Previously: the Owners aren’t making a lick of sense!
Last time: No, really, it’s not the fault of both sides!
MLB today indicated a willingness to miss a month of games and took a more threatening tone than yesterday, sources briefed on the day’s first meeting between MLB and the Players Association tell me, @Ken_Rosenthal and @FabianArdaya. Full context of conversation not yet known.
— Evan Drellich (@EvanDrellich) February 28, 2022
Whether there’s an extension of the MLB-imposed deadline of tonight is in MLB’s court, a union source said, but the sides have discussed it. Sides still said to be very far apart on key aspects of deal.
— Evan Drellich (@EvanDrellich) March 1, 2022
There will be no deal on a new collective-bargaining agreement in this early hour, sources tell ESPN. Enough progress was made that MLB and the MLBPA will meet again later today in hopes of finalizing one. Deadline to miss regular-season games has been moved to 5 p.m. today.
— Jeff Passan (@JeffPassan) March 1, 2022
Uh oh. The batter is looking overpowered up there. Just barely got a piece of that one.
BREAKING: MLBPA player leaders agreed unanimously not to accept MLB’s final proposal, and there will be no deal on a new collective-bargaining agreement before MLB’s 5 p.m. ET deadline, sources tell ESPN.
MLB has threatened to cancel its March 31 Opening Day without a new deal.
— Jeff Passan (@JeffPassan) March 1, 2022
….The MLBPA had a decidedly different tone today and made proposals inconsistent with the prior discussions. We will be making our best offer before the 5 pm deadline for the MLBPA that’s a fair deal for players and clubs.”
— Jesse Rogers (@JesseRogersESPN) March 1, 2022
Opening Day 2022, as scheduled, is canceled
The commissioner cancels the first two series of the year, which for the Dodgers would March 31 to April 3 (vs. Colorado) and April 4 to April 6 (vs. Arizona). The earliest that the season could start is April 8, at Colorado.
Manfred: “The concern about our fans is at the very top of our consideration list.”
Uh huh. A unilateral lockout leading to a unilateral cancellation of regular-season games. But you have the chutzpah to say that.
I wish I could say I am surprised with the current state of things. But I’m not. And it looks like Minneapolis is likely not happening. On the plus side, I would avoid Minnesota in April.
Per Evan Drelich, of The Athletic, on February 26 (paywalled):
The most cynical read is that the owners want to break the union, that they want to squash the players once and for all, or at the least discourage them from taking up such fights again anytime soon. Indeed, it is a suspicion held by some on the players’ side — and also the kind of viewpoint that those on the players’ side could effectively embellish as a rallying cry. But so far, what evidence is there otherwise? The league would suggest that its offers to date improve the players’ lot. It is true that in some individual areas, the league has proposed changes that would be positive for players relative to what was in place before (never mind for a moment that in one area in particular, the luxury tax, the league has proposed an onerous step backward)….
You get what you fight for, what you negotiate. What you’re willing to suffer lost paychecks and loud criticism for. And the same logic, by the way, applies to the owners and their positions. Don’t want to give up more to the players? Simple: outlast ’em.
The owners were never, ever going to hand over hundreds of millions of dollars to the players unless they had to. You could suggest it would have been the nice thing to do, or the benevolent thing to do, to move closer to the players’ position. Certainly, some people would argue it would have been the right thing to do, if not for the sake of fairness itself, then for the health of the sport. But that is simply not the way the world works. It was never going to happen of the owners’ own volition.
Once games start to fall off the calendar, the real talks will begin. After years of anger, with so much on the line, what’s another few days of waiting? What’s a few missed games in April?
It’s the little things really. Let’s set the mood.
Fun fact: Gilbert O’Sullivan was 21 when he wrote this song. Also, his mother was very much alive when he wrote the song and he didn’t know his father that well, due to his father who was an alcoholic (figurative) bastard.
Okay – so the shoe we’ve waiting to drop has finally dropped. It stinks.
You would think that someone as loquacious as I am would have something more apt to say on the matter, but I don’t. It stinks. It really stinks.
You will likely be tempted in blaming both the Players and the Owners for the current state of things. As I have previously argued and demonstrated, I would sincerely hope that you, dear reader, are not tempted to succumb to this temptation.
“The Players and Owners don’t care about the fans. They should have made a deal yesterday! They should make a deal today!”
You are starting to hear this “argument” from some corners.
From Peter Gammons, The Athletic, February 25 (paywalled):
Usually it’s around Lincoln’s birthday that the sound of Eddie Vedder singing “no matter how cold the winter, there’s a springtime ahead” plays time and time and time again in my head. But Lincoln’s birthday passed this year, and the springtime ahead was not usual, scheduled or definable, as the parties that make and mold baseball chose not to collaborate on their sport and livelihood. Instead, they remained focused on the shiny objects so intently that Lincoln’s famous phrase, “no man has a good enough memory to be a successful liar,” seems particularly apt right now.
The day Major League Baseball announced spring training games would be postponed, further endangering the opening of the regular season, George Springer said the “one good thing about the delay is being about to spend more time with my (13-month-old) son.” No mention of labor, just his son. And preparing under any condition for the regular season and the future of the Toronto Blue Jays. He talked about “looking forward to playing a whole season with Toronto as a home park.”
Come on, man – you are a literal Hall of Fame inductee. You should know better. Besides, please don’t make a prominent member of the 2017 Houston Asterisks as the avatar as to why you want baseball to come back when you have a perfectly good, and not-tainted example, right here:
And I’m sure Mookie Betts isn’t doing anything. That’s not a dig. He’s a handsome, talented man. If George Springer is the best the sport can do, maybe it’s time to pack it up for a bit.
The most glaring example comes from The Washington Post, Ms. Chelsea Janes, on February 26:
But the sides are stuck, in part because needing to appeal to a broader base doesn’t mean either side is wrong to push for the most favorable agreement possible. They are stuck because expecting either to concede an inch to the other for the sake of the sport is unrealistic. Manfred’s title, commissioner of baseball, implies stewardship of the sport. His job description, at least in the minds of those who hired him, is to represent the interests of the owners — interests which, in financial reality or the minds of those who matter, have moved steadily away from what is best for the sport.
And the players are employees, in some ways like those in any other American union, bargaining for the best compensation they can get. Whatever public opinion dictates about how much they are paid or whether people so handsomely compensated should be this determined to get paid more, they are workers who should not necessarily be expected to put the best interests of the sport ahead of their interests, either, particularly when putting their interests aside feels like conceding to even wealthier owners they believe are crying poor for their own convenience. Plus, even when [the Players] gave the owners what they believed to be major concessions on several major issues Saturday, MLB’s negotiating team dismissed them as not being real moves at all. What incentive is there to meet in the middle if only one party is willing to do it — or if those involved can’t even agree on what the middle would be?”
Has this writer not been paying any attention? The Owners imposed the Lockout at the first opportunity. The Owners could lift the lockout at this very moment and bargain that the current terms continue while the Parties continue to negotiate. The two paragraphs almost have nothing to do with each other, as if written at different times under different sets of circumstances.
Ms. Janes continues:
But players and owners have always been that way. Something about this year’s negotiation has reinvigorated an obstinacy that used to define these negotiations every five years. The something is this: The players felt they lost negotiations in 2016, that they ceded ground in their CBA and therefore gritted their teeth ahead of 2021. They hired Bruce Meyer, who had never been the lead man on an MLB negotiation before, to help them. And for five years, Manfred’s unpopular unilateral decisions and glib statements spurred animosity and mistrust among players, a hostility that festered and spiraled to the point that his status as a guile-driven villain became cemented in players’ minds. That animosity only grew Saturday when the players heard the owners wave aside their proposal, leading to expletives and widespread frustration, according to multiple people in the room.
So they are here, at Roger Dean Stadium, roughly 48 hours away from letting this labor dispute turn into the most destructive in a generation, consumed by the details and ensuring the public knows the other side is to blame — calculating only how the details of a deal will affect their livelihoods, unwilling and unable to calculate what will be lost for every day they go without one.
That’s a long wind-up to journalistically say the following:
As bad takes go, hers is pretty bad. I’m trying not to repeat myself, so I’ll merely refer back to Part 2. Thankfully, the view appears to be in the minority from what I am able to tell. In fact, most writers are starting to get off the fence and take the (figurative) gloves off. Eric posted an excellent summary, which you can read here.
Per Andy McCullough, The Athletic, February 27 (paywalled):
The owners did this.
The owners initiated this shutdown. The owners waited 43 days to make a proposal. The owners have refused to budge on the relatively modest requests made by the players for a more equitable piece of the industry’s massive revenue pie. The players are willing to grow the pie by diluting the playoffs and sullying their uniforms with ads. They just want to get paid better. The union isn’t rallying for revolution; they’re asking for a cost-of-living raise.
That’s all. That’s it. And the reason baseball is not happening, the reason camps are closed, is because this legal monopoly — the stewards of the sport who have refused to pay minor-leaguers the minimum wage and contracted affiliates and shrunk the draft these past few years — will not pay the players a bit more.
At worst, I’m trying to inform and entertain you all. And if a Haim sister ends up noticing my work – cool. Not counting on it, just throwing it out into the universe.
But okay, we’re finally here: lost regular-season games. In some respects, this outcome has been on the wall for a while now. Especially when you see the argument behind the Owners’ position: we must maintain the status quo and any threat to the revenue stream must be squashed like a bug.
The above topic sentence is not to say that the Dodgers can’t afford Freeman (they probably can) or that they couldn’t use him (they probably could). If the Dodgers can sign him and can make the numbers work, they probably should. But the fact he’s even available is shocking when you consider the recent financial news about the Atlanta Braves that just came out.
My point, which was made by Jeff Schultz of The Athletic, a team that was being square with its players and fans would have already signed Freddie Freeman, and ties into the arguments I proffered in Part 1. Imagine if the Dodgers let Max Muncy reach the open market with grumblings that he might not re-sign. That scenario would be shocking.
Hence, something funny is probably going on in Atlanta that merits a closer look.
By Schultz, February 25 (paywalled):
Imagine pulling up to a soup kitchen in a Bentley.
This shouldn’t come as any surprise, given that the Braves’ first World Series title since 1995 drove ticket sales and revenue streams in and around the stadium through the economic roof. … Cue the cartoon of Scrooge McDuck diving into a pile of gold coins. The Braves posted a record $568 million in revenue from baseball and development (up from $178 million in the pandemic season 2020). The 2021 revenue far exceeded the previous record of the last pre-pandemic season of $476 million in 2019. This effectively amounted to a 2021 profit of $111 million (baseball and development combined) in adjusted operating income before depreciation and amortization (OIBDA, in geek-speak).
Mr. Schultz didn’t include a GIF of Scrooge McDuck at this point, because (most likely) he is a serious journalist who is above such silly things. I am not above such things. Nor would I consider myself a serious … well, anything.
Mr. Schultz continued, sans the GIF:
MLB commissioner Rob Manfred said recently the stock market is a safer investment than owning a baseball team. He looks foolish.
“We capped off an incredible 2021 with our World Series title,” Liberty CEO Greg Maffei told investors on a conference call. “And we will start 2022 with the highest number of season ticket holders in 22 seasons, since 2000. We are sold out of our premium seats for the first time in Truist Park history, including all the suites. … And in 2021 The Battery had close to nine million visitors, including 330,000 during three World Series games.”
As such, there is no fathomable reason that Freddie Freeman remained unsigned prior to the owners instituting the current lockout. It’s not like he’s an institution to Atlanta (he is); it’s not as if his skills have immeasurably declined (from what I can tell, they haven’t); it’s not as if he’s too old to play ball (he’s 32 – this paycheck is probably his last major paycheck), and it’s not as if he’s an unprofitable or niche position (the dude can play first base – ask the Dodgers if they want to recall when they lost their regular first baseman at the end of last season – and no, I’m not picking on Andy Burns).
There were those who argued that my focus on team valuations in Part 1 was missing the point as to the owners’ collective financial situation. I disagree. The vast majority of team financial information is sequestered and private, but the loans and the outside credit have to come from somewhere. Banks and other financial institutions are not in the business of just giving out cash for no good reason —
Aren’t you forgetting something?
Okay, point taken, banks and other financial institutions are not supposed to be in the business of just giving out cash for no good reason. You like financial crashes, because that situation is how you get ants, er financial crashes. Unless you believe for one second that the owners are putting up their own money, in which case I have a slightly used, orange bridge in San Francisco I would like to sell you. I will accept payment in the form of a cashier’s check.
Because the one set of financials that we do have access to demonstrates that at least one mid-market team drew in ridiculous amounts of cash last season. As Liberty Media is publicly traded, and as they own the Atlanta ballclub, they have to release quarterly reports, which are summarized below:
ENGLEWOOD, Colo. – Liberty Media, which owns the Atlanta Braves and The Battery Atlanta development surrounding Truist Park, released 2021 year-end financial results, which show the impact of the 2021 World Series on the company’s earnings.
Liberty Media’s Braves Group reported $568 million in revenue from baseball and development in a Friday morning press release. The company reported $6 million in baseball revenue per home game in 2021.
Liberty Media reported $93 million in baseball revenue in the fourth quarter alone, which included all eight of the club’s postseason games in addition to three regular season games.
Revenue spiked after a 2020 season, shortened by the COVID-19 pandemic saw $142 million in baseball revenue.
If we dig a little deeper into Liberty Media’s financials, we see that the team had $568 million dollars in revenue while having annual expenses of $457 million dollars. Now, if you went “woah,” as I did, that expense number should pop out at you. Considering what I have previously written, it begs the question: just where is all this money being spent.
Per Tim Tucker, the Atlanta Journal-Constitution, on February 25, 2022:
The Braves ranked second in MLB in home attendance last season, in part because they reopened their stadium to full attendance earlier than 28 of the 29 other teams.
Liberty Media also disclosed that the Braves carried debt of $700 million as of Dec. 31, down from $721 million three months earlier. The debt stems largely from borrowing associated with [the] construction of Truist Park, The Battery and a spring-training facility in North Port, Fla.
The second phase of The Battery “is nearing an on-time and on-budget completion” with an expected cost of $200 million, Liberty said.
$700 million dollars in debt?!? Where did all that money go? I keep drifting back to the words “construction of Truist (then SunTrust) Park, ” as that number doesn’t seem right. I don’t recall Atlanta, pulling a San Francisco Giants and paying for the construction of their ballpark themselves (hat tip McCovey Chronicles and Doug Bruzzone!).
Here are the numbers for the construction costs of SunTrust, now-Truist Park, from the Atlanta Journal-Constitution, Mr. Dan Klepal and Mr. Brad Schrade, May 27, 2014 (archived):
Cobb Commissioners voted unanimously, 5-0, on the operating agreement that will bound the county to borrow up to $396 million to build the Atlanta Braves a new stadium scheduled to open in 2017….
Tonight’s vote culminates months of negotiations between county and team officials, which followed commission approval of a preliminary agreement in November.
Here’s a breakdown of the deal.
Stadium Project Budget: $622 million
Public Contribution: $392 million ($368 million in bonds*
$14 million in transportation sales tax
$10 million cash from businesses in the Cumberland Community Improvement District
*Does not include up to $29 million in additional county debt to pay the first 15 months of interest and up-front borrowing costs. The interest rate at the time of the issuance will determine the exact amount borrowed. The maximum bond issuance could be $397 million.
Braves Contribution: $230 million, which can be increased up to $280 million at the team’s discretion.
County’s maximum annual payment: $25 million**
(Author’s Note: **This amount is the legal maximum annual debt payment. The exact amount will depend on interest rates at the time of the bond issuance. County officials have estimated the annual payment is unlikely to exceed $24 million.)
Okay, it figures that Atlanta paid a portion but that the taxpayer picked up the rest of the tab. So that’s at most $300 million of the debt. Where is the rest of it?
County annual revenue sources for bond payments:
Renewal of countywide property tax levy: $8.6 million
Braves rent: $6.1 million
New property tax from Cumberland-area businesses: $5.1 million
New nightly hotel room fee: $2.7 million
Existing hotel-motel tax: $940,000
New rental car tax in unincorporated Cobb: $400,000
So the Atlanta Braves made its annual rent in 2021 after a single game last year?!? Good grief, imagine the personal equivalent – oh I went to work today and I earned enough revenue to pay my rent for the entire year. Oh, and it’s worth noting that the team has a 50% stake in the luxury hotel that is literally feet from the ballpark.
Rather than draw this discussion out, here’s the relative proportion of these numbers back in 2020, per Tim Tucker, The Atlanta Journal-Constitution, on August 11, 2020:
According to a quarterly filing by team owner Liberty Media with the U.S. Securities and Exchange Commission, the Braves’ debt as of June 30 included $297 million from the construction of Truist Park (formerly SunTrust Park), $206 million from the construction of The Battery Atlanta mixed-use complex adjacent to the stadium, $30 million from construction of a spring training facility in North Port, Fla., and $185 million for operations.
The Braves’ debt load has increased from $559 million at the end of 2019, with the additional borrowing used for operations and for [the] ongoing construction of the second phase of The Battery. That phase is expected to cost $200 million by completion, with about $95 million in additional debt funding remaining, according to Liberty Media.
So, if I’m reading these figures correctly, the team fronted almost $300 million for the ballpark with the County (aka the taxpayer committing the remainder). The team has also committed almost $400 million in the construction of The Battery Atlanta. Also, the team had $344 million in other operating expenses in 2019 which dropped to $170 million in 2020. This figure jumped to $377 million in 2021.
Oh, and at the end of the 2021 season, Atlanta’s payroll was in the ballpark of $153 million dollars, which is above the median in player salaries in the majors in 2021, but that’s a sneak peek into Part 3 – The Art of the Tank.
I suppose you learn to spend what’s in your pocket, but I would not expect organizations to follow that line of thinking.
And yet, Atlanta is seemingly pinching pennies over retaining the face of their franchise…even though they are making money hand over fist and spending it just as quickly…after their first title since the 1990s…and they are balking at bringing their franchise player back, which could be the Dodgers’ gain.
And in case it was not mentioned elsewhere, it will take 23 Owners to ratify an agreement with the Players. So whales like the Dodgers and Yankees are outnumbered by the spendthrifts elsewhere, I suppose I’ll have to come up with a nickname for them. (Spoiler alert: I did.)
I’m still not an accountant, but I still wonder whether my original hypothesis raised in Part 1 is true. Honestly, the hypothesis seems true, but, once again, it’s not my money.