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A little over a month ago, I wrote a piece titled “You can’t trust MLB’s crying poor,” with the thinking being that the league’s discussion of the debt that they had accrued and the losses they suffered wasn’t in line with the reality of either situation. Part of the reason for writing that was not just to tackle the idea head-on at the moment, but also because it was necessary to understand what was happening in that moment in order to also understand what was to come.
One of those items in the “what was to come” bucket turned out to be “Bill Madden columns,” as he’s been repeating back whatever he’s told by MLB clubs about finances and debt for the last month-and-a-half. In October, he wrote that this offseason will be a “bloodbath” for MLB players in a column in which he repeated the kinds of revenue loss claims that caused me to write a rebuttal in the first place:
Every team in baseball has lost a minimum of $100 million — the larger market teams like the Yankees, Dodgers, Red Sox and Phillies, between $175-$200 million. Last week, the Phillies’ Team Marketing Report reported they lost $186.1 million, while the Yankees were probably closer to $200 million or more. The lower-payroll teams like the Rays and Marlins, accustomed to playing to three-quarters empty ballparks anyway, lost considerably less. But they will get hit with an additional whammy of losing out on their customary $50 million (in Tampa Bay’s case) to $70M (in Miami’s case) revenue sharing payments. Or as one MLB exec noted to me: “You can’t be paid revenue sharing from the other teams if there is no revenue.”
As for the notion that baseball got partially bailed out this year by the massive national TV contracts, that is a misconception. The national TV, radio and licensing monies all go into the MLB Central fund from which approximately $65-70 million per club is doled out at the end of the year. But this year that number is estimated to be about $50 million per club. The fact is, local revenues — attendance, TV and radio, concessions, merchandising — account for 80% of the clubs’ revenues, and they were essentially non-existent this year.
Just thinking about this for about three seconds would show you where the holes in the reasoning are, but alas, sometimes you just need to file. Revenue from attendance (which includes tickets, parking, concessions, and in-stadium merchandise purchases) accounts for around 40 percent of the revenue in a given season, and player salaries were scaled down to just 37 percent of their usual size since that’s the percentage of a regular season that was played. Where, exactly, are these losses coming from? Certainly not from “TV and radio” or “merchandising” as Madden says, not when the other 57 percent of the season was played and broadcasted, not when MLB.com still had a shop that takes orders. Are all of the numbers smaller than usual? Yes, including how much MLB teams had to pay out in order to have a shortened season.
Did MLB teams lose money? It’s definitely possible! Are those losses anywhere near the claims being thrown out there by MLB themselves? Absolutely not. I hate to spend a whole article playing [taps sign] but, as I said, I wrote about this already:
Remember, too, that MLB put the 2020 season in danger rather than given in to the PA’s demand that the books be opened up once more in order to prove that the players needed to take a second pay cut in addition to the one they had already agreed on back in March. Now, given the past, how the rich operate in general, and how the present-day owners felt secrecy and risking the cancellation of the 2020 season was the more palatable option to them, tell me what you think the chances are that there aren’t any shenanigans in the bookkeeping in the present.
MLB said back in the spring that they’d lose money by playing the 2020 season without fans. They then kept floating cries of how the pandemic would probably impact finances for a good three years, and that was before they knew it would still be ongoing at this point in time. They’ve been planning a Woe Is Us tour for months now, which was introduced without providing any proof that it would actually happen, and now that the season is over, they’ve gone back to talking about debt without providing any proof the debt exists like they say it does.
MLB isn’t going to reveal the math behind their reported losses, so you can’t trust what they report. Franchise values are still going up in spite of the pandemic, with Forbes saying investing in MLB remains “a sure bet.” The debt they speak of isn’t debt like you and I deal with: their debt comes from a desire to invest, and thanks to the low interest rates inherent in this kind of capital-based borrowing, they’re going to make much more money than they would have if they hadn’t taken on the debt in the first place. There is no money for free agents, though, nor time to let teams know whether or not they are going to need to sign a designated hitter or not for 2021.
Now, you can listen to this line of thinking, or you can believe Madden, who at the end of November published that, according to his sources, the Phillies lost $2 billion during 2020. You can consider that MLB might be lying about finances for their own benefit, or you can believe the kind of person who would hear that $2 billion figure and not only fail to come up with a follow-up question for his source, but then just publish said figure without a whiff of incredulity to be found. Now, I might be biased, but I’ve got a pretty good idea of which of us you should be listening to right now.
Publishing that $2 billion figure was not a typo. It’s the result of a reporter who believes what they’re told by authority figures. An editor either missed that before publishing or has the same deferral reflex as Madden: neither answer is a good one. This instinct to believe whatever MLB tells you about their finances only spreads lies, and that’s to the league’s benefit.
When MLB says they’ve taken losses, what they’re really saying is that there was money they could have made that they did not make thanks to the pandemic. Their costs were no higher than they usually are, on a rate basis or overall. They just didn’t pull in as large of a profit as they normally do, and this constitutes a “loss,” even though that’s not at all what’s happened. Scott Boras has gone as far as to say that “There’s no team in baseball that lost money last year,” and while I might not feel comfortable going that far, that’s certainly closer to the truth than everything MLB has been leaking and saying.