The Atlanta Journal-Constitution
Plenty of good reasons for players to distrust owners
MLB negotiators set a Monday deadline for reaching a labor agreement that would allow the season to start on time. That didn’t happen after a long day of negotiations, so they pushed the target back to Tuesday by 5 p.m. That deadline also passed with no deal. Players are still locked out and, this time, MLB didn’t announce another self-imposed deadline.
I won’t bore you with the details about the issues that separate the two sides. Team owners want to preserve the concessions they won in the past two labor deals. Players want to claw back gains they’d made before then while taking aim at decreasing salaries amid growing revenues. The two sides eventually will hash out those issues, and then the Braves can begin their defense of the World Series title.
But the reason negotiations have dragged on for nearly a year and counting is players don’t trust team owners to deal with them in good faith. That’s with good reason. For decades, team owners have repeatedly been caught lying about their finances. In the 1980s, they colluded to hold down player salaries, and one of them, Bud Selig, would later become MLB commissioner.
Now current MLB Commissioner Rob Manfred has taken up the traditional role of crying poor on behalf of billionaires. Before the current round of negotiations began, Manfred tried to make the case that baseball’s franchise owners would be better off putting their money in a 401(k) account.
“If you look at a purchase price of franchises, the cash that’s put in during the period of ownership and then what they sold for, historically, the return on those investments is below what you get in the stock market,” Manfred said.
Pitchbook, a financial data company that tracks public and private equity markets, looked at those numbers. It found that
MLB franchises appreciated in value by 548% between 2002 and 2020, while the S&P 500 stock market index grew by 381%. MLB revenue grew from $3.58 billion in 2001 to $10.37 billion in 2020. Revenue increased by about 25% from 2015 to 2019, while player salaries decreased by 6.4%.
MLB team owners should be expected to put a pessimistic spin on their finances when angling for labor concessions. But players see Manfred is willing to tell whoppers for that cause. They surely noticed when Manfred told the truth about the so-called Competitive Balance Tax functioning as a salary cap.
“We have tried to deal with payroll disparity by limiting, through the use of taxes, the very highest payroll clubs,” Manfred told NBC 7 in San Diego in 2017. “For the first time in the 25 years since I’ve been in baseball, everybody in the top quartile of clubs had payrolls that actually went down this year due to the increased penalties that were negotiated as part of this (labor agreement).”
Can’t blame franchise owners for wanting to maintain that status quo. But Manfred’s rhetoric probably isn’t helping their cause. It’s better for negotiations if he’s not antagonizing players with easily debunked claims about baseball’s finances. Fans just want to see baseball, but Manfred’s statements are so preposterous that even some of them must be catching on to his bad faith act.
It started as soon as MLB locked out players Dec. 2. Manfred wrote a letter to fans describing it as a “defensive” move. He expressed hope the measure would “jump-start the negotiations” with players. Then MLB didn’t present the union an offer for more than six weeks.
The flimflam has continued, according to ESPN’S Jeff Passan. He reported that Manfred last week asked union Executive Director Tony Clark to make significant concessions with the Competitive Balance Tax. Clark came back the next day with a proposal that included a lower CBT threshold plus no calls for changes to the revenue-sharing system, a key point of contention for team owners.
MLB countered with an offer that included CBT penalties harsher than those in the expired labor deal, according to Passan. That would accelerate the trend that Manfred described: less spending on payroll by the richest teams. At least the baitand-switch by team owners didn’t halt negotiations.
Those talks hit more snags in the hours before MLB’S Tuesday deadline. Several reports quoted an unnamed MLB spokesperson as saying negotiations had gone backward and accusing players of reneging on previous proposals. Giants pitcher Alex Wood, who began his MLB career with the Braves, pushed back on that narrative with a post to his Twitter account.
“The last (24 hours) I’d say there was cautious optimism on the players side because the owners were actually at the table negotiating with us toward a deal,” Wood wrote. “What we’re asking is more than fair. If there’s no deal the optimism from MLB was a PR illusion to make it look like they tried.”
If there’s a hint of acrimony in Wood’s response, then I get it. MLB team owners have been pulling such ploys for ages. Manfred’s predecessors have been front men for a lot of dubious claims that haven’t held up to scrutiny.
By 2002, baseball was recovering from a players’ strike that wiped out the 1994 postseason. Juiced-up sluggers were generating excitement, and the federal investigation that would ensnare them hadn’t yet been revealed. But Selig was making the case that baseball needed a cap on player salaries because owners were going broke paying them.
If that were the case, then why were franchises still selling for record-breaking prices?
“The bigger fool theory!” Selig told Sports Illustrated. “Gone. Gone. There are just no buyers. Nobody.”
And yet bigger fools kept lining up to pay more and more for franchises. Since 2002, 15 MLB franchises have been sold. The average annual return on investment for those transactions was about 56.7% and the mean roughly 45%.
Former MLB Commissioner Peter Ueberroth had sounded a similar alarm years before Selig.
“The only person that can own small-market teams is some very rich semi-fool who doesn’t mind losing a lot of money for five years of his life,” Ueberroth said during a 1997 appearance on “Real Sports with Bryant Gumbel.”
Four years prior, MLB had expanded with franchises in two relatively small markets, Denver (Rockies) and South Florida (Marlins). The Marlins were bought for $158.5 million in 1998 and sold for $1.3 billion in 2017. Kansas City is the nation’s 34th-largest market, according to Nielsen. The Royals were sold for $1 billion in 2020.
The buyers of MLB franchises aren’t fools. They are businesspeople making a great investment in an asset that’s propped up by public subsidies and comes with massive tax benefits. Baseball players also aren’t fools. They see the numbers, know the history and rightfully don’t trust team owners.
That’s a big reason why players have been locked out for three months with no new labor deal.