Do not believe MLB’s claims about how much money it stands to lose
Over the weekend a story from the Associated Press about Major League Baseball’s potential financial losses got a lot of traction. The headline: “MLB projects $640K per game loss with no fans.” Inside the article it was claimed that even if a season is played, “doing so without fans would still lead to a $4 billion loss and would give major league players 89% of revenue.”
That story, and subsequent stories citing anonymous MLB sources, is clearly intended to paint a picture of a season which cannot happen absent massive concessions from players. Concessions, mind you, that MLB has told multiple reporters it requires, but which it has not yet formally requested from the players. Which is to say: this is a public relations onslaught.
The thing about it, though: the numbers are mostly bunk.
Yesterday at Fangraphs, Craig Edwards walked through the claims in both the AP article and from other sources and compared it to what is known about MLB finances. He found that, in multiple ways, the figures are misleading. They leave out large chunks of revenue MLB and its owners will realize. They include costs, such as spending on the amateur draft, that that have already been deferred to the future. The AP article neglects to mention that the money MLB claims it will lose due to broadcasters holding back broadcast rights money for games not played is, often, money being saved by the same businesses which own teams because a lot of teams have interests in their cable network. Sure, SNY might not be paying the Mets for some games, but every penny SNY saves is a money Fred Wilpon saves.
Which is to say a great deal of what MLB is claiming as a loss can be characterized very differently depending on how one accounts for it. Which is something anyone who is familiar with the history of Major League Baseball’s economic landscape knows has long been a part of the game’s creative approach to finances.
None of which is to say that what’s going to happen is good for the game’s finances, necessarily. But Edwards’ conclusion is far closer to the mark than the alarmism coming from MLB:
But, under the current plans being floated, there will be a postseason,. If it comes off as planned -- complete with an additional round -- even the losses claimed by MLB will be substantially ameliorated.
Indeed, it seems to me that far more hinges on the 2020 season having a postseason than anything the players agree to or don’t agree to as far as salary goes. If they play October baseball (or November baseball), things will likely be fine for MLB. Not flush like the past few years, but something the league and its teams can ride out pretty well. If for some reason they don’t -- if, say, we get a nasty second wave COVID-19 outbreak and even the limited season plans are washed out -- it will be worse.
Either way, though, as Edwards shows, there’s a huge reason not to buy what MLB and its surrogates in the media are selling about the financial state of affairs at the moment. Be wary of those claims. Always.