For as long as I can remember – which goes back to 2006 when I began writing about baseball – the Major League Baseball Players Association has been dealing away the rights of players who weren’t in the players association in exchange for benefits for those who were in the players association. Over the last decade, though, it’s seemingly been taken to another level against non-professional players, too. It’s not just the minor leaguers who were having their rights negotiated away anymore – players looking to join professional baseball now were under attack.

In the last decade we’ve seen the draft go from uncapped spending to capped spending. We’ve seen international spending go from uncapped, to “you pay a penalty if you go over our recommendation”, to “you absolutely can not spend more than this cap”. And they’ve also set it so international players from other professional leagues around the world can’t be free agents like they used to unless they have spent at least five full seasons as a professional in another league around the world.

In the last week we saw where Major League Baseball and the Major League Baseball Players Association agreed to alter the 2020 and 2021 drafts and how many rounds there are, as well as how undrafted players can be handled (signings can only go up to $20,000). Zach Buchanan of The Athletic asked Arizona Diamondbacks union representative Nick Ahmed about a whole lot of issues in his piece published yesterday. But one of the things he asked about was about the draft. Here was the question, and the answer:

One area the deal has been criticized is the effect it has on amateur players and the draft, which can be shortened to just five rounds. As the union was trying to hash out those issues with the league, how did you weigh the concerns of amateurs, who are not union members, against those of your actual membership?

That was tough. No one wants to not have a full draft. I have a bunch of buddies who are college seniors, some guys who train at the same gym where I train at home, guys that went to UConn that I’ve gotten to know over the years. I just feel for those guys. The opportunity that they’re not going to get now is tough. It was a really tough situation. We were fighting to keep as much of the draft as we could. Just from a financial perspective, it was something that MLB wasn’t comfortable with. We gave on that a little bit. We fought for as much as we could, I guess. Hopefully, there’s going to be the right guys drafted, the guys that love the game and are going to give it their all and are going to make it. But it is tough just knowing there’s going to be guys who would have been drafted in later rounds. Think of how many guys in the big leagues right now who were drafted after the fifth round? There’s so many of those guys. It’s going to be a big effect this year. It’s sad. It’s unfortunate.

Let’s start off with the “saved money” aspect of the comment. Absolutely, Major League Baseball is looking to save money wherever they can. They are going to be making less money this year than they were planning on. Just like the rest of us, probably. We’re all going to be hit by this in one way or the other. With the draft being limited to five rounds – with bonus pools being the same as last year – let’s run the numbers. There are 160 draft picks this year in rounds 1-5. Let’s assume that since teams don’t need to “game the system” with draft picks because they can’t spend on guys beyond the 10th round anymore, they just draft the best 160 players. Last year the top 160 players, by signing bonus, got a combined $241,840,699. That ranged from $400,000 up to $8,100,000 for Adley Rutschman at the #1 spot in the draft.

The remaining 800 players who signed last year got a combined $74,723,285. That is roughly what Major League Baseball will be “saving”. But not really. They are still going to sign some free agents, but with a $20,000 limit, the numbers are probably going to be really small overall – probably just a few million in total for all of baseball. Let’s make the math easy and say it’s $4,723,285 that the teams spend on free agents (That would be the equivalent of paying the full $20,000 to nearly 8 players per organization – a number that probably isn’t realistic on the high end). That takes us to $70,000,000 saved for all of Major League Baseball. There are 30 teams. This saves each team $2,333,333.33 each – on average. That’s not nothing. But it’s really not much of anything, either.

If five rounds of the draft was “as much as they could get”, as suggested, I have plenty of questions. The first one would be “if you fought to get five rounds, what on Earth was the first proposal on the table”? I’d follow up by asking if the $400 a week to minor leaguers was a “trade off” for the draft shortening.

In the end, it is sad. It is unfortunate. I’m glad that Zach Buchanan asked the question, and I’m glad that Nick Ahmed gave an answer. But the answer didn’t feel great, either. There are a lot of tough decisions that are being made by all of us. I get it. Just feels like another situation where the haves – in this case, the big leaguers who, for the most part, have already made millions upon millions of dollars, working to get just a little extra for them at the expense of the have-nots (the amateur players).

22 Responses

  1. Stock

    Again why is baseball expected to add 1200 jobs when so many other companies in the USA are cutting payroll.

    MLB players are the only pro sports players who financially support those not in the majors. There is no minor league basketball or football. These players don’t give up a portion of their salary to support those younger and/or less talented than they are at this point in time.

    In the last 14 years the Reds have zero players drafted with 6th round or later money that made an impact to the ML club.

    I understand that part of the savings from what clubs pay draft picks the last 5 years or so goes to the owners. But part of it goes to the ML players. The ones who earned it.

    I would not mind seeing baseball go to a 10 round draft after this year. I think it would help the Reds.

    • Doug Gray

      There is minor league basketball. And there is minor league hockey.

    • Doug Gray

      As to why they should add jobs? Well, because A, they do actually have the money to do so, and B, it’s in the best interest of their business long term to do so.

      • Stock

        It is in the best interest in your mind. Obviously they disagree. If they agreed with you then there would be a full draft this year. Minor league basketball is not supported by NBA players. It is sponsored and financially supported by Gatorade. I did not know about minor league hockey so didn’t include. My guess is that minor league hockey makes enough to be self supportive but I don’t know.

      • BK

        You stated MLB has money to add jobs. On what basis are you making that statement? I think it would be more accurate to say MLB may have money to add jobs. Like other business under severe revenue pressure, MLB is doing everything it can to conserve cash because there is huge uncertainty for what their revenue will actually look like. Like other industries, MLB is willing to take the risk that most of these potential prospects will be available for signing once the veil of uncertainty is lifted.

        We don’t know what the financial consequences would be (likely dire) if the entire season is cancelled or if the overall economy suffers further.

      • Doug Gray

        Based on everything we know about the money these teams have, they have the money to hire minor league baseball players who make next to no money at all. If they went forward with a full draft, the signing bonuses added onto the draft as it’s currently set up, and paid the new guys their seasonal salary, you’re looking at an additional $2.8M per organization (not accounting for the fact that guys can’t get most of their bonus money this year, so the pay this year is far lower) – maybe even a little bit less.

      • BK

        The point you are missing is that MLB must plan today for worst case … no games in 2020. If that scenario plays out, they are going to lose billions (even lost gate revenue; i.e., playing with no fans would trigger multi-billion dollar losses) … no one seems to dispute that possibility.

        The Fangraphs article you posted stated that baseball hasn’t lost TV revenue YET (not trying to shout, just emphasize the key word). If “force majeure” provisions kick in (contract clauses that kick in for unforeseen situations) they could end up losing that TV revenue. I recommend reading this Bloomberg piece that was cited in the Fangraph’s article.

        https://www.bloomberg.com/news/articles/2020-03-25/sports-blackout-forces-leagues-networks-to-rethink-media-deals

        Here’s a quick summary: we won’t know the true financial impact until one of the major sports officially cancels there season and the media outlets respond. Is this likely to kill any of the sports? No. But it will very likely leave another multi-billion dollar hole in revenue. In this scenario, teams will have to take on debt to pay off the losses.

        In short, is there money in their accounts: almost certainly. Should they spend it? MLB’s actions are totally in line with other similarly affected industries. The fact is that over 6.6 million Americans filed for unemployment last week on top of 3.3 million the week prior. For context, the previous high in unemployment filings was 695,000 in October 1982.

        The facts seem to indicate that MLB owners and players are doing well together walking a delicate balance of guaranteeing the players a floor of about 4 percent of their expected wages (I know many are wealthy, but they have bills to pay, too) while agreeing to hire at least the 150 best draft prospects. Bear in mind it is a near certainty that most owners will lose money this year–it’s simply a question of how much.

        One more article for those looking for analysis of the economic impact on MLB:

        https://www.baseballamerica.com/stories/how-the-novel-coronavirus-changes-mlbs-economic-landscape/?utm_source=Newsletter&utm_medium=email

      • Doug Gray

        Hiring as many players as they did last year would cost the Reds, roughly 0.6% of their 2019 operating revenue, for the entirety of the 2020 year (accounting for the only 10% bonuses that can be paid out this year). And the number is only that high because I accounted for 30 free agent signings all at the $20,000 limit and that the Reds would pay that in full at signing (which I’m honestly not sure if it applies here or not, or if they fall into the 10% now, 45% and then 45% the following two years).

      • BK

        Once again, you are really downplaying the overall economic impact of the pandemic. Businesses (and government entities for that matter) are minimizing cash flow. That means forgoing spending that can be reasonably deferred. MLB and MLBPA left open the potential for expanding the draft up to 10 rounds. Now is not the time to spend money and justify it by stating that it’s relatively small. For the record, I’m not conceding that your $2.3M/team estimate is small or $70M overall is small. Within the context of the pandemic, it is quite significant. Let’s go back to your statements that I’m pushing back on:

        “They actually have the money to do so” … MLB must plan their spending for the potential that there will be no games played. This is a distinct possibility and one that would essentially negate most revenue for an entire season. They have vendors and employees to pay. Discretionary spending would be irresponsible right now and could jeopardize obligations they have to both employees and business partners. If that $70M came from the players it would mean they had taken a nearly 98 percent pay cut. Or perhaps they could simply layoff their front office staffs, or forgo paying their MiLB players anything at all. In reality, these are the kinds of choices they would have to make. To suggest otherwise, is simply ignoring the facts. To use a baseball analogy, it’s like vehemently arguing your favorite team should hoard players with strong RBI track records–as a decade long reader here, you’ve convinced me, with data, that’s a misinformed approach.

        “it’s in the best interest of their business long term to do so” … the percentage of prospects are suggesting MLB spend $70M to hire that actually makes the majors is negligible (BTW, your my source for that data point). The ill will among others that would have to forgo payment (employees, vendors, suppliers, etc.) would be lasting. Potential debt they would have to take on would have a lasting effect. Moreover, as reported on Baseball America, the pandemic has left some form of MiLB contraction a forgone conclusion the need for players to fill out rosters will be significantly reduced (source link below). Every discretionary dollar spent right now comes with significant long- and short-term risks. This will be the case until uncertainty is reduced.

        https://www.baseballamerica.com/stories/coronavirus-scrambles-already-difficult-mlb-milb-negotiations/?utm_source=Newsletter&utm_medium=email

      • Doug Gray

        Here’s the math behind what I’m saying: With the numbers I laid out, that additional money per team spent, is the equivalent of someone making $30,000 a year balking at the idea of spending $60 for the entire year. Look, I understand that everyone is trying to cut the spending, and cash flow is an issue, but the additional funding just is a hard sell as “impossible”.

      • BK

        I think you just made my point. If you were anticipating making $30,000 this year and then discovered there was a high likelihood that you may only make $5,000 to $6,000 this year, you would absolutely avoid spending $60 unless it was a basic need. To do otherwise would be irresponsible jeopardizing your ability to pay bills that you have already commited to paying.

      • Doug Gray

        I didn’t make your point, though. First, even if my income were to crated to those levels, a Major League Baseball team wouldn’t see a similar decline. They have more income sources. The equivalent would be for the Reds to see their revenue drop to $42M. So we’re talking about 5% of THAT revenue, which is incredibly unlikely to see it fall to. And that completely ignores the ability for the 19 owners, individually, or the team itself, to find capital either through their personal wealth or through the lowest interest rate loans you’ve ever imagined, that someone making $30,000 a year would never, ever be able to make happen.

  2. Greenfield Red

    Shin-Soo-Choo is donating $1,000 to each Ranger minor league player to help him get through this tough time. It will cost him about $200,000.

    It’s time for mlb players to stand up and do something. Maybe some of them are, and we don’t hear about it. Why not challenge each other. Why not offer to match the owner’s $1000 with $1000 of your own for the next month?

    These guys are so talented they can be paid extreme amounts of money to play a game. It’s time to step up, and again if they want to do it as a challenge to ownership, who makes even more money than the players do, I’m fine with it.

    I read last week that Drew Brees is donating $5,000,000 to relief in New Orleans. Maybe he is not helping football players, but he is helping in an enormous way.

    The average big league player makes a ton of money. You don’t have to be a superstar and give 5 mil. But what Choo did should not be that hard for 100s of them.

    • Greenfield Red

      Additionally, it should be noted that there are CEOs in America foregoing pay and bonuses this year in order to keep furloughed employees on the payroll a little longer. I think that is amazing, and it’s really what being an American and a human being is about. Those guys should be saluted and thanked.

      I was not so lucky. The company I work for pointed us to the unemployment line while management continued to “work” even though there was nobody to manage.

  3. Jon

    It would take years and years, but I feel like MLB is going to Scrooge their way right out of business. Every year they keep doing more and more to push people away. They haven’t been “America’s Pastime” for a long time! And stupid rule changes that save a whole 30 seconds per inning will not bring fans back to baseball either! They’re so distracted counting their millions they apparently don’t realize they’re shooting themselves in the foot!

  4. MK

    I believe it unfair to put blame on the Players Association. The purpose of any union is the protection and success of its members, the people paying the dues. Their goal is not to make those trying to take their members jobs easier. Should their negotiations hold out for more draft picks or fought for the 26th roster spot an addition of at least $563,500 of payroll? That 6th round draft pick would not be a Union member when drafted.

    • Doug Gray

      I guess I’ll just disagree on the explicit purpose of the union to only be to protect the current members.

  5. BK

    Your savings calculations for this year a off. Per your previous reporting, only $100K can be paid to draftees in the first 5 rounds with the rest split evenly between 2021 and 2022. It was reported that MLB wanted no draft and MLBPA fought to keep a draft. The problem right now is cash flow. I would think that MLB had to show MLBPA what the financial impact is now and a reliable projection for a cancelled season. Otherwise, MLBPA wouldn’t have agreed to receive only about 4 percent of their expected income (if you do the math, that’s what $170M equals). Companies all over America are prioritizing taking care of their current employees at the expense of new hires–every industry will eventually need the new hires (draft picks). Entertainment, travel, hospitality, and oil were hit hard a few weeks ago. No other sectors are following. It’s gotten to be reflexive among sportswriters to criticize the wealthy players and owners, but macroeconomics explain this situation, not greed.

    • BhamRed

      Yes I guess all the owners are just supposed to fall in line and be Socialists and just spread the wealth equally. “You earned it but I’d like to have it please!”