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Monday, February 20, 2023

MLB Creates Economic Reform Committee

One year after a tense period of CBA negotiations between MLB and it players that resulted in a lockout and a delay to the start of the 2022 season, it appears the league is already preparing for the next round of negotiations. According to Evan Drellich of The Athletic, the commissioner’s office has formed what they’re calling an economic reform committee chaired by Dodgers chairman Mark Walter. Drellich reports that Tigers chairman Chris Ilitch, Red Sox principle owner John Henry, and Rockies chairman Dick Monfort are among other members of the committee of franchise owners. The current CBA is set to expire following the 2026 season.

As Drellich notes, the impending bankruptcy of Diamond Sports Group, owner of the Bally Sports networks that hold the TV distribution rights of 14 MLB teams, appears to be a catalyst for the creation of this committee. Should that bankruptcy indeed come to pass, it would open the door for MLB to begin work on a league-wide streaming service free from blackouts. But according to Manfred, discussions of such a path have brought about concerns about disparity between the revenues of clubs:

“We have businesses that are literally not similar in terms of the overall revenue that they’re generating.” Manfred tells Drellich, “And to the extent that you could find a new distribution model that actually helped on that disparity side, that would be the daily double. So people are having conversations that haven’t been had in baseball, and it’s really been owners talking to owners, which is a good thing.”

As Drellich points out, the financials of most MLB clubs are not public and the new committee has no plans to produce a league-wide financial report, making it impossible to verify most claims related to revenue. But Drellich reports that concerns about revenue disparity have been exacerbated by the willingness of Mets owner Steve Cohen to put up record payrolls that dwarf those of other clubs. Per RosterResource, the Mets 2023 payroll for luxury tax purposes currently sits at almost $374 million, and that’s even after the club’s bid to land Carlos Correa on a 12-year, $315 million contract fell through due to concerns about Correa’s physical.

Drellich quotes an industry source as saying that “[Small market clubs] demand everything’s got to change… The whole idea is to basically come up with a system that gets to a salary cap.”

RoyalsRetro (AG#1F) Posted: February 20, 2023 at 12:08 AM | 27 comment(s) Login to Bookmark
  Tags: salary cap

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   1. tell me when i'm telling 57i66135 Posted: February 20, 2023 at 02:28 PM (#6117969)
former marlins team president david samson:
“Owners are now beginning to dislike each other, not just personally, but the economics of the game is something that you’re gonna have to work through. But it’s not coming till ’26. They’re not reopening the collective bargaining agreement. But … they’re working on the new CBA. Now.

“And that may sound early to you, but it’s not. And the reason they’re working on it now is they’ve got to come up with solutions to get to 23 [votes]. Because if they had a vote on a CBA today, given what Steve Cohen’s done, given what the league looks like, here’s a little terrible fact: They don’t have the votes. And that’s a scary thing if you’re the commissioner.”

   2. Jose is an Absurd Sultan Posted: February 20, 2023 at 02:51 PM (#6117971)
I assume this involves a blanket party for Padre and Met owners.
   3. The Yankee Clapper Posted: February 20, 2023 at 03:16 PM (#6117976)
Owners who think the current economic conditions are insufficiently favorable can always sell their teams for a huge profit. It’s been a long time since any team, no matter how incompetently run, has sold at a loss, although perhaps I’m forgetting someone. In any event, I’m not sure there is room for more subsidies at the expense of the better teams.
   4. A triple short of the cycle Posted: February 20, 2023 at 04:02 PM (#6117983)
But is it a blue ribbon committee?
   5. You can keep your massive haul Posted: February 20, 2023 at 04:28 PM (#6117984)
We have businesses that are literally not similar


Totally...
   6. Walt Davis Posted: February 20, 2023 at 05:11 PM (#6117988)
What, they just noticed some teams are in a metro area of 20M while others are around 2M? Nobody wondered what might happen if the Yankees, dodgers, mets, Angels, red Sox, Cubs all were competently (or at least expensively) run at the same time? And what would happen if a few of the low revenue teams actually started spending all that revenue sharing money? And the voting ramifications of 2/3 of votes belonging to the receivers while probably 50% or more of the revenue comes from the bigger teams. All the while the pending tv collapse has been obvious for a decade
   7. John Northey Posted: February 20, 2023 at 07:17 PM (#6117999)
Part of me wonders if the biggest clubs have debated splitting MLB in half. Large revenue teams in a 'super league', the rest in a AAAA league. The losing teams get to keep the MLB title but are no longer seen as such. Value of their teams collapses while the Mets/Yankees/Dodgers/etc. become even more valuable as they stop sharing revenue with others.

One has to think there is legal language that stops this, but I could see a lot of value to the big teams cutting out perpetual welfare teams like Tampa, Miami, KC, Oakland, Pittsburgh, etc. I'm sure going back to a 16 team ML would still produce a killer product.
   8. Doug Jones threw harder than me Posted: February 20, 2023 at 07:31 PM (#6118001)
MLB remains the only major sport that finances player development, through the minor leagues. I thought for a while the NFL and NBA were going to have to do this, and the NBA does to a minor extent with the "G-League", and the NHL with minor-league hockey, but the NFL gets away scot-free, and with the rise of the USFL, XFL, and Arena League (as well as the probable rise of something like a European Football League) won't have to for the foreseeable future.

Partly because of this, and partly because of the revenue model which is much more dependent on attendance and local media (NFL teams don't have to pay TV broadcasters, for example, just radio), MLB is very high overhead compared to the NFL (expecially) and the NBA. No NBA, NFL, or NHL team maintains a separate practice facility for the preseason, for example.

I am not sure where that leads things, but it's a point to ponder. MLB teams need buts in seats more than the NBA or the NFL. The NHL is probably the closest in terms of overhead, with larger rosters and more extensive minor leagues, and of course they have to cool the ice!
   9. Tony S Posted: February 20, 2023 at 08:57 PM (#6118016)
Crabs in a bucket.

"Not so fast there, Padre Crab."

I guess Economic Reform Committee sounds better than Salary Containment Committee.
   10. The Duke Posted: February 20, 2023 at 11:16 PM (#6118023)
Why don't they simply re-align from American League/ National League to something like

Red state league and a blue state league. All the coastal teams in the East and West can spend as much as they want and the red state league can spend a lot less and demand subsidies from the blue state league. Each year, one really poor team gets to play in World Series against one really rich team. This is basically how America works today. Blue subsidizes red and once efery four years the poor guys get one shot at being in charge. Sometimes they win. Marge Shott could be the red state league president (yes, I know she's dead) and Pete Buttigief could continue to fail upwards as the blue state president (yes I know he's an idiot).

I'm not sure if it breaks down perfectly 15 and 15 but it's close.
   11. Pat Rapper's Delight (as quoted on MLB Network) Posted: February 20, 2023 at 11:41 PM (#6118024)
But is it a blue ribbon committee?

The only color this committee cares about is green.
   12. Textbook Editor Posted: February 20, 2023 at 11:46 PM (#6118025)
Part of me wonders if the biggest clubs have debated splitting MLB in half. Large revenue teams in a 'super league', the rest in a AAAA league. The losing teams get to keep the MLB title but are no longer seen as such. Value of their teams collapses while the Mets/Yankees/Dodgers/etc. become even more valuable as they stop sharing revenue with others.


Building on the above, I'll throw this out there: Two 16-team leagues with promotion and relegation would be... Quite interesting.

Two 8-team divisions the "Premiere MLB" league; Top 3 from each division makes playoffs, you make up some sort of system where the winner of each division has some enormous advantage in the best of 3 WC round (or have a bye), then run through the rest. Bottom 2 teams in each division are relegated to...

The "Championship MLB" league. Also has two 8-team divisions. Winners of each division are automatically promoted to the Premiere MLB. Then each division places 2-5 have a mini-playoff to determine the 2nd team to be promoted (2 plays 5 and 3 plays 4, best of 5; the winners play a best of 7).

Here's the beauty of the above (from the owner's POV):

In the Premiere MLB you still have 6 teams competing for the World Series (and if you wanted to make it 8, that would be fine with me, but 8 of 16 seems too many). That's still a lot of playoff baseball, but what's even better is...

In the Championship MLB you have 10 of the 18 teams (many of whom would no doubt be smaller-city clubs) competing for a championship/promotion... A trophy to play for. Again, lotta playoff baseball.

If you play a balanced schedule (150 games, 10 games against each of the 15 teams in a team's league), you have the ability to start playoffs in mid-September and still have time to get all of the games in before the end of October. You have less of a regular season, yes, but you have a lot of playoff games replacing it, and in some cities where playoff games are usually pretty scarce. It turns the whole September-October timeframe into a baseball extravaganza--teams desperate for wins to try to make the playoffs to be promoted, teams desperate not to be relegated, etc.

Now--the key is that the money aspect has to work. But under this scheme, so much more would be at stake across all levels of teams, so--in theory--viewership would be up and TV revenues would follow... And while you'd reserve, say, the very last week for just the Premiere MLB World Series (so that remains on its own and special), you's have 8 weeks of insane, high-stakes baseball being played.

The initial 16 teams "relegated" to the Championship MLB league won't be happy, I know, and I don't have a firm idea on the $ it would take to get them to agree (and to also offer to each of the promoted teams each season), but if the big clubs gave up just a little bit of money, I think you could make it work. (If you wanted to do something like promote 8 and relegate 8 I'd be fine with that too.)

The above would very much give teams an incentive to do more than just play out the string. There'd be concrete incentives for lots of teams that currently have none come July 1. Not saying any of it's likely to happen, just that the above might be more exciting, for more teams, for a longer period of time every season than the current format.

I am not a crackpot.







   13. Tony S Posted: February 21, 2023 at 09:02 AM (#6118033)
The promotion/relegation idea seems to enjoy some popularity. But this is what I don't get about the concept.

It seems to me that such a setup would just end up with the same couple of teams pingponging between the two levels. If you demoted the Pirates and Reds to AAA, they'd steamroll that level, and promptly get promoted again -- replacing the two AAA teams that took their places and couldn't compete in the majors.

Just seems kind of pointless to me.

   14. RoyalsRetro (AG#1F) Posted: February 21, 2023 at 09:12 AM (#6118036)

Part of me wonders if the biggest clubs have debated splitting MLB in half. Large revenue teams in a 'super league', the rest in a AAAA league. The losing teams get to keep the MLB title but are no longer seen as such. Value of their teams collapses while the Mets/Yankees/Dodgers/etc. become even more valuable as they stop sharing revenue with others.


What big market team wants to finish in last place?

The big problem with relegation is no city is going to pony up a billion dollars for a stadium that could be minor league. I'll admit, I don't really get the popularity either, it seems kinda boring in EPL that only 6-7 clubs have a realistic chance.
   15. Misirlou cut his hair and moved to Rome Posted: February 21, 2023 at 09:14 AM (#6118037)
Part of me wonders if the biggest clubs have debated splitting MLB in half. Large revenue teams in a 'super league', the rest in a AAAA league. The losing teams get to keep the MLB title but are no longer seen as such. Value of their teams collapses while the Mets/Yankees/Dodgers/etc. become even more valuable as they stop sharing revenue with others.


The thing is, who gets to be in the top tier? Yes, Yankees, Dodgers, etc are obvious. But do you include well run small market teams like the Rays and Brewers, or poorly run large market teams like the Rangers and Angels?
   16. Tony S Posted: February 21, 2023 at 09:24 AM (#6118039)
Also, how does a non-top-tier team compete for free agents? How do you get a player to sign with you when there's a chance your franchise might get relegated at some point?
   17. DL from MN Posted: February 21, 2023 at 10:06 AM (#6118043)
A national television deal is not worth nearly as much when there is no MLB in many of the major media markets. Unless you think people in Pittburgh or Milwaukee will be thrilled to watch the Red Sox play the Yankees forever.
   18. Pat Rapper's Delight (as quoted on MLB Network) Posted: February 21, 2023 at 12:50 PM (#6118061)
What big market team wants to finish in last place?

From the looks of their off-season, I'll say Boston.
   19. Eddie Gaedel Posted: February 21, 2023 at 01:37 PM (#6118064)
With the relegation system (two 16-team leagues), how would the amateur draft work?
   20. Walt Davis Posted: February 21, 2023 at 02:57 PM (#6118079)
The most obvious obstacle to relegation, which makes it completely impossible without completely revamping the entirety of baseball, is that AAA teams aren't independent. You relegate the Reds to AAA to be replaced by ... the Cards' AAA team? Or a AAA all-star team?

If you want to split into a 12-team super-league and an 18-team "major" league with relegation between those two then you've got a model that at least works in theory. (And that seems what most here are thinking.) That one falls apart over money plus the fact that it would take just a few seasons before the "major" league is a minor league and the Pirates struggle to draw 400,000. Do these lower-tier teams still get $230 M a year? If so, what's the point of splitting? The reason the big guys would want to split off on their own would be to stop/reduce revenue sharing. Will Fox, ESPN, etc. even bother showing non-super league games?

There's no way you could get small-market owners to vote for second-tier status and lower revenues. If you ever get close to that point, you might as well just start buying out owners and killing off teams. Or wait for it to start happening "naturally" if/when baseball's market starts to collapse.
   21. Ron J Posted: February 21, 2023 at 03:05 PM (#6118080)
#16 This is something soccer deals with all of the time. A talented player wants out and the team nearly always sells.

Mind you, soccer is built around teams selling off players all the time. You'd need a change in the way MLB is structured to make any kind of promotion/relegation system happen and MLB ownership would never agree because of the huge change in franchise values.
   22. tell me when i'm telling 57i66135 Posted: February 21, 2023 at 03:14 PM (#6118081)
Also, how does a non-top-tier team compete for free agents?
the same way they do now: they hope their betters aren't interested.
With the relegation system (two 16-team leagues), how would the amateur draft work?
it wouldn't exist. the yankees would sign every prospect, and then they'd sell off the ones they don't want to the highest bidder.
   23. DL from MN Posted: February 21, 2023 at 03:54 PM (#6118086)
Isn't expanded playoffs essentially the same as relegation? 30 teams start the season but only 12 make the postseason.
   24. Barry`s_Lazy_Boy Posted: February 21, 2023 at 04:43 PM (#6118094)
The top 16 teams want to have teams to beat up on. Once you go to a 16-team league, winning a lot becomes more difficult.

The same logic goes to those who think the top NCAA football teams would build a Super League. The top teams don't want to start having 3-9 seasons.

Promotion/relegation will never come to North American sports. Franchise owners aren't going to agree to a scheme that could suddenly destroy their franchise values. Promotion/relegation discussion is message board fan masturbation.
   25. Misirlou cut his hair and moved to Rome Posted: February 21, 2023 at 05:14 PM (#6118098)
Promotion/relegation discussion is message board fan masturbation.


So is re-alignment to larger divisions or no divisions, and shorter seasons.
   26. Tony S Posted: February 21, 2023 at 05:33 PM (#6118103)
So is re-alignment to larger divisions or no divisions, and shorter seasons.



The NBA nominally has divisions, but they're pretty much irrelevant.
   27. BDC Posted: February 21, 2023 at 06:40 PM (#6118113)
Promotion/relegation will never come to North American sports

I think you're mainly right about the structure of the few top college conferences. But a variety of promotion/relegation already obtains in college "revenue" sports in the US. Schools jockey to get into better conferences or (sometimes) accept that they've fallen out of the top tier. E.g. Texas and Oklahoma to the SEC means the SEC gets even stronger than the crazy-strong it already is, and the Big However Many Are Left get significantly weaker. At the levels below, schools are even more energetic in trying to rise to higher tiers, even in the face of near-prohibitive competition.

But to the pro sports, no, just as you say. It's just a different history. American pro teams, except in the distant origins of a few ancient clubs, are franchises created by their leagues. European pro teams are independent entities that have a life and structure apart from their league.

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