MLB players, facing stagnant salaries and CBA battle, now have revenue-sharing fight on hands

Before this unprecedented Major League Baseball season can lurch any closer to fruition, its players must confront an internal dilemma that will stretch beyond 2020.

As owners and the union aim for agreement on how to mitigate billions of dollars in lost revenue from playing games in empty stadiums – should even that be possible – a group that has enjoyed almost unchecked salary growth and solidarity for the last 50 years has been asked to swallow the unthinkable at a time they’re already backed against the ropes.

With COVID-19 depleting the industry’s mutually distributed riches, owners are prepared to offer the players a 50% share of revenue, USA TODAY Sports reported, rather than the pro-rated portion of their salaries the sides agreed upon in March.

Revenue sharing is, in the players’ minds, the equally evil cousin of the salary cap, a poison pill that owners tried to implement in 1994 even if the cost was the 1994 World Series. Instead, players held strong, the Series was canceled and, despite the fallout, everybody got richer and richer in the decades that followed.

Now, the most powerful union in sports – and almost any industry – is faced with crises both immediate and existential:

Major league owners and players must figure out how to mitigate billions of dollars in lost revenue by playing in empty stadiums. (Photo: Jayne Kamin-Oncea, USA TODAY Sports)

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-After years of outpacing other leagues with regard to salary, guaranteed money and benefits, MLB now feels it can put players, at least temporarily, alongside their brethren in the NFL (whose players just agreed to a 48% share of revenue), NBA (which guarantees players 49-51% of revenues each year) and NHL (50% share).

-Yet unfortunately for them, after years of salary stagnation in an era when industry revenues continue to boom, capturing 50% of revenue wouldn’t look much different from recent years, anyway.

For two consecutive seasons, the average major league salary has stagnated or suffered a slight drop, depending on your methodology. Safe to say that for the players, who made an average of around $4 million in 2018-19, flat is the new up.

Not so for owners.

Forbes and other estimates put 2019 industry revenues at $10.7 billion, up from $10.3 billion a year earlier and approaching double the $5.8 billion a decade earlier.

Now, knock off about a billion dollars in operating costs for league entities. And then consider the $4.58 billion in salaries and benefits players earned in 2019, per 40-man payroll estimates by Cot's Baseball Contracts.

That left players with 47.3% of revenues.

Naturally, this back-of-the-napkin math won’t be totally square, and industry revenue estimates can greatly vary and are often disputed. But the shrinking share of the financial pie is undeniable – and that's before factoring in ownership revenue that's totally off the books, such as real estate interests around their mostly publicly funded ballparks.

In 2008, then-MLB executive vice president Rob Manfred told Sports Business Journal that he estimated players’ share of revenue was 52% in 2007. Multiple studies indicate player revenue share had peaked in 2003 at a whopping 63%.

A year later, the effects of a collective bargaining agreement hammered out by Manfred and Co. in late 2002 (narrowly avoiding another work stoppage) began to settle: The average salary dropped in 2004, the first time it fell in a year that didn’t involve a work stoppage (1995) or owners being found guilty of collusion (1987).

There have been no collusion charges yet to explain the two most recent and consecutive years of salary drops, but suffice to say, players, the union and agents have been aghast at various owners exhibiting lack of interest in competition.

The revenue-salary gap will significantly frame talks for a new collective bargaining agreement after the 2021 season, a negotiation in which the union is expected to seek significant changes to free agency and the pay structure to mitigate the devaluation of veteran players.

So, what does that mean for a 2020 season that may not even exist?

At the least, it puts players – already putting their health at risk – in an unenviable spot. They will refuse to set the precedent of accepting a percentage of revenues, and will vigorously oppose any proposal with a revenue split at its center. They already believe they are set to receive pro-rated salaries per March negotiations – “That negotiation is over,” union executive director Tony Clark said in an April statement – while MLB asserts the agreement did not include games played in empty stadiums.

Yet, if the court of public opinion based on the many past work stoppages is any indication, any effort to fight MLB’s offer may well be viewed as obstructionist and tone-deaf, particularly amid a global pandemic (So, too, are any potentially bad-faith dealings from ownership, though that part of the sausage-making usually occurs well behind the scenes).

They also know the real fight is a year away, and that political capital with a ticket-buying public that often somehow sides with billionaires over millionaires is already limited.

The pandemic itself may render the current issues moot, but both sides must act as if the season will occur. For the players, that means determining how hard to fight now when the larger battle looms on the horizon.

It is a most unenviable position from which to operate.

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