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Monday, October 26, 2020

MLB debt totals $8.3 billion as Manfred mulls options for next season

Major League Baseball’s 30 clubs have amassed an unprecedented $8.3 billion of debt from their various lenders and will post $2.8 billion to $3 billion in operational losses this year, Commissioner Rob Manfred told Sportico Monday in an exclusive interview.

The debt was accrued so the clubs could fund their businesses during this COVID-affected season without fans in the stands and negligible ballpark revenue.

“We are going to be at historic high levels of debt,” Manfred said. “And it’s going to be difficult for the industry to weather another year where we don’t have fans in the ballpark and have other limitations on how much we can’t play and how we can play.”

RoyalsRetro (AG#1F) Posted: October 26, 2020 at 05:52 PM | 22 comment(s) Login to Bookmark
  Tags: rob manfred

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   1. Jose Needs an Absurd Ukulele Concert Posted: October 26, 2020 at 06:34 PM (#5985568)
Wow MLB teams are losing huge amounts of money! I have no doubt they would be willing to open their books and let independent accountants verify this to determine the best course of action going forward.

Oh.
   2. Walt Davis Posted: October 26, 2020 at 06:55 PM (#5985574)
$8.3 B sounds really bad ... divide it by 30 and it's an average of $280 M. A reminder that the common and shared revenue payment pre-Covid was already over $200 M per year. A $3 B operating loss is $100 M per team which is not to be sneezed at but is more than survivable ... and, to me, seems pretty light given <40% of games played and no fans.

Equally obviously this can't go on for too much longer before MLB really is screwed so I don't mean to downplay the threat to its future. But I expect this season to be the rock-bottom -- clearly the Dodgers with the Mookie contract and Steve Cohen with the Mets purchase are in rough agreement with that. But yes, a terrible covid winter in the US could put a massive hole in the 2021 season too.
   3. Bob T Posted: October 26, 2020 at 07:18 PM (#5985579)
I think all 30 teams debts should be assumed and just be one giant MLB debt. Then MLB should form its own bank and perhaps sell securities.
   4. Stevey Posted: October 26, 2020 at 07:47 PM (#5985584)
The owners should have been saving their money and not buying so much avocado toast (or more like yachts).
   5. the Hugh Jorgan returns Posted: October 26, 2020 at 07:48 PM (#5985585)
Well seeing as John Henry will be cashed up after the Fenway sports float, he can just pay that $8 bil off easy!
   6. Ziggy: social distancing since 1980 Posted: October 26, 2020 at 08:05 PM (#5985587)
These guys are billionaires - with a B. Operating at a loss for a while isn't going to mean closing up shop.
   7. puck Posted: October 26, 2020 at 08:54 PM (#5985591)
So the annual revenue was estimated to be 10.7 billion for 2019 season. The players' 2020 salaries were pro-rated for the 60 games, and they were in debt 8.3 billion?

   8. Rally Posted: October 26, 2020 at 09:35 PM (#5985593)
I suspect if there is truth in that number, the 8.3 billion is the total debt they have accumulated. Like they had 6.3 before the season and added another 2 billion to the balance.
   9. The Duke Posted: October 26, 2020 at 09:52 PM (#5985594)
This will be a prelude to a very short 2021 Season assuming the players stick to their pro-ration position. I’m expecting no more than an 80 game season next year which automatically gets them a 50% reduction in salaries. That adds a month so something like Memorial Day to sept 30 with a later start to spring training. Weather sucks the first few weeks anyhow.

Same concept for playoffs to maximize playoff revenue. Maybe they get 10000 fans per game but nowhere near their previous price points.

Every player that can be will be cut loose this winter. Minimal free agent signings, lots of contested arbs, lots of non-tenders and no long term contracts. Same will happen in the next offseason and when they get to 2022, most of the teams will have worked off all but a few long term commits.

Not much the players can do - owners would much prefer not to play and not pay these high salaries

   10. JRVJ Posted: October 26, 2020 at 10:10 PM (#5985597)
8 is almost certainly right.

As to the 2021 season, presumably MLB will be making and remaking plans on the go, for the simple reason that nobody knows where the U.S. (and Canada) will be in February/March 2021.

And to look back a little, MLB's argument that the season couldn't be pushed beyond October due to the possibility of a terrible COVID wave in the Fall seems a lot more reasonable than MLBPA's insistence that the season could be pushed deep into November (the playoff bubbles have worked exceedingly well, but I doubt that outbreaks could have been prevented if the regular season had been extended deep into October).
   11. Tom Goes to the Ballpark Posted: October 26, 2020 at 10:13 PM (#5985598)
Equally obviously this can't go on for too much longer before MLB really is screwed so I don't mean to downplay the threat to its future. But I expect this season to be the rock-bottom -- clearly the Dodgers with the Mookie contract and Steve Cohen with the Mets purchase are in rough agreement with that. But yes, a terrible covid winter in the US could put a massive hole in the 2021 season too.
One of the lesser Dodgers’ owners said recently that they were expecting 2021 to be a disaster, but that things would be back to normal for 2022. Obviously, that isn’t a problem for the Dodgers or Cohen (or likely any of the big market teams). It remains to be seen if that crushes any of the mid market or small market ownership groups.
   12. Tin Angel Posted: October 26, 2020 at 11:50 PM (#5985604)
Two suggestions to make some of that back. 1) Raise ticket prices, and 2) more ads in between pitches/pitching changes.
   13. the Hugh Jorgan returns Posted: October 27, 2020 at 12:37 AM (#5985607)
more ads in between pitches/pitching changes.


Well sh*t, there is almost 30 seconds between pitches anyway, might as well chuck an ad in between pitches.

This high and tight fastball brought to you by Geico, insurance for all your possible head injuries!
   14. winnipegwhip Posted: October 27, 2020 at 12:55 AM (#5985609)
The Jerry Reinsdorf Telethon will take place over the next long weekend. Be sure to donate to help Jerry's kids.
   15. jacksone (AKA It's OK...) Posted: October 27, 2020 at 09:08 AM (#5985626)
Two suggestions to make some of that back. 1) Raise ticket prices, and 2) more ads in between pitches/pitching changes.


You're on the right track, but thinking way too small. Ads on bases, ads on uniforms, different ads on hats, ads on gloves, ads on bats, ads on balls. And more official sponsors, official eye black sponsor, official grass seed sponsor, etc.
   16. snapper (history's 42nd greatest monster) Posted: October 27, 2020 at 09:42 AM (#5985632)
I suspect if there is truth in that number, the 8.3 billion is the total debt they have accumulated. Like they had 6.3 before the season and added another 2 billion to the balance.

Absolutely. Their debt is less than one times their revenue, that's not very high. In today's interest rate environment, we're talking about $300-400M of debt service, out of $10B in revenue. It's nothing in the short term.
   17. DL from MN Posted: October 27, 2020 at 10:05 AM (#5985639)
Two suggestions to make some of that back. 1) Raise ticket prices, and 2) more ads in between pitches/pitching changes.


#1 is certain to happen. MLB will welcome COVID limits on in-person attendance which will decrease supply and ensure that season ticket holders buy up all the tickets. It will keep the rabble out and make sure people who attend in person are an even more exclusive club. Just enough studio audience to provide applause cues for the people watching on TV.
   18. Rally Posted: October 27, 2020 at 10:16 AM (#5985645)
I'm sure they'll try that. I wonder how well that will actually work. Supply is down but so is demand. I know a lot of people who would not let themselves be in a stadium crowd even if the ticket was free.
   19. RoyalsRetro (AG#1F) Posted: October 27, 2020 at 01:00 PM (#5985680)
I wonder if Steve Cohen is aware of this, it seems like a really bad investment!
   20. RoyalsRetro (AG#1F) Posted: October 27, 2020 at 01:50 PM (#5985694)

I suspect if there is truth in that number, the 8.3 billion is the total debt they have accumulated. Like they had 6.3 before the season and added another 2 billion to the balance.


The first sentence of the blurb above:

"Major League Baseball’s 30 clubs have amassed an unprecedented $8.3 billion of debt from their various lenders and will post $2.8 billion to $3 billion in operational losses this year"
   21. John Northey Posted: October 28, 2020 at 04:10 PM (#5986227)
So 2 new expansion teams at a cost of $2 billion each? Zip boom bang there goes the loss. Maybe even reduce how much of the shared revenue those teams get for years 1 and 2 just to help the current teams a bit more. Now, can you find 2 suckers willing to pony up that much? Or would those be 2 smart people who have seen that team values keep climbing and climbing no matter what and figure it could be a good investment. People said they couldn't go up more when teams hit $100 million in value, and probably have said the same since the first team was sold sometime in the 1800's.
   22. The Honorable Ardo Posted: October 28, 2020 at 06:37 PM (#5986300)
Is any of the $8.3 billion secured debt? (against the stadium itself, parking lots, or other team-owned assets)

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