Projecting losses of "substantially more than $100 million," Phillies ownership on Monday instituted salary cuts for its top-earning employees.
The cuts, effective immediately, apply to employees earning more than $90,000 per year. Employees making $90,000 or less are not subject to cuts.
"Our senior executives have made significant and deep non-payroll expense cuts across the organization, but even with their best efforts, the Phillies will lose substantially more than $100 million this year," managing partner John Middleton wrote in a letter that was emailed to full-time employees and obtained by NBC Sports Philadelphia.
"These staggering losses have forced ownership and senior management to make difficult but necessary decisions, as have other clubs and businesses confronted with the impact of Covid-19, to protect the financial viability of our organization and to ensure our future. All of us, beginning with me, must make sacrifices."
Employees making over $90,000 will have a percentage of their pay reduced on a graduated basis; the higher the salary, the bigger the cut. The reductions will continue through October 31, the end of the team's fiscal year. In his letter, Middleton stated that he would forego his compensation for the balance of the year.
"While I remain hopeful that we will see baseball at Citizens Bank Park this summer, any games played will almost surely be played without fans in the ballpark which is regrettable," Middleton wrote. "The absence of fans creates an enormous financial challenge, as approximately 40 percent of our total annual revenue is generated by attendance — tickets, food and merchandise concessions, parking and sponsorships. With no fans in the stands, these sources of revenue evaporate."
Middleton stated that employees would be treated the same, whether they were on the baseball side or the business side.
In recent weeks, Phillies ownership pledged it would not cut jobs or employee benefits through October. Employees from some other teams have not been so fortunate.
The Los Angeles Angels, Oakland A's, Miami Marlins, Tampa Bay Rays and Cincinnati Reds are teams known to have issued furloughs. Many other teams, including high-profile clubs such as the Boston Red Sox, Chicago Cubs and Los Angeles Dodgers have instituted pay cuts. According to reports, 80 percent of Cubs employees have been subject to a 20 percent pay cut and Dodgers employees making over $75,000 have been cut up to 35 percent. Red Sox employees making over $50,000 have received cuts ranging from 20 to 30 percent.
"This salary reduction plan does not come close to eliminating our 2020 losses," Middleton wrote. "As a result of the financial impact of the Covid-19 pandemic, the Buck and Middleton families must now invest an additional $100 million in the Phillies over the next year to ensure the continued stability of the club. During these uncertain and distressing times, our decision-making must address both short-term and long-term financial ramifications, especially since none of us knows when and how this pandemic will end. Our success historically has been defined by a culture of collaboration, and I am asking all of you to continue working with me to meet this challenge."
As the calendar turned to June on Monday, Major League Baseball and the players union continued to negotiate a way to bring the game back for a shortened season this summer. The sides remain apart on financial issues. A resolution must come in the next week or so if a season is to commence in early July.