Baseball’s Free Agents Are Heading For Whopping Salary Cuts

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Baseball’s top free agents, like Mookie Betts of the Dodgers, are likely facing a non-existent free-agent market this offseason – and perhaps beyond that – if the sport can’t figure out a way to salvage at least a portion of the 2020 season.

Betts was scheduled to be paid $27 million this season, which has been delayed because of the COVID-19 pandemic. He and the Houston Astros’ George Springer, who was supposed to collect $21 million this season, are among the marquee players who might suffer, salary-wise, if owners and players can’t work out a deal to play.

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The terms of baseball’s return, possibly as soon as July, are being negotiated by owners and the union that represents players. Issues being discussed are related to economics, of course, but health and safety, too. There have been more than 1.5 million cases of the virus in the U.S., resulting in almost 92,000 deaths.

Major League Baseball Commissioner Rob Manfred delayed the start of the regular season, following his counterparts in basketball and hockey. All of the leagues face the same problem: returning to play, and generating revenue, while keeping everyone safe. If baseball’s owners and players can’t figure it out, players like Betts and Springer had better get used to the idea of much lower salaries.

“You can kiss free agency goodbye for the next three or four years if we don’t play,” a source with knowledge of the negotiations told Sportico. “There’s no money. We’re not the federal government. We don’t do stimulus checks. We can’t print money.”

Two months ago owners agreed to advance $170 million to the union through June 1. As part of that agreement, which was reviewed by Sportico, Section 1(a) of the deal states that players would receive a prorated portion of their salary for each game played provided three criteria were met. They are:

“(1) No limits on mass gatherings that would prevent games in front of fans at all 30 home ballparks; (2) No travel restrictions in the U.S. and Canada; (3) The Commissioner determines that it’s safe for everyone, including fans, to return to play.”

Those conditions have not been met, and may not be for months. That leaves the issue of player pay unresolved if games aren’t played in front of fans. The owners are offering a 50-50 split of revenue. The players, meantime, want their prorated salaries.

The agreement goes on to say, that “as a concession to the union, the club’s agree to consider the economic feasibility of playing in neutral sites with fans or empty stadiums, clearly reserving [the economics of] those topics for further conversation.”

In an exchange of emails between attorneys for MLB and the union, MLB confirmed that ”economic feasibility” means games would only be played in neutral sites and without fans if players agreed to reduce their daily salaries.

The union has said it has no intention of renegotiating a deal. Executive Director Tony Clark and agent Scott Boras have said there was agreement that players would get their prorated salaries for games played under any condition.

“The players’ association and the players are very galvanized by this,” Boras said last week. “The owners came to them and said, `We need to reach an agreement. We can’t afford to give you 162 games.’ And the players compromised. They’ve already given them back about 40% of their salaries.”

The union has asked for, and received, financial documents from MLB, which according to the commissioner stands to lose about $4 billion if no games are played this season.

The cost of playing the games without fans is $640,000 per game, which mushrooms to $787.2 million if all 30 teams played an 82-game schedule in empty stadiums.

Without fan-related revenue, things like tickets, concessions and parking, the only revenue stream for teams would come from $1.5 billion in local and national broadcasting rights, said the source, who was granted anonymity because talks are private.

The owners are proposing to split that revenue evenly with the players. Management’s half would cover the operational costs of staging games, many of them perhaps at neutral sites. The owners have already borrowed hundreds of millions.

Sports leagues and teams generally have credit lines backed by revenue sources such as media contracts.

Under these circumstances, the larger markets teams like the Yankees, Dodgers, Mets, Cubs and Red Sox will lose substantial money. That said, there won’t be anything to share with teams like the Marlins, Rays and Pirates, who garner a much smaller share of local revenue.

On top of all the virus-related challenges, the labor contract between owners and players expires after next season. Collective bargaining is often difficult even in good economic times.

Still, players like Betts and Springer have been able to cash in. But this is unprecedented turmoil. It remains to be seen whether baseball will be played this season, and what the ramifications will be down the line.

“There are no winners here,’’ the source said. “Everybody is routinely getting whacked for different reasons.’’

Barry Bloom is a reporter for Sportico, Penske Media’s new sports business platform.

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