one is revenue, that is a year to year measure and it fluctuates. I do not trust MLB on this either to fairly report their annual revenue.
Value of a franchise and annual revenue are not one in the same. IOW you cannot pay players with franchise value, you can pay them with revenue.
If I were a player the revenue number is a lot more relevant to me than the value of a franchise going up.
The players will not be playing the amount of games their contract was based on, and the owners will not be getting anywhere close to their typical annual revenue.
It shouldn't have to go much further than that. They both share in the loss IMO.
can't you do that for any business then? Different products have different profit margins - should we cap what profits can be?
The players getting fully (and above) prorated salaries seems incredibly fair considering the circumstances. The rest of their grievances (i agree with many of them) seem like they should be reserved for a new CBA, not for a shortened season due to a pandemic.
Both sides are to blame but I'm not going pile it on the owners just because they make a lot of money.
RE: It seems like you're combining a couple of different factors
Value of a franchise and annual revenue are not one in the same. IOW you cannot pay players with franchise value, you can pay them with revenue.
Sure you can - every public company in the world does it with their most important employees. Its called stock options and it aligns incentives between owners and employees.
Current sports systems ask players to absorb losses, but not share in the upside. Its not right.
But as FMiC says ... this debate is an exercise in futility, and both sides suck. Lets just get the season started.
But I’ve seen this, and can understand why the players would reject the offer. If salaries were prorated it’s one thing , but what the owners are proposing might be considered preposterous.
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/ Link - ( New Window )
But I’ve seen this, and can understand why the players would reject the offer. If salaries were prorated it’s one thing , but what the owners are proposing might be considered preposterous.
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/ Link - ( New Window )
This is 3 weeks old. The latest offer is 104% of prorated salaries based on games played.
could easily take out loans using the franchises as collateral to weather the storm of lower revenues. As MAB stated, they could also give players ownership options.
The values of the franchises matter because they are realized at the time of sale and thereby undercuts the notion that the owners are facing such risk. What risk? A short-term, one-season hit of revenues due to a pandemic won't materially affect the valuation of the franchises if they were to sell going forward, whereas the players foregoing salary is an absolute loss (since their baseball earnings are entirely in the form of compensation).
But the owners aren't concerned about the risk of a collapse of the value of their franchises because they are protected.
Unlike other companies/businesses, MLB enjoys federal antitrust exemptions. These unique protections keep out competition, allow baseball to maintain a scarcity of franchises to maintain inflated franchise value; they can also determine where franchises can operate to fully protect each franchise.
Unlike other companies/businesses, they own the rights to their employees before they even enter the workforce and they own your rights for 7 years (teams have to do certain things within that time to maintain control, like calling up to the majors after 4 or 5 years).
The players can't just say "MLB inc isn't treating me well so I'm going to work for another baseball company." The only protection they have is that their contracts are guaranteed and the only agency they have of who to work for is when they finally hit free agency.
I side with the players here.
franchise value definitely factors in - like any investment
there is a cost and when you are the one investing in any asset, whether it's 1 share of stock, building a house, or majority share of a baseball team, there are potential unexpected costs the same way there are potential gains. That's why investors usually need to prove they are viable. The ultimate determining factor of most decisions is the overall return and if it's increasing in value (like say 400%) you are likely to accept some short term cost increases. That is the entire speculation.
That's not to say there aren't scenarios where it's inappropriate to try to adjust terms, the owners were within their rights to ask the players to accomodate things for the good of the game in this situation (like prorating their salaries, and possible even deferring cash into the future, etc). Just that in this scenario where the owners investments are way up, this was the equivalent of building a house that has quadrupled in value but then also asking the builders to take less money for their work building it. Their asks were fundamentally unfair and against the spirit of the investment ("we'd lose less by not playing").
as a larger discussion about how baseball operates. But that isnt the situation here, this isnt a new collective bargaining session. This is a specific situation due to a pandemic. Just cause you dont think the way baseball is setup is fair to the players doesnt mean that in any situation the owners should just take the loss cause they can afford it. I mean sure in a perfect world that would be great, it would be great if Jeff Bezos paid all the people who are unemployed just because he can afford to. I get its easy to blame the billionaires over the millionaires but this shouldnt be about the person with more money just taking care of it, both sides should have come to an agreement that worked for them and neither had any interest in doing that so F them both. I said all along the owners should have taken the loss here because its the payment for not being open with the books. The 70 games is where they should have said "fine", but i still dont put the blame all (or even mostly) on them.
But I’ve seen this, and can understand why the players would reject the offer. If salaries were prorated it’s one thing , but what the owners are proposing might be considered preposterous.
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/ Link - ( New Window )
This is 3 weeks old. The latest offer is 104% of prorated salaries based on games played.
Thanks, I knower it’s was old, but I haven’t seen an update to the owners’ offer. I stand corrected
that must be why the average salaries keep going down in pretty much every sport.
And not every company offers stock options.
Baseball salaries are up 40% on average over the past decade compared to 300% rise in team valuations.
As revenues rise, owners had been getting increased annual revenues as well as a terminal multiple on those higher revenues.
But don't you think the paper increase (300%) is different from a hard $$$ increase (the 40%).
What I mean is the players actually got 40% more in salary over that decade.
Shouldn't the 40% be compared with revenues not franchise value?
No because there have been enough trades done in recent years across MLB, NFL and NBA (dont follow NHL sales closely) to trust the "paper" valuations to an extent. You can apply a haircut to them if you like, even if its 10%... you're talking about owners a) seeing those cash flows increase the same as players have (assuming player salaries and revenues have grown by 40%... not sure if revenues are more or less, i do know the TV deals and networks lots of teams established have been huge $$$), plus b) their valuations have increased 6-7X player salaries.
Anyway, i take italianju's and FMiCs points that this debate isnt really worth arguing - the owners have an inherent advantage on the labor because the labor can only play at a professional level for 10-15 years, and they sign away their rights for the first ~7 of those. Especially when the players are faced with losing ~10% of their career income this year while the owners really suffer very little downside... the owners hold just about all the leverage and they know it.
that they wanted to play an even more bastardized season despite their agreement to negotiate in good faith for as long of a season as possible and some wanted to outright cancel the season.
What other business can operate that way and expect their customers (fans) to come back? Even with an anti-trust exception.
Value of a franchise and annual revenue are not one in the same. IOW you cannot pay players with franchise value, you can pay them with revenue.
If I were a player the revenue number is a lot more relevant to me than the value of a franchise going up.
The players will not be playing the amount of games their contract was based on, and the owners will not be getting anywhere close to their typical annual revenue.
It shouldn't have to go much further than that. They both share in the loss IMO.
Seriously
The players getting fully (and above) prorated salaries seems incredibly fair considering the circumstances. The rest of their grievances (i agree with many of them) seem like they should be reserved for a new CBA, not for a shortened season due to a pandemic.
Both sides are to blame but I'm not going pile it on the owners just because they make a lot of money.
Value of a franchise and annual revenue are not one in the same. IOW you cannot pay players with franchise value, you can pay them with revenue.
Sure you can - every public company in the world does it with their most important employees. Its called stock options and it aligns incentives between owners and employees.
Current sports systems ask players to absorb losses, but not share in the upside. Its not right.
But as FMiC says ... this debate is an exercise in futility, and both sides suck. Lets just get the season started.
And not every company offers stock options.
And not every company offers stock options.
Baseball salaries are up 40% on average over the past decade compared to 300% rise in team valuations.
As revenues rise, owners had been getting increased annual revenues as well as a terminal multiple on those higher revenues.
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/
Link - ( New Window )
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/ Link - ( New Window )
This is 3 weeks old. The latest offer is 104% of prorated salaries based on games played.
The values of the franchises matter because they are realized at the time of sale and thereby undercuts the notion that the owners are facing such risk. What risk? A short-term, one-season hit of revenues due to a pandemic won't materially affect the valuation of the franchises if they were to sell going forward, whereas the players foregoing salary is an absolute loss (since their baseball earnings are entirely in the form of compensation).
But the owners aren't concerned about the risk of a collapse of the value of their franchises because they are protected.
Unlike other companies/businesses, MLB enjoys federal antitrust exemptions. These unique protections keep out competition, allow baseball to maintain a scarcity of franchises to maintain inflated franchise value; they can also determine where franchises can operate to fully protect each franchise.
Unlike other companies/businesses, they own the rights to their employees before they even enter the workforce and they own your rights for 7 years (teams have to do certain things within that time to maintain control, like calling up to the majors after 4 or 5 years).
The players can't just say "MLB inc isn't treating me well so I'm going to work for another baseball company." The only protection they have is that their contracts are guaranteed and the only agency they have of who to work for is when they finally hit free agency.
I side with the players here.
That's not to say there aren't scenarios where it's inappropriate to try to adjust terms, the owners were within their rights to ask the players to accomodate things for the good of the game in this situation (like prorating their salaries, and possible even deferring cash into the future, etc). Just that in this scenario where the owners investments are way up, this was the equivalent of building a house that has quadrupled in value but then also asking the builders to take less money for their work building it. Their asks were fundamentally unfair and against the spirit of the investment ("we'd lose less by not playing").
And not every company offers stock options.
Are salaries going down in ANY sport??
Quote:
that must be why the average salaries keep going down in pretty much every sport.
And not every company offers stock options.
Baseball salaries are up 40% on average over the past decade compared to 300% rise in team valuations.
As revenues rise, owners had been getting increased annual revenues as well as a terminal multiple on those higher revenues.
But don't you think the paper increase (300%) is different from a hard $$$ increase (the 40%).
What I mean is the players actually got 40% more in salary over that decade.
Shouldn't the 40% be compared with revenues not franchise value?
Quote:
But I’ve seen this, and can understand why the players would reject the offer. If salaries were prorated it’s one thing , but what the owners are proposing might be considered preposterous.
https://empirewritesback.com/2020/05/27/new-york-yankees-players-salaries-proposed-cut/ Link - ( New Window )
This is 3 weeks old. The latest offer is 104% of prorated salaries based on games played.
Thanks, I knower it’s was old, but I haven’t seen an update to the owners’ offer. I stand corrected
Quote:
In comment 14923870 Italianju said:
Quote:
that must be why the average salaries keep going down in pretty much every sport.
And not every company offers stock options.
Baseball salaries are up 40% on average over the past decade compared to 300% rise in team valuations.
As revenues rise, owners had been getting increased annual revenues as well as a terminal multiple on those higher revenues.
But don't you think the paper increase (300%) is different from a hard $$$ increase (the 40%).
What I mean is the players actually got 40% more in salary over that decade.
Shouldn't the 40% be compared with revenues not franchise value?
No because there have been enough trades done in recent years across MLB, NFL and NBA (dont follow NHL sales closely) to trust the "paper" valuations to an extent. You can apply a haircut to them if you like, even if its 10%... you're talking about owners a) seeing those cash flows increase the same as players have (assuming player salaries and revenues have grown by 40%... not sure if revenues are more or less, i do know the TV deals and networks lots of teams established have been huge $$$), plus b) their valuations have increased 6-7X player salaries.
Anyway, i take italianju's and FMiCs points that this debate isnt really worth arguing - the owners have an inherent advantage on the labor because the labor can only play at a professional level for 10-15 years, and they sign away their rights for the first ~7 of those. Especially when the players are faced with losing ~10% of their career income this year while the owners really suffer very little downside... the owners hold just about all the leverage and they know it.
Ground rule double went screaming right over my head!!
My bad
What other business can operate that way and expect their customers (fans) to come back? Even with an anti-trust exception.
@karlravechespn
·
5m
The deal is done between MLbPa and Mlb on health and safety protocols. Game on