PORT ST. LUCIE, Fla. — In the wake of Steve Cohen’s spending and the financial turmoil at Bally regional sports networks, Major League Baseball has started an “economic reform committee.” Less than a year after MLB and the Players Association came to an agreement to end the 2021-22 lockout, the committee’s formation emphasizes that some MLB owners are unhappy enough that they want to discuss major change.
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“It came out of a recognition of a couple of issues — one new, one old — that were particularly acute for us,” commissioner Rob Manfred said. “The new one’s the local media situation. I think that people see it as an opportunity to rethink the revenue side of the house a little bit, which has been hard in our sport. People entrenched in their local (media dynamics).”
Diamond Sports Group is the parent company of 19 Bally Sports channels, which carry 14 MLB teams. The company appears headed for bankruptcy. If that’s the case, MLB hopes to be in a position to distribute those teams’ games digitally.
“We got to find a new model,” Manfred said. “Maybe we ought to be driving the boat, what that model looks like. So, that’s the new challenge.”
The older challenge Manfred referred to is indeed a long-running topic in the sport: owners who are unhappy about the difference in the amount of money teams make. (For as long as those complaints have existed, so too have rebuttals that the clubs are doing well financially.)
“When you start thinking about the opportunities in terms of a more national (broadcasting) product, it did lead into a conversation about our disparity issues on the revenue side,” Manfred said. “We have businesses that are literally not similar in terms of the overall revenue that they’re generating. And to the extent that you could find a new distribution model that actually helped on that disparity side, that would be the daily double. So people are having conversations that haven’t been had in baseball, and it’s really been owners talking to owners, which is a good thing.”
Most MLB teams’ financial reports are not public, limiting the ability to independently evaluate claims about revenue. The league has ordered studies of its economics in the past. In 2000, under commissioner Bud Selig, the league famously published the Blue Ribbon report, which included input from individuals outside the ownership ranks, including former Senate Majority Leader George Mitchell, former Federal Reserve chairman Paul Volcker and columnist George Will.
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The new group, however, is not producing a report, Manfred said, and is exclusively made up of owners.
“No report,” Manfred said. “It’s a vehicle for owners to talk to owners about how they see the game and what solutions they see. And then try to use that group to go more broadly with the group of 30.”
Mark Walter of the Dodgers, one of the sport’s largest market teams, is chairing the economic reform committee, a person briefed on its formation said. Chris Ilitch of the Tigers, John Henry of the Red Sox and Dick Monfort of the Rockies are among the members of the new committee as well.
What impact the committee will have is to be seen. It could provide a vehicle for MLB to eventually propose major changes to the Players Association, be it in revenue sharing, a formal salary cap or other major modifications. But it could also function more as a political tool for Manfred to allay the concerns of owners who are upset.
Steve’s spending
One leading reason that revenue disparity is newly taking center stage is that Cohen’s Mets enter 2023 with a projected payroll of roughly $370 million, a record.
David Samson, a former president of the Marlins who now hosts the show “Nothing Personal” for CBS Sports, said Friday: “There is so much Steve Cohen-driven right now.”
An industry source briefed on the creation of the committee who was not authorized to speak publicly said Friday that the television concern, while not illegitimate, is a vehicle for MLB to address the fact that Cohen has made “the small market teams go f——- crazy.”
“They demand everything’s got to change, and so the answer is to put a study committee together for labor,” the source said. “The whole idea is to basically come up with a system that gets to a salary cap. … Rob didn’t lie by saying it has to do with the RSNs, dealing with the RSNs. Because these teams will lose more money and the disparity will get bigger. So they’re using that excuse to have a study committee.”
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An official with a rival team told The Athletic in December that Cohen’s spending was “going to have consequences for him down the road.”
The 2022-26 CBA that the owners and MLBPA agreed to 11 months ago included a new tier in the competitive-balance tax system that’s been dubbed the “Steve Cohen tax.” It was named so for the feeling that Cohen, the sport’s richest owner, would be perhaps the only owner who would consider spending enough to reach it in the first place. Cohen has not been afraid to surpass that new, higher threshold, which this year is $293 million.
“There’s gonna be a little bit of panic,” Samson said. “Rob is worried, as he should be. The biggest problem in ’94 was owner vs. owner. Right, that’s really what was going on is the owners were fighting. … (To ratify a CBA, the commissioner needs) 23 votes to pass. If you get eight votes to block, then you can stop everything from happening. And what he is noticing, there’s more problems with owners, and it’s a lot of new owners.
“Owners are now beginning to dislike each other, not just personally, but the economics of the game is something that you’re gonna have to work through. But it’s not coming till ’26. They’re not reopening the collective bargaining agreement. But … they’re working on the new CBA. Now.
“And that may sound early to you, but it’s not. And the reason they’re working on it now is they’ve got to come up with solutions to get to 23 (votes). Because if they had a vote on a CBA today, given what Steve Cohen’s done, given what the league looks like, here’s a little terrible fact: They don’t have the votes. And that’s a scary thing if you’re the commissioner.”
Manfred said he did not think Cohen has made the most recent CBA look bad.
“I don’t see it that way,” Manfred said. “I mean, look — whether we should have, or shouldn’t have, right, we bought in again to a system that lacked absolute upward limitation on what people can spend. And I mean, I said this at the owners’ meeting: I think our owners understand, that’s what we agreed to. And he can do what he wants to do within the context of that system.”
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At Mets camp on Saturday, Mets general manager Billy Eppler was asked about the outside complaints about the Mets’ spending. Eppler said that “nobody’s called me and told me that.”
“I just do my job,” he said. “And if Steve says, put together the best team we can, and gives us the resources to do it, I do it.”
Eppler said he was not aware that MLB had started an economic reform committee. Earlier this month, Cohen told ESPN that, “I’ve heard what everyone else has heard: that they’re not happy with me.”
“I kind of look at that like, you’re looking at the wrong person,” he told reporter Jeff Passan. “They’re putting it on me. Maybe they need to look more at themselves.”
Precursor to a cap proposal?
A system with an “absolute upward limitation,” as Manfred referred to, is called a salary cap. If the committee does push in that direction, it would be guaranteed to induce a major labor fight. The 1994-95 strike was centered on MLB’s desire for a cap, and the MLBPA has both a historical and ongoing staunch resistance to that structure. The players would not oppose a salary minimum, but the trade-off for payroll minimums have historically always been a corresponding cap, or something like it.
Manfred said that MLB had not “even started thinking about where we’re going to be the next go-around” when it comes to bargaining. But he appeared to hint in the direction of a cap with another comment, as well.
“When I talk about a more national product, sort of the thought there is that a more national product produces more centrally shared revenue … which, in turn, we hope, would reduce payroll disparities,” Manfred said. “At various times, we have talked and proposed, including in the last round, about direct payroll regulation, in addition to that, having a minimum payroll. It’s like poker: you got to ante at that number if you want to play. We remain open to those sorts of solutions. Obviously, we’re a long way from the next round of bargaining, but there are ways to get at it. There are ways to get at it.”
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In 2021, early in the last round of negotiations, MLB proposed a system that would have instituted a penalty for teams that did not spend above $100 million. It also would have made the penalties for spending over the luxury-tax threshold more onerous (while dropping the first tier where those penalties kick in to $180 million). So it wasn’t quite a proposal for a firm floor and a firm maximum, but it was a system that would have resembled a cap. The players were not interested.
Asked by The Athletic if he plans to newly push for a cap, Manfred suggested he has a political problem.
“The reality is you got to solve your revenue disparity problem before you can even think about a cap,” Manfred said. “We’re so disparate right now, that it’s almost hard to make — and I mean, literally — the math of a salary cap work. You got to be at a certain level to get an agreement with the players. You start thinking about minimums and maximums, you know all of a sudden, you’re talking about minimums, we have some clubs where …” he said without finishing the thought.
The gist: teams would disagree as to where a minimum salary would be set.
“I think we’re really focused on the revenue side of the house right now,” Manfred added.
The MLBPA declined comment.
TV trouble
Taming the television side of things is going to be no small feat. Manfred wants to create an MLB-wide streaming product, which fans have been clamoring for.
“What has happened among ownership is they have realized that as we go more digital, there is an opportunity for us to become a more national product,” Manfred said. “And there’s a lot of work that will need to be done on this project. But I think as you move more national, by definition, you’re going to have more central revenue.”
But attempting to centralize revenue creates controversy, too. Put aside that elements of revenue sharing have to be collectively bargained with the players. The individual teams own their digital streaming rights, as opposed to the league office controlling them. Big-market teams with high viewership aren’t going to want share their revenue from those rights with small-market teams, at least not if it’s not worth their while. And an MLB streaming package probably wouldn’t sell well if some of the biggest franchises didn’t participate.
In all, the creation of a new committee sends a clear message that some MLB owners are unhappy. Whether they wind up changing anything through that committee is another matter.
(Top photo of Rob Manfred: Jonathan Dyer / USA Today)
