MLB and the Players Association have agreed to a change to the collective bargaining agreement that’ll help teams whose television rights situations are uncertain. Evan Drellich of The Athletic reports that the league is now permitted to redirect its portion of competitive balance tax money to clubs that have lost TV revenue. Those teams can receive a maximum of $15MM or the necessary amount to compensate for their revenue drop.
Teams that exceed the competitive balance tax threshold are required to pay fees at the end of each season. The league and union split the money. The MLBPA’s portion funds its retirement accounts. That is unaffected by today’s agreement. The league now has the discretion to allocate some of its half of the money to clubs that have seen their TV revenues drop in either of the last two seasons. According to Drellich, the MLBPA projects the league’s half of the CBT payments to total around $150MM this year. Today’s agreement permits the commissioner’s office to distribute half that money to the teams affected by TV problems.
It’s a sensible arrangement for both parties. MLB gets more flexibility to support organizations that have lost some or all of a key revenue source in recent seasons. The union expects that’ll lead to a trickle-down benefit on player salaries. Last offseason, roughly a third of teams pointed to concerns about the long-term viability of their TV contracts as justification for limiting payroll raises or outright payroll cuts. Most of those organizations had contracts with Diamond Sports Group, which is trying to survive as it concludes a lengthy bankruptcy proceeding.
Diamond dropped its contracts with the Padres and Diamondbacks midway through last season. This spring, it renegotiated its deals with the Guardians, Twins and Rangers at lesser fees after threatening to abandon those contracts. Texas had a quieter offseason than expected for a defending World Series champion. Minnesota sliced payroll over the winter and its ownership is reportedly still reluctant to take on money via deadline deals. AT&T Sports dropped its local TV deals with the Rockies, Pirates, Mariners and Astros last offseason. Pittsburgh, Seattle and Houston found alternate broadcasting arrangements (likely with reduced revenues), while MLB stepped in to handle Rockies broadcasts within market.
A good number of teams remain skeptical about the long-term future of their regional sports networks. Diamond is carrying 12 teams on its networks at least through the end of this season. MLB has made no secret of its wariness about the broadcaster’s viability for ’25 and beyond.
Diamond’s ongoing conflict with Xfinity hasn’t done it any favors in that regard. A contract dispute between the broadcaster and the carrier has kept Xfinity customers from watching any games on Diamond networks since May. Blackout restrictions prevent MLB from stepping in to handle in-market broadcasts, leaving a subset of fans without the ability to watch their teams for a couple months.
There was a positive development on that front this morning. An attorney for Diamond said at today’s bankruptcy hearing that DSG and Xfinity had made progress in negotiations and expected to finalize a new contract “in the very near term” (link via Alden González of ESPN).
“The MLBPA believes this will lead to more spending on player salaries.”
I can hear Bruce Sherman laughing at this.
Meh. I’m cynical too, but I think here it might actually be true. The teams that normally get this money never spend it and remain bad. Some of the teams that lost TV money are teams that spend money. So, I think it will result in more money going to players.
But not significantly more at only $15 million per team.
Baron- I’m willing to bet not 1 player sees a dime of that freaking money.!
The best example in sports history of revenue sharing without requirements to spend it leading to nothing is Sterling with the Clippers in the NBA. None of the teams in the bottom 3rd of the league in payroll will have a jump in spending. Teams like Tampa will keep doing their thing.
Oakland will be losing its TV money that’s linked to playing in the coliseum….
I think we know where that money would go, and, it’s not player salaries
I’m laughing. Fisher, Nutting, Castellini, Open pockets put in money. Buy a boat.
I know Minnesota is one team that would be willing to add at the trade deadline but does not have the money to make moves due to a dramatic reduction in TV revenue.
@Mjm117
It could be worse. He could do what Jeffrey Loria did. Remember when, after refusing to pay for players, he donated about $25 million to his alma mater for a study hall to make sure that the kids at Yale had “…a safe place to study…”
They have to mandate a salary floor. It’s insanity not to do so.
The league wants to, and so do most of the teams. It was the players association that refused (because it would come with, or inevitably lead to, a cap).
For good reason. A salary cap would be the worst thing for players because it creates a fixed pie zero-sum scenario for compensation.
it creates a fixed pie zero-sum scenario for compensation.
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That wouldn’t matter. All that would matter is what percentage of the gross they settle on. Everything else is an accounting exercise.
When the NFL owners and players get together, there are no arguments. The owners will get an 18th game because the players will get a piece of that.
MLB owners and players argue over change in the couch-cushion issues.
@Blue Baron
Not enturely accurate. It depends on the type of cap and any potential exceptions they tie to it. Personally, it should include something similar to the NBA’s “Larry Bird Exception”. That is a starter to aleviate what you are referring to.
I don’t understand why they wouldn’t agree to a cap. It’s undoubtably better for both the game and the fans from a parity perspective. As long as the floor is high enough to offset what the top spenders would be restricted from spending, why would they care which team is signing their paychecks?
The only way a cap would work is for there to be an outside arbiter that guarenteed both sides of the total revenue number. Then they could set the cap based on that. But what is revenue or not is highly controversial. Teams wouldn’t want their books known like that, etc. It’ll never happen.
I like the 50/50 split but you do run the risk of another covid situation happening where the players actually get paid less than what they’re promised due to the unexpected loss in revenue. It’d be nice to see something done though, it’s pretty crazy that these revenue sharing teams get paid to not spend their money by the big markets.
jdgoat: A salary cap is not better for the game, only for the owners as it gives them cost certainty.
It’s terrible for players because it fixes total player compensation, making it a zero sum scenario where for one player to make more, another must make less.
That means players must compete against each other for the same dollar, and that’s why the MLBPA never has and never will agree to it.
The league’s cap/floor proposal was not serious. It was something like $100m low, with luxury tax lines operating as a cap at like $180m. That’s way too big a gap. There was also never talk about a guaranteed % of revenue.
In the NHL, NBA, and NFL the cap system works where the floor is like 90% of the cap, and the whole scheme is to guarantee a fixed percentage of the revenue to the players. A certain amount of money is held in escrow to be paid to either side to guarantee that percentage. That percentage is typically close to 50%.
The last time I had full numbers on this was 2019. That year the league paid just under 40% of revenue to salaries. The league isn’t proposing anything like that because they’d be paying a ton more to the players.
Those other sports don’t need to contribute as much $$$ as baseball does to their farm club employees. Way more affiliates to be responsible for. These fans calling for a salary floor are only thinking about the MLB level and not the minor leagues that develop the players they overpay to see.
it’s,
All the salaries of a team’s minor leaguers combined is a drop in the bucket for a franchise.
Owners are probably fine with the current arrangement. The players will pat themselves on the back over not accepting a percentage, but are leaving a billion $$$ on the table
making it a zero sum scenario where for one player to make more, another must make less.
=========================
But as long as revenues are rising, the players, as a whole, will do better. Individual players might do better or worse, but the union will do better.
Just ask yourself, how much has revenue increased in the past ten years, and how much have salaries increased.
The league isn’t proposing anything like that because they’d be paying a ton more to the players.
====================
I agree 100%. Every year the owners offer the players a percentage of the gross in the hopes they reject it without thinking about it.
Gbs there are front office people and staff that work in every office that is an affiliate. If there are 6 affiliates there are employees.
Did you know there is a staff that handles the field? Believe it or not the players do not prepare the field or clean up the stands afterwards.
More minor league teams in baseball than any other sport. You call it a “drop in the bucket”. Considering many probably operate at a loss, they still fund these teams at a price you could not guess.
Each team is down to 4 affiliates, and the affiliates pay for their own staffs. MLB teams are just responsible for player salaries. Some MLB teams own some of their affiliates. Why? Because they make money.
Not all.
And, there is more than 4 teams when you include the rookie leagues. You have AAA, AA, high-A and low-A. There is still the rookie league for the 16-17 year old international players and recent draftees, mostly high school players. For many teams they have 2 rookie teams, totalling 6 teams.
The NBA has a developmental league and a
Women’s league to run. I’m sure having those two under the NBA umbrella is just as costly as having personnel in independently run minor league teams. Even less if they own their affiliated teams
Two leagues in big cities versus 5-6 teams in MLB. Plus smaller rosters in the NBA. No comparison.
WNBA has a much more related to player management and marketing compared to minor leagues. And its major arenas with a far greater audience. When many minor affiliate teams are independent, you’re right, there is no comparison. MiLB doesn’t even hold a candle to the WNBA when it comes to work needed or expenses for the league.
The WNBA players are not playing in the NBA. Stop using them as an example as the comparisons is in no way, shape or form the same as MLB.
Second, depending on the team, the expenditures for minor league clubs to take flights to road games exists.
Third, MLB needs the farm system while NBA does not need the WNBA. Paying 15 player rosters versus 40 is another factor. But if you like overpaying for your night at the park, enjoy. At some point you can start thinking about you and the fans rather than choosing sides between millionaires and billionaires that’s quite embarrassing.
I think what JD is getting at is that if you put the floor high enough to compensate for the current luxury tax thresholds being changed to a cap and find a balance, it would potentially eliminate the ‘rich owner not spending his fair share and therefore should be removed’ vehemence. That could balance the spending and possibly reduce the number of owners acting detrimentally to the game for personal income.
Obviously, it is far more in depth that what I describe above, but a system could certainly be hammered out that could achieve what JD is talking about. The problem is the players whine incessantly about changing things, but as soon as they are asked about a CAP they shut down without even looking at the whole picture. A cap could be bad, but if done correctly it could absolutely make things better for them.
The biggest issue in MLB, and this is what precipitated the strike of 1994-95, is that there is a divide between small-market owners and large-market owners as big as the one between owners and players.
The two owner factions don’t even agree on the desirability of a salary cap.
What’s better for the owners is very frequently better for the fans. A salary cap could lead to more team control which is better for fans.
Patriot,
That’s an interesting perspective. Why do you think owners do anything for the fans’ benefit?
A salary cap would do essentially nothing to keep ticket/concessions/parking/etc. prices down. They’re set by supply and demand, not from any desire to help the fans.
Hockey is the example of how and why they don’t want a cap.
Would rather have a cap on ticket prices.
Your gripe is with the fans willing to pay the tix and concessions prices. If one refuses to go, then they’re not in their target demographics.
The very same fans that are hoping for a salary floor.
The Owners are willing to accept a salary floor as long as it’s tied to a Salary Cap which the Players to negotiate ANY thing close to a Salary Cap. Translation, neither will ever happen.
I would bet that not all owners are willing to accept a salary floor.
We’ll see.
Okay, now do the same with comp picks.
“What kind of ballpark do you expect me to build with $15MM?!” – John Fisher
It may not buy a stadium, but it buys a lot of mailers, radio/tv spots, and lines a few local politicians pockets to help get his way when it comes to getting the stadium built.
With enough left over for all the Dubai porta-potties, golden showers, and chest dumps a degenerate like John fisher could ask for.
FartCop: Seriously, mailers?
It’s 2024. Nobody does paper mail marketing anymore. There’s a new-fangled thing called email, which is virtually free.
@BB. Yes, seriously. Political mailers are very much still a thing especially when it comes to voting. Old people vote more than most and mailers are effective. Also email is not virtually free. Email marketing on a large scale can be very costly. My org spends several thousand a month on email marketing. Plus mailers during elections are more direct/focused than email you can just circle a map for a voting area and flood it with mailers, while such an area focused email campaign would be less fruitful because inboxes are already overly flooded with promotions.
But now you’re changing your position.
You implied that baseball teams do bulk mail marketing, but they simply don’t.
Political campaigns are a different animal.
But newsflash: Older people use email, including those over 80.
I am not. Stadium funding is voted on by residents. Thats a political campaign. Who do you think funds the pro-stadium campaigns?
So what if they use email? It doesn’t make mailers obsolete and mailers make it to mailboxes and without having to make it through spam filters. Just as much of chance someone reads a mailer as they do a random email.
Also you changed your position. You said “nobody does paper marketing anymore”. Then you turn around and say “political campaigns are a different animal”.
Which is it? Nobody uses it anymore or it’s used?
And blue baron mutes me because he can’t stand being proved wrong while being aggressively contrarian.
Pathetic
And what if they don’t use it as intended?
Free money for the dead beat owners like Fisher, Sherman, and Nutting
Disrespectful to leave Reinsdorf off. Shoutout White Sox Dave
The White Sox are not revenue-sharing participants.
The White Sox are technically a big market team. Jerriy won’t get this money
I’ll believe it when I see it!
I hope the A’s don’t qualify for this because they are moving to Sacramento and violating their tv deal
They get to keep the NBC deal in Sacramento
bag o ballz: Why? What’s it to you?
15 million might get you a broken down 30 something journeyman,a 8 cut pizza, a bag of chips and a can of Pepsi.
Finally the twins can afford to pay Correa and field a full team!
The mariners may have lost in embarrassing fashion once again, but John Stanton still won.
Yep he’s laughing all the way to the bank. Cheap b*st*Rd.
Padres are one of said teams
MLB Network just launched a stand-alone Streaming service for $5.99 per month or add At Bat for a total of $6.99 per month!! This is great news and hopefully a step in the right direction that will lead to lifting local blackouts for MLB-TV..!!
Not holding my breath on lifting the blackouts.
If they just do a national MLB TV deal with no blackouts with revenue shared equally between all 30 teams and stop the RSN madness with local TV deals, then you would have something that evens the playing field, outside of plain incompetent management.
@this one…
Stop making sense…
Word is Fisher was already seen with his hand out…
The concept of a floor isn’t a bad idea if done correctly. The current luxury tax system has worked. For the betterment of the game requiring teams to spend more money at Major league level for salaries is needed. Especially after today’s announcement that Colleges will have 34 baseball scholarships. With 34 baseball scholarships, far less high schoolers will be going into the draft pool…
All games on Netflix or Prime. Make it happen, captain.
Why is MLB allowing a company to say they are broke but still keep buying up minor league teams and MLB broadcasts. Keep fixing problems you Manfraud created. If that blackout rule was actually legit then you would NEVER see a home broadcast of Oakland or other none performing teams. Sad joke.
This is one of the reasons why Baseball is a dying sport, the mlb should find a way to get rid of the stupid black outs and give the fans a way to watch the games on the mlb app.
I’ve known roughly 10 people who were huge baseball fans that now refuse to watch.
I think Manfred’s goal is to have MLB control all broadcasting rights to create leverage. At that point, I think there will be more focus on eliminating all the BS and letting all fans buy all 162 games for all 30 teams, for a price, but without the ridiculous blackouts.