DeWitt Claims Baseball Industry “Isn’t Very Profitable”
Cardinals chairman Bill DeWitt Jr. offered some eyebrow-raising comments in an interview with Frank Cusumano of 590 The Fan (audio link). You’ll want to listen to the entire chat for yourself, but we’ll cover some pertinent elements here — in particular, his highly questionable claim that the baseball industry isn’t even a terribly profitable one.
DeWitt says he believes there will be a 2020 season and that the game will be fine in the long haul. Baseball has “always survived and come back stronger,” he says.
But that doesn’t mean it’ll come about through a mutually satisfactory bargaining process. Indeed, DeWitt seemed less than optimistic that the sides will end up agreeing to terms.
“At some point we do have the right to implement a season and pay full salaries and the only way it makes sense is with a shorter season,” he said. “And that’s I think the way it’ll turn out.”
DeWitt insists that the owners want to make the season as long as possible. At the same time, he rejected the idea of pushing play outside the normal bounds of late October/early November. He cited concerns of a second COVID-19 wave and called it “a little bit of a ridiculous proposal” to imagine “Christmas shopping while you’re watching the World Series on television.”
The Cards’ chairman left little doubt as to where the league sees its leverage. “We understand that if we implement a season — a shorter season — that they will get full pay but in total they’ll make less money,” he said. “So it really doesn’t make a lot of sense for them to continue to hold out.”
That’s all interesting enough, but DeWitt’s most notable comments came when he attempted an explanation of the owners’ overarching position that players should share in the downside of a limited 2020 campaign. The host posed the question why players should subsidize losses even when their salaries have declined on average while the game raked in record revenues over the past two seasons.
DeWitt rejected the idea that declining salaries were tied to more profits: “don’t think for a minute that the reduced payroll added money in the pockets of the owners because it didn’t.” Citing the growth of non-player personnel — from 240 to 400 in the past six years, he says — DeWitt claims “It’s a bit of a zero-sum game” because “a lot more is put into training, conditioning, promotional work, front office, analytics.”
One might respond that what the teams are really doing with those alternative investments — given the areas of emphasis DeWitt cited — is looking for more efficient ways to spend their roster-related funds. And to boost the profitability of the existing product.
But DeWitt insists, against all reason, that “The industry isn’t very profitable, to be quite honest.” It’s rather a remarkable quote.
Depending upon how one draws the lines around the multi-faceted business efforts tied to the game, it may be possible to narrowly support such a claim. But surely, when you pull in broader efforts — television, retail, real estate — someone is making money in the industry?
DeWitt even rejects that notion in large part. He referenced the Cardinals’ massive Ballpark Village effort — the second phase of which the team values at $260MM. It’s an opportunity to benefit St. Louis, he says, but for the Cardinals? Per DeWitt, “we don’t view as a great profit opportunity.”
DeWitt went on to suggest that it’s the players’ own historic preference for market-based salaries that is gumming up the efforts to resume play. Other sports are “aligned with the players,” says DeWitt, because “the more the revenue the more the players get based on a formula.” It’s interesting that this viewpoint arose at this particular moment, during a downturn. And it’s not entirely clear why such a sophisticated businessperson suddenly feels he and his fellow owners aren’t able to adequately consider costs and revenues when bidding on talent.
DeWitt notes that there’s “been a little bit of distrust” when it comes to the players believing ownership’s sharing of financial information. Frankly, it’s not hard to see why. Players have indeed shared in the benefits over the years, as DeWitt notes, even as franchise values have soared. Even though many of the league’s main profit-generating efforts have occurred somewhat outside the scope of the arena the players can access directly, they’ve no doubt been able to secure greater paydays as a result. But it’s inconceivable that wealthy investors would continue to tie up billions of dollars into a business that doesn’t throw off profits. Arguing otherwise won’t help rebuild that missing trust.
American League Future Salary Guarantees
In recent weeks, we have gone through the future payroll obligations of every American League team. These contract commitments were locked in before the terms “coronavirus” and “covid” were permanently embedded in the general public’s lexicon. You can find every individual team’s player-by-player breakdown at this link.
We’ll soon begin marching through the N.L. sides and then undertake some further examination of the overall numbers. First, let’s pause to put the A.L. numbers in context. The chart below orders the American League teams by total post-2020 salary obligations.
(Click here to view the chart at full size.)
Ryan O’Rourke Announces Retirement
Former MLB southpaw Ryan O’Rourke announced last night on Twitter that he’s hanging up his spikes. MLBTR wishes him the best in his future endeavors.
O’Rourke made two appearances last year with the Mets before he was cut loose. He caught on with the Twins on a mid-season minors deal but never got the call to the MLB roster.
Most of O’Rourke’s experience at the highest level of the game came in his 2015-16 stint with the Twins. Over 47 frames in 54 appearances, he worked to a 4.98 ERA with 9.2 K/9 and 4.8 BB/9.
O’Rourke, a Massachusetts native and former 13th round pick, did find quite a bit of success at the Triple-A level. Through an even one hundred appearances over five campaigns, he posted a cumulative 3.29 ERA.
Angels’ Future Payroll Features 4 High-Dollar Players
2020 salary terms still need to be hammered out. But what about what’s owed to players beyond that point? The near-term economic picture remains questionable at best. That’ll make teams all the more cautious with guaranteed future salaries.
Every organization has some amount of future cash committed to players, all of it done before the coronavirus pandemic swept the globe. There are several different ways to look at salaries; for instance, for purposes of calculating the luxury tax, the average annual value is the touchstone, with up-front bonuses spread over the life of the deal. For this exercise, we’ll focus on actual cash outlays that still have yet to be paid.
We’ll run through every team, with a big assist from the Cot’s Baseball Contracts database. Next up is the Angels:
(click to expand/view detail list)
Dipoto On Mariners’ Plans For Top Prospects
The Mariners never expected to contend in 2020, but a lost or truncated season stands to impact the club’s developmental timeline. GM Jerry Dipoto discussed his organization’s approach, especially with regard to its top prospects, with Larry Stone of the Seattle Times.
Dipoto acknowledged the tightrope the team is likely to encounter with exciting young talents such as Logan Gilbert and Jarred Kelenic. On the one hand, the original plan was for such players to open the year “in developmental mode” in the upper minors. And while it went unsaid, it stands to reason that the Seattle front office isn’t anxious to burn up service time unnecessarily.
On the other hand, Dipoto is cognizant of the need to squeeze in as much development as possible. These guys need reps and seem unlikely to find them at Triple-A in 2020. Getting prospects the requisite playing experience “becomes a little more challenging when there may not be a league for them to go play in,” Dipoto explains.
“We are very committed to the idea that their development is more important to us than virtually anything else we’re going to do this year,” says Dipoto. “We’re still committed to that idea, and this will just be a delicate balance for not trying to rush them, but make sure they get the competition reps to the best of our ability.”
It sounds as if it’s still up in the air whether and for how long we might get a glimpse of these highly regarded youngsters. That’s all presuming there’s a season at all, of course.
The Seattle brass is clearly pessimistic about anything like a typical minor-league season. It’s not hard to see why, given the stumbling effort to get a MLB campaign underway. But Dipoto says there is some hope that many minor-leaguers will get some sort of competitive action. He says he’s “optimistic” that minor-league action of some kind will be possible later in the year.
More broadly, Dipoto says, the club is bullish on the organization’s outlook. The Mariners’ slate of future financial commitments isn’t onerous; most of it is promised to younger players. As a whole, the current MLB roster is quite youthful, and there’s hope that some new stars are just on the horizon. It’ll certainly be fun to watch if the M’s decide to throw some of that talent into the bigs in an offbeat 2020 campaign.
76ers, Devils Owners Eyeing Mets
Josh Harris and David Blitzer are “in the early stages” of compiling a bid for the Mets, Scott Soshnick of Variety reports. They join a still-amorphous A-Rod/J.Lo bidding group among known pursuers of the club.
There’s little question that Harris and Blitzer have ample experience in purchasing and running major sports franchises. The former is principal owner of the NBA’s Philadelphia 76ers and NHL’s New Jersey Devils. The latter also has ownership stakes in those franchises. Both are shareholders in the Premier League side Crystal Palace F.C. There’s baseball experience, too: Blitzer co-owns the Yankees’ Triple-A affiliate (the Scranton Wilkes-Barre RailRiders), an interest he’d likely have to divest to swing this deal.
The pair of potential Mets owners surely aren’t looking only for a fun place to park their capital. Both acquired their bankroll through their work at famed private equity shops (Apollo Global Management and Blackstone, respectively). And they’ve made out like bandits through their other sports-related investments.
New bidders generally represent good news for the current ownership group, led by Fred and Jeff Wilpon. Then again, it seems notable that this particular slate of candidates is only just emerging. Harris and Blitzer may well smell an opportunity.
It remains hard to imagine that the Wilpons will be able to wrangle the $2B asking price they’ve reportedly placed on the franchise — unless, perhaps, they waver on their desire to hang on to the SNY network. No doubt profit-minded investors will want the television revenue opportunity to be included in the package.
Athletics Have Ample Future Payroll Flexibility
2020 salary terms still need to be hammered out. But what about what’s owed to players beyond that point? The near-term economic picture remains questionable at best. That’ll make teams all the more cautious with guaranteed future salaries.
Every organization has some amount of future cash committed to players, all of it done before the coronavirus pandemic swept the globe. There are several different ways to look at salaries; for instance, for purposes of calculating the luxury tax, the average annual value is the touchstone, with up-front bonuses spread over the life of the deal. For this exercise, we’ll focus on actual cash outlays that still have yet to be paid.
We’ll run through every team, with a big assist from the Cot’s Baseball Contracts database. Next up is the Athletics:
*Includes buyouts of club options over Stephen Piscotty and Jake Diekman
(click to expand/view detail list)
MLB Will Propose Financial Plan To Players On Tuesday
TODAY: Though the league’s proposal is still days away, there is “more optimism” that a deal can be reached to launch the 2020 season, according to MLB Network’s Jon Heyman (Twitter links). While many details still stand in the way of an agreement, both the league and the MLBPA are aware of the stakes, both the financial cost if no games are played, as well as the “understanding on both sides what cancellation of [the] season would do to” damage baseball as a whole. To this end, Heyman writes that the “belief is, both sides will compromise” in some fashion from their current positions — the owners’ desire for a 50/50 revenue split and the players’ desire for prorated salaries.
MAY 22: There’s been an awful lot of debate surrounding the financials of a prospective 2020 MLB campaign, but the league has yet to issue a formal proposal to the MLB Players Association. That will finally take place on Tuesday, per Evan Drellich of The Athletic (via Twitter).
What isn’t yet known is just what sort of concept the league will ultimately put in front of the players. Prior talk of a 50/50 revenue-sharing plan for salaries was met with quite some angst from the labor perspective. That set off a round of bizarre debate regarding the meaning of the sides’ late-March preliminary agreement on resuming play in 2020.
The MLBPA position remains that the players have already agreed to a pro rata reduction of pay and shouldn’t be forced to give up more — unless, at least, the league comes forward with additional information demonstrating it would not be economically feasible to stage a season otherwise. The league side believes the original agreement really didn’t address the matter of salaries in the event that games are played without attending fans (as seems all but certain).
At the end of the day, regardless of the interpretation of the prior agreement, the sides will need to find common ground on salaries to get an already-challenging 2020 campaign rolling. And there are immense incentives for both sides to figure things out. It’d be a true shocker to see a stalemate hold up a resumption of play. The effort to avoid that mutually disastrous outcome — and to jockey for the best position short of it — will begin a new chapter upon the presentation of this new proposal on Tuesday.
Altuve & Bregman Dominate Astros’ Long-Term Payroll
2020 salary terms are set to be hammered out in the coming days. But what about what’s owed to players beyond that point? The near-term economic picture remains questionable at best. That’ll make teams all the more cautious with guaranteed future salaries.
Every organization has some amount of future cash committed to players, all of it done before the coronavirus pandemic swept the globe. There are several different ways to look at salaries; for instance, for purposes of calculating the luxury tax, the average annual value is the touchstone, with up-front bonuses spread over the life of the deal. For this exercise, we’ll focus on actual cash outlays that still have yet to be paid.
We’ll run through every team, with a big assist from the Cot’s Baseball Contracts database. Next up is the Astros:
(click to expand/view detail list)
Astros Total Future Cash Obligation: $254.79MM
*includes buyouts of club options
*excludes remaining obligation to Zack Greinke retained by Diamondbacks
Jung Ho Kang Seeking KBO Comeback
It emerged recently that former Korea Baseball Organization superstar and Pirates infielder Jung Ho Kang was interested in resuming his career in his native Korea. But it wasn’t clear just how he planned to accomplish that.
Trouble is, Kang has been arrested three times for driving under the influence — a shameful mark that scuttled his MLB career and subjects him to the KBO’s harsh mandatory minimum suspension of three years. At 33 years of age, a three-year wait would pose some difficulties.
It seems the hope is to argue that the rule shouldn’t be applied in that manner. Per Jeeho Yoo of Yonhap (Twitter thread), Kang’s reps have asked the league not to count the third arrest since it took place when he was under contract with the Pirates rather than a KBO outfit.
The applicable KBO authorities are slated to consider the matter shortly. If successful, Kang might be permitted to resume play after a much shorter suspension. Yoo suggests something on the order of ninety games might be levied.
Given that he has already seemingly exhausted his chances stateside, and is already at a fairly advanced age for a ballplayer, it’s quite unlikely we’ll see Kang back with an affiliated organization. But it would be quite interesting to watch a potential KBO return effort. The league has only continued to grow in quality since Kang left and it is for the moment the top active baseball league in the world.
Yoo indicates that Kang’s former team, the Kiwoom (formerly Nexen) Heroes, retains his rights even after receiving a posting fee from the Pirates. Accordingly, he’d either work something out with the Heroes or be forced to seek that organization’s approval to latch on with another KBO club.