PAYROLL DEFICIT

[Blarg]

As the season presses on without a game being played one thing in baseball is still active and that is payroll. Regardless of games played the entire 40 man roster gets paid monthly even though no income stream is coming through. Every team is upside down once the first month passes, there is no gate revenue, no television revenue, very little if any merchandising revenue. 

Any team can afford the loss of a star player for a season. The Angels paid off 3 years of Hamilton's contract and received no on field production without losing money, just had to restrict spending for those seasons. Even last year with the attrition of losing Upton, LaStella, Simmons and even Trout for part of the year with injury, the implosion of the pitching staff that saw both free agent pitchers released, eating $20 million in contracts, the Angels still made payroll through games played. Just taking the field pays for every guy that sat on the bench last season.

But there is no bench, no turnstiles, not even rainouts with a games scheduled a month or two later, there is nothing. Except for costs. How much this year costs every team will determine a lot as to how many owners buckle and give up and how many have to tighten their purses for the next 5 years to recoup the losses of this one. 

This may be the straw that breaks Arte's bank account.

 

[Taylor]

Blarg taking a page from @Angels 1961's book with the all-caps title.

[Rollinghard]

Bail out coming soon!

 

[Dtwncbad]

Have you read the broadcasting agreement?  

You have confirmed and know for certain that there there will be no revenue if there are no games right now?

I would not assume that either way without confirming.

 

[Stradling]

5 minutes ago, Dtwncbad said:

Have you read the broadcasting agreement?  

You have confirmed and know for certain that there there will be no revenue if there are no games right now?

I would not assume that either way without confirming.

 

Or you could do that before assuming he hasn’t. 

[kevinb]

I thought none of the players get paid till the season officially starts? Isn't that what Fletcher said? 

[Docwaukee]

2 hours ago, Blarg said:

As the season presses on without a game being played one thing in baseball is still active and that is payroll. Regardless of games played the entire 40 man roster gets paid monthly even though no income stream is coming through. Every team is upside down once the first month passes, there is no gate revenue, no television revenue, very little if any merchandising revenue. 

Any team can afford the loss of a star player for a season. The Angels paid off 3 years of Hamilton's contract and received no on field production without losing money, just had to restrict spending for those seasons. Even last year with the attrition of losing Upton, LaStella, Simmons and even Trout for part of the year with injury, the implosion of the pitching staff that saw both free agent pitchers released, eating $20 million in contracts, the Angels still made payroll through games played. Just taking the field pays for every guy that sat on the bench last season.

But there is no bench, no turnstiles, not even rainouts with a games scheduled a month or two later, there is nothing. Except for costs. How much this year costs every team will determine a lot as to how many owners buckle and give up and how many have to tighten their purses for the next 5 years to recoup the losses of this one. 

This may be the straw that breaks Arte's bank account.

 

you've basically described 90+% of businesses out there at this point.  massively decreased revenue with a bunch of fixed costs.  

as it relates to baseball, it will be very interesting to see if there is an impact on the valuation of teams.  A sharp decline in the value of a franchise will certainly impact the ability or willingness to borrow against that for payroll or stadium deals.  

And then there is the tv revenue component.  I am sure there are provisions in those contracts where the teams don't get paid by local networks if there are no games.  I know you mentioned it, but that is absolutely huge.  

If and when this lets up, are people going to just start piling into stadiums again right away?  So even if they do start playing again, fans will shift their viewership from live to on TV where the teams are getting a fixed amount not taking into account that shift.  Which will create a fight among teams and networks.  

[Claude]

The Montreal Canadiens hockey team just laid off 60% of their employees. 

[Jeff Fletcher]

No players get paid till the season starts under normal circumstances. They are still negotiating what they’re doing this year. I think MLB has the contractual right to withhold all salary since there are no games and it’s a national emergency, but I assume they are negotiating some type of compromise. 

[ettin]

Also Arte is a billionaire, as are most of the owners, so a year of "deficit" shouldn't back-break most of them anyway, IMHO.

[Lou]

2 hours ago, Jeff Fletcher said:

No players get paid till the season starts under normal circumstances. They are still negotiating what they’re doing this year. I think MLB has the contractual right to withhold all salary since there are no games and it’s a national emergency, but I assume they are negotiating some type of compromise. 

What about the broadcasting revenues? 

[Claude]

2 hours ago, ettin said:

Also Arte is a billionaire, as are most of the owners, so a year of "deficit" shouldn't back-break most of them anyway, IMHO.

That’s not true. All teams make their year to year budgets based on projected team revenue. If the 2020 MLB season is wiped out and Arte is forced to pay out $200M in operational costs coupled with him losing $150M in projected revenue profit, that’s a huge hit. It will certainly force Arte to cut down on future expenses, raise the ticket prices and increase the parking pricing. He’s going to recoup those loses somehow.

Edited March 24, 2020 by RendZone

[nate]

1 hour ago, ettin said:

Also Arte is a billionaire, as are most of the owners, so a year of "deficit" shouldn't back-break most of them anyway, IMHO.

Billionaire doesn't mean that he has a ton of liquidity.  Most teams will need to take out loans, or perhaps MLB will take out one big loan and distribute it.

[Jeff Fletcher]

29 minutes ago, Lou said:

What about the broadcasting revenues? 

I'm not sure how that works. But it would seem if MLB isn't providing the programming that they paid for, that they wouldn't have to pay.

[Tank]

i assume all money comes out of the team's budget and not directly out of the owners pocket.

but if this means i need to go buy more merchandise, i'm willing to help the cause.

[ettin]

2 hours ago, nate said:

Billionaire doesn't mean that he has a ton of liquidity.  Most teams will need to take out loans, or perhaps MLB will take out one big loan and distribute it.

Team has virtually no debt, I am not worried about Moreno or any other owner that made a conscious decision to buy a Major League baseball team. I just don't think this is an issue unless it goes on for years.

[Lou]

2 hours ago, Tank said:

i assume all money comes out of the team's budget and not directly out of the owners pocket.

but if this means i need to go buy more merchandise, i'm willing to help the cause.

I'm not spending a dime

[bruin5]

6 hours ago, Jeff Fletcher said:

I'm not sure how that works. But it would seem if MLB isn't providing the programming that they paid for, that they wouldn't have to pay.

I haven’t seen anything that suggests that cable/satellite/streaming providers don’t have to pay ESPN etc per their contracts....

[ukyah]

11 hours ago, Stradling said:

Or you could do that before assuming he hasn’t. 

he didn't start the topic.

[Lou]

11 hours ago, Stradling said:

Or you could do that before assuming he hasn’t. 

I assume nobody here has read it. 

[Stradling]

6 minutes ago, Lou said:

I assume nobody here has read it. 

Maybe but Eric isn’t usually uninformed or talking out of his ass.  

[Lou]

@Blarg

Have you read the broadcast agreement? If so, can you share it with us?

Thank you

 

[Lou]

3 minutes ago, Stradling said:

Maybe but Eric isn’t usually uninformed or talking out of his ass.  

Ok, but do you honestly think he's read it? 

Even Fletch said he's not sure. 

[Claude]

I don’t think the A’s are worried. Their payroll is built for times like this.

[Jeff Fletcher]

16 hours ago, bruin5 said:

I haven’t seen anything that suggests that cable/satellite/streaming providers don’t have to pay ESPN etc per their contracts....

That's an interesting situation. 

Cable providers pay ESPN to provide programming, which they assume to be games but I don't know if that's actually spelled out. Networks pay MLB for games. Although I haven't seen it spelled it out, I have seen other articles that allude to the fact that the networks wouldn't pay MLB to show games that aren't being provided.