Is it happening? MLB forming an economic reform committee.

[Brock Beauchamp]

Oooh, this is exciting. After years of sitting on their hands while the game crumbled, MLB has been actively pursuing improvements to the game and I have to give them credit for making (mostly) right decisions. First, they ended the lockout in a relatively timely fashion. I could have gone with less drama but teams played 162, which I was doubtful would happen. I'm a big fan of most of the new rules changes, particularly the pitch clock.

A couple of months ago, they hired a former RSN executive to evaluate blackouts and how to end them. When Diamond showed signs of going belly-up, Manfred said MLB is open to acquiring the rights. All of this is good. It's long overdue, but it's good.

And now there's this bombshell. As always, subscribe to The Athletic, they're great. But for those who don't, I'll pick out a couple of nuggets.

https://theathletic.com/4226341/2023/02/19/mlb-economic-reform-committee-mets-bally/

Quote

In the wake of Steve Cohen’s spending and the financial turmoil at Bally regional sports networks, Major League Baseball has started an “economic reform committee.” Less than a year after MLB and the Players Association came to an agreement to end the 2021-22 lockout, the committee’s formation emphasizes that some MLB owners are unhappy enough that they want to discuss major change.

Okay, so this scared me a bit. The problem isn't that Steve Cohen spends so much, which has traditionally been how MLB approached this issue. They want to reel in the top spenders but do nothing for the bottom revenue teams, nor punish teams that simply refuse to spend. Not great.

But...

Quote

“When you start thinking about the opportunities in terms of a more national (broadcasting) product, it did lead into a conversation about our disparity issues on the revenue side,” Manfred said. “We have businesses that are literally not similar in terms of the overall revenue that they’re generating. 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.”

For the first time in a long time, I'm truly excited about the future of baseball instead of bracing myself against just suffering through the sport's refusal to address its long-standing problems.

[sveumrules]

It takes two teams to play a game, so fifty percent of all local TV contracts should have been pooled for redistribution from the outset. Now that the RSN model is predictably crumbling…oh, let’s look into doing something about it.

The wealthiest teams have been treating the luxury tax as a soft cap for decades, but here comes Cohen blowing past it & rubbing their noses in it…well, we can’t let that keep happening.

Don’t get me wrong, it’s great they are finally taking it to committee & I hope they eventually wise up and go to something closer to the more equitable NBA/NFL models, but MLB is a molasses covered dinosaur so they’ll probably use this as the central issue to draw out the next couple two tree CBA negotiations (when it should have already been in effect for a couple two tree CBAs by now).

[Brock Beauchamp]

3 minutes ago, sveumrules said:

It takes two teams to play a game, so fifty percent of all local TV contracts should have been pooled for redistribution from the outset.

I heard a really great solution to this on Twins Daily that I fully support. I've pushed heavily for a 50% TV revenue cut, as they currently distribute gate revenue. That still allows the Yankees and Dodgers to have an advantage (they get 50% of 81 games) but drastically improves the TV revenue for the Rays, Rockies, etc.

The solution I heard on Twins Daily is to flip the script on that. Teams get 50% of TV revenue. When the Brewers play the Cards/Cubs and their more lucrative television contracts, they get a 50% cut of that game's TV revenue.

On the other hand, teams stop sharing gate revenue. This punishes teams like the A's, Pirates, and Rays who routinely run out a shoddy fan experience while the Brewers do moderately well in this regard. The Brewers earned that fan support through a solid stadium experience, competitive product, outreach programs, etc. while the A's just hoard money and throw absolute garbage on the field while doing it in a terrible stadium.

I like that solution a lot. It rewards teams that try in a meaningful way while still sharing ever-expanding TV revenue to help those teams become even better.

[SF70]

I’m skeptical the revenue disparity will ever get fixed in a meaningful way with needing 23 owners votes. Too many LM owners, that will fight to keep their larger slice of the revenue pie.

It was a miracle of salesmanship Bud Selig & Jerry Reinsdorf convinced the LM owners 30 years ago to relent to the modest RS back then, and unfortunately I don’t see that type of galvanizing owner in baseball today. 

[wiguy94]

3 hours ago, Brock Beauchamp said:

Oooh, this is exciting. After years of sitting on their hands while the game crumbled, MLB has been actively pursuing improvements to the game and I have to give them credit for making (mostly) right decisions. First, they ended the lockout in a relatively timely fashion. I could have gone with less drama but teams played 162, which I was doubtful would happen. I'm a big fan of most of the new rules changes, particularly the pitch clock.

A couple of months ago, they hired a former RSN executive to evaluate blackouts and how to end them. When Diamond showed signs of going belly-up, Manfred said MLB is open to acquiring the rights. All of this is good. It's long overdue, but it's good.

And now there's this bombshell. As always, subscribe to The Athletic, they're great. But for those who don't, I'll pick out a couple of nuggets.

https://theathletic.com/4226341/2023/02/19/mlb-economic-reform-committee-mets-bally/

Okay, so this scared me a bit. The problem isn't that Steve Cohen spends so much, which has traditionally been how MLB approached this issue. They want to reel in the top spenders but do nothing for the bottom revenue teams, nor punish teams that simply refuse to spend. Not great.

But...

For the first time in a long time, I'm truly excited about the future of baseball instead of bracing myself against just suffering through the sport's refusal to address its long-standing problems.

Are the middle and small market owners finally going to turn against the big market owners? 

[Brock Beauchamp]

44 minutes ago, wiguy94 said:

Are the middle and small market owners finally going to turn against the big market owners? 

I hope so, it’s long overdue. 

[CheeseheadInQC]

Whatever is done, I imagine large market owners will probably ensure it is done slowly because of contracts already on the books.

[TURBO]

1 hour ago, CheeseheadInQC said:

Whatever is done, I imagine large market owners will probably ensure it is done slowly because of contracts already on the books.

I'm sure all the current contracts would be grandfathered into any new deal.  There would probably be a feeding frenzy by the large market teams to sign as many big contracts as they could before the deal kicked in.

[Brock Beauchamp]

17 minutes ago, TURBO said:

I'm sure all the current contracts would be grandfathered into any new deal.  There would probably be a feeding frenzy by the large market teams to sign as many big contracts as they could before the deal kicked in.

This is my thinking as well. 

[CheeseheadInQC]

54 minutes ago, TURBO said:

I'm sure all the current contracts would be grandfathered into any new deal.  There would probably be a feeding frenzy by the large market teams to sign as many big contracts as they could before the deal kicked in.

I am not even talking cap or any sort of structural changes involving contracts. I think they will push to make any more equitable distribution of TV revenue phased in really gradually with the argument that they gave out the contracts with the expectation of X number of TV dollars.

[clancyphile]

On 2/19/2023 at 3:48 PM, Brock Beauchamp said:

This is my thinking as well. 

So they can't grandfather, but they should, at least phase the sharing in.

Year one is 85/15, year two 70/30, year three 60/40, year four 50/50.

[owbc]

On 2/19/2023 at 8:15 AM, SF70 said:

I’m skeptical the revenue disparity will ever get fixed in a meaningful way with needing 23 owners votes. Too many LM owners, that will fight to keep their larger slice of the revenue pie.

It was a miracle of salesmanship Bud Selig & Jerry Reinsdorf convinced the LM owners 30 years ago to relent to the modest RS back then, and unfortunately I don’t see that type of galvanizing owner in baseball today. 

Presumably the teams that have juicy TV deals locked in in a big market with a high ownership fraction in their RSN are the ones that stand to lose the most. I think that's approximately 10 teams. But those deals are still subject to the same cable TV subscriber economics as everyone else. 

We should be thankful for both Cohen's spending and the Bally bankruptcy, since those are combining to exacerbate the economic disparities on both ends. 

The Brewers stand to massively benefit from added revenue sharing of any kind. 

[nate82]

The Athletic article touches on a salary cap but that is dead on arrival.  MLB tried to put in low cap but they didn't provide enough details and lowered the ceiling a lot in one of their CBA proposal.  The MLBPA obviously rejected it but from the response from the MLBPA I don't think they would approve a cap at all as they want to eliminate the soft cap.  The floor would be really high probably something around $150m and the ceiling being somewhere around $300m for the MLBPA to accept a salary cap. 

[Brock Beauchamp]

36 minutes ago, nate82 said:

The Athletic article touches on a salary cap but that is dead on arrival.  MLB tried to put in low cap but they didn't provide enough details and lowered the ceiling a lot in one of their CBA proposal.  The MLBPA obviously rejected it but from the response from the MLBPA I don't think they would approve a cap at all as they want to eliminate the soft cap.  The floor would be really high probably something around $150m and the ceiling being somewhere around $300m for the MLBPA to accept a salary cap. 

Which is fine if additional revenue sharing is in place. My opinion for years has been that the MLBPA will accept a reasonable salary cap if the floor captures the current spending of ten or more teams, which puts a floor around $140m right now.

What the players won’t accept is a floor so low that a few teams have to spend a few million more while big spending teams gut their payrolls by $50m+, which is what owners have been offering to this point.

At the end of the day, players want to make money, the same as owners. If you guarantee players a certain threshold of money, there’s no reason they would even care about a salary cap. What matters is the total revenue.

[jerichoholicninja]

Quote

 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.

Stacking the committee with representatives from large market teams doesn't really seem like it will get anything done.

[Brock Beauchamp]

2 hours ago, jerichoholicninja said:

Stacking the committee with representatives from large market teams doesn't really seem like it will get anything done.

Yeah I heard that last night. Bad decision, I think it renders the committee mostly useless. 

[tmwiese55]

I get right after Covid wasn't the time to have a drawn out standoff.   But next CBA they have to rip the bandaid off and deal with this to get to a similar system as the NFL/NBA where all the money is openly put into the same pot and then split among the teams/players and everyone plays by the same rules.   It has to be done eventually.

[MVP2110]

10 minutes ago, tmwiese55 said:

I get right after Covid wasn't the time to have a drawn out standoff.   But next CBA they have to rip the bandaid off and deal with this to get to a similar system as the NFL/NBA where all the money is openly put into the same pot and then split among the teams/players and everyone plays by the same rules.   It has to be done eventually.

This is it, there is no reason they can't a have a system similar to the NBA with a Salary Cap & Salary Floor where 50% of revenue goes to the players. 

[TURBO]

2 hours ago, Brock Beauchamp said:

Yeah I heard that last night. Bad decision, I think it renders the committee mostly useless. 

Damn it!  What a buzz kill...

[tmwiese55]

Another thing that should get put in is some kind of max contract length thing similar to the NBA.  Teams would be all for it to save them from themselves.

This popped in my head in the Mark A thread in the talks about yearly payroll.  Say, ok sweet Brewers can now afford 30 mil per year, great.  Isn't it still smart/wise or are they capable to give a 10 year deal to a Burnes type. No, so the guy is still going to end up at a team like LAD who can do it. Basically, just saying we'd still be looking for short term deals which rarely show themselves.   Some kind of 5 or 7 year max deal would really help.    Presumably, the players would be big time against this so you'd have to give them back some years at the beginning to allow FA sooner at a younger age.  Which, again gets closer to the other leagues in setup

[jerichoholicninja]

In the NFL you can throw around stupid money and stupid lengths of contracts as long as you're smart enough to write it in a way that you can limit how much it costs you when the player isn't worth it anymore. I'd love for something like that in MLB.

[CheeseheadInQC]

If I trusted Manfred, I’d actually view those owners being on the committee in at least a neutral light. You would want to get as many of those guys on board as possible and best to do it in the initial planning stages rather than after public infighting later on. It seems like the sort of thing David Stern would have done before strong-arming something through in the NBA.

Once again, though, with this commissioner…

[nate82]

The reason why these owners were chosen was because right now if a new CBA had to be written the owners wouldn't be able to even vote on a CBA as they don't have a majority.  This is a play for the next CBA to try and get enough owners in agreement so they can actually submit a proposal to the players.