each side didn’t sound like the ultimate villain perspective of NO SALARY CAPS NEVER vs WE GOTTA FIX SALARIES LOW.
Like, both sides you gotta realize Baseball is not in a good place revenues aside when 15 teams aren’t competing out of the gate. And realistically, they aren’t. We know this. Fans know, owners know, unions know, players know. It sucks a lot if you’re in some of these cities knowing your team will have almost no shot, your team signed nobody and is just coasting until 2-3 prospects hit the majors at a level where it’s worth spending for a year, then disband the winning team and go full tank mode again. All 30 teams should be trying to win every year. Some won’t, some will, but the league needs to figure out how to encourage that instead of the once a decade try for it model that half the league’s owners want.
Sometimes I feel like neither side actually cares about baseball and it’s just the thing they do for a gigantic amount of money and that’s the best we can hope for.
Dave good stuff man
I predict a long work stoppage next CBA because those 15-20 teams won’t sign off on anything remotely like the current system and the players will balk.
Which begs the question as to what the MLBPA will do when there are not so many jobs when teams go under?
I think the next CBA negotiations will be similar to the last CBA negotiations where the two sides were not completely agreeing, but the majority of the player reps from the 30 teams voted to take the deal. I think they realized they had made some gains and took the deal, avoiding a work stoppage.
Most of the so called people in the know are saying that there is going to be another lockout. So apparently neither side has learned a thing from any of the previous ones. I think it’s hilarious that they start negotiating now, Then things will stall, Both sides will dig in their heels then they won’t talk again until a couple of days before the old one expires. They’ll both expect the other side to cave and the only losers again will be the fans. Sad.
I think the lock out is so the players don’t strike right before the playoffs. I don’t want to watch a whole season and then have no playoffs. Yeah, I think they will never agree no matter when they start negotiating and it will come down to the vote of the player reps again. Lucky for us, it looks like the players do not want a work stoppage. I bet Clark would support a work stoppage.
Problem with these CBA’s the people most important to the game the fans aren’t even considered EVER.
Dave 32–Exact thing i been trying to say.Game is not in a good place it’s been like this for a long time.If i didn’t love game so much i would of stopped watching years ago.It’s really screwed up.Of course if your a fan of the few constantly in postseason you think everything’s great.
Baseball is not in a good place revenues aside when 15 teams aren’t competing out of the gate.
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I’ve never found that to be true. There are generally maybe 5 teams that have no shot at the start of the year.
On 6/30 last year, there were only 3 teams that weren’t within 6.5 games of the playoffs. 7 teams in the NL. That will be the same in every sport. How many teams in the NFL had a shot last year?
Who actually made the deal with Diamond Sports Group?
Was it Manfred and MLB or Tony Clark and the MLBPA?
The individual teams made it their local FOX regional. eg Angels Fox Sports West. Then Disney bought Fox. They had to divest Fox. Diamond Sports bought the Fox Regional Networks from Disney and changed the name to Ballys.
So far the deal the Giants struck with NBC Bay Area looks solid and is not in any jeopardy.
Cable is dying, each year more and more people are getting rid of it. Diamond Sports Group didn’t seem to understand what that would do their business, and it’s only going to get worse. Streaming services are the only viable options at this point.
I heard “we are never going to agree to parity”. We are, like the owners, going to take and take until there is none left.
Clark is correct.
I’d like to see some numbers on that. What is the players percentage of revenue over the last 30 years? My understanding is that it is steadily decreasing.
Between an international draft and tax floor/ceilings dilemma, we should all enjoy baseball now because there’s going to be a significant work stoppage at the end of this contract.
Ive never seen anything actually done in blue ribbon committees only for the committee to schedule another meeting. Sounds prominent, but they don’t get much done.
Doesn’t the MLBPA and the MLB already have a CBA in place, expiring soon, like 2026?
“League revenue is back up, so the league is doing well.” Is not a business projection. It doesn’t take a business degree to see increasing labor costs projected over a decreasing market. With owners unwilling to place increasing costs on the customer base..that would speed up the shrink.
You can’t tell owners to be more efficient in their business practices and NOT expect them to address labor. Labor is USUALLY 40% or more of a businesses expense.