The newly-formed economic reform committee comprised of five team owners drew some criticism from MLB Players Association executive director Tony Clark, who told The Athletic’s Evan Drellich that “the underlying theme” of the committee is reducing and controlling player payroll rather than any significant reshaping of the league’s business.
“The economic reform committee is not a new idea. They had a Blue Ribbon panel, and even an economic committee that was put together back in 1991….Those two in particular, and perhaps even this third, based on the comments that came out today, is focused in on how best to depress player salaries,” Clark said.
The MLBPA declined to make an initial comment last week when the committee was announced, though it naturally isn’t surprising that the union and the owners would have greatly differing perspectives on economic inequalities within baseball. For starters, Clark feels that “baseball is doing very well,” which seems to belie the existence for the committee in the first place.
“There was a lot of discussion in 2020 about the challenges that the industry had. There were a number of positions taken suggesting that the industry was in harm’s way, and was unlikely to come out of it for years following,” Clark said. “And yet, 2021 (league-wide) revenue was nearly back to what it was pre-pandemic; 2022 is above what it was pre-pandemic. And so the industry is doing well.”
The possible bankruptcy of the Diamond Sports Group is the primary reason for the committee’s creation, as 14 different MLB teams have broadcasting deals with Bally Sports (the regional networks owned by Diamond Sports). This will certainly have a major impact on the revenue streams for those teams, but only in the near future, Clark argues.
“We think, based on the expertise that we’re receiving, that over the long term, growth will still happen,” Clark said. “Live events, sports itself, have still done remarkably well. It’s the [regional sports network] model that appears to be challenged, not fan interest in sporting events.”
While certain teams could be harder hit depending on the specific length of their TV contracts, the potential also exists for those game broadcasts (and thus revenues) to be covered via new deals with streaming platforms, as opportunities could emerge in relatively quick fashion should a bankruptcy trigger a resolution to any pre-existing contracts with the Diamond Sports Group.
To this end, it is possible a good portion of the Bally Sports-related problems could be solved well before the end of the current Collective Bargaining Agreement, which expires at the end of the 2026 season. Given how the CBA was only settled less than a year ago in the wake of a 99-day lockout, much could still change between now and 2026, though the league seems quite likely to continue to push revenue disparities between teams as a prime motivator for an overhaul of baseball’s financial structure in the next CBA.
Commissioner Rob Manfred noted last week that the league’s exploration of the Bally Sports issue has led to a broader discussion between owners of revenue disparities, which is the other purpose of the economic reform committee. A salary cap doesn’t appear to be on the table for now since even the owners, Manfred said, would have difficulty in finding a cap ceiling that would be agreeable to all parties.
That said, Clark reiterated the longstanding MLBPA tenet that “we’re never going to agree to a cap….we’re not going to agree to a cap. A salary cap is the ultimate restriction on player value and player salary. We believe in a market system. The market system has served our players, our teams and our game very well.” The last round of CBA talks did involve the union exploring the idea of a salary floor, which Clark said was “similar to what currently exists on the top” in terms of the current luxury tax structure rather than an actual cap. However, “we have yet to have a conversation with the league that doesn’t include something far more restrictive on the top end. That makes the conversation null and void to this point.”
Unsurprisingly, Clark praised the Padres’ increased spending, which has come under public criticism from some owners (including the Rockies’ Dick Monfort). Though the Padres play in a relatively smaller market, Clark feels the team’s willingness to spend and compete at the upper levels “should be celebrated, not questioned.”
“The question that should be asked in regards to one team’s payroll versus another, is whether or not that team is making a conscious decision to have its payroll there, or whether it has the ability to increase its payroll?” Clark said. “The answer is the latter, and not the former. So at the end of the day, particularly when you see teams in smaller markets — aka San Diego, in this instance, as the best example — provide a level of engagement for their fans, and a level of excitement in being one of the seven smallest markets we have, it begs the question as to why they made that decision, and why others aren’t.”
Returning to labor talks, the union and the league are in ongoing negotiations about another CBA, the first agreement between MLB and minor league players. Though no deal has been reached since the two sides began talks in November, Clark doesn’t feel a work stoppage is likely if an agreement isn’t in place by Opening Day, since “the greater likelihood is that the terms and conditions that currently exist will likely continue as we continue to negotiate.” According to Clark, one of the roadblocks is that the league has again looked to reduce the size of minor league rosters, which the union considers a “non-starter” of a proposal.
