Latest / Foul Territory / Evan Drellich on players and owners stockpiling war chest money

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Evan Drellich on players and owners stockpiling war chest money · Foul Territory

• 0:00
  Speaker 1: Show me the money.
• 0:11
  Speaker 2: Great intro for the athletics, Evandrelik joining us right now.
• 0:15
  Speaker 2: That's not what he does. He just reports on things
• 0:18
  Speaker 2: like that. And to me, Evan, the theme this week
• 0:21
  Speaker 2: for the labor battle between players and owners involves what
• 0:25
  Speaker 2: I would call it a stick measuring contest. I wanted
• 0:28
  Speaker 2: to make sure I said that right in terms of
• 0:30
  Speaker 2: war chest. So can you enlighten us on the war
• 0:34
  Speaker 2: chest publicity battle that is occurring lately and where we
• 0:38
  Speaker 2: stand heading into a potential lockout and negotiations for a
• 0:42
  Speaker 2: collective bargaining agreement coming up?
• 0:45
  Speaker 3: Yeah, Scott, something very exciting happens for those of us
• 0:48
  Speaker 3: who follow baseball's labor situation every year, which is that
• 0:52
  Speaker 3: usually around March thirty first, the union submits this annual
• 0:56
  Speaker 3: disclosure form called an LM two to the Department of Labor.
• 0:59
  Speaker 3: This is a public document that all the reporters race
• 1:02
  Speaker 3: out and go look at it, and it's particularly important
• 1:05
  Speaker 3: when you're about to arrive at bargaining because, drum roll,
• 1:09
  Speaker 3: it reveals how much money the union has on hand.
• 1:11
  Speaker 3: They list total assets about five hundred and nineteen million dollars.
• 1:15
  Speaker 3: Someone made the point to me that they're not going
• 1:17
  Speaker 3: to sell the computers, so you know, five hundred might
• 1:20
  Speaker 3: not be the most accurate, probably a little bit lower
• 1:23
  Speaker 3: in terms of what's available to them. But this comes
• 1:26
  Speaker 3: on the heels of reports I think the New York
• 1:29
  Speaker 3: Posts had at one point, but others as well, and
• 1:32
  Speaker 3: I've confirmed it too that the owners are also stockpiling
• 1:35
  Speaker 3: their cash ahead of bargaining. They've put aside about seventy
• 1:38
  Speaker 3: five million per team. That's about two point twenty five
• 1:42
  Speaker 3: billion in total, so the owners not shockingly have more
• 1:46
  Speaker 3: money available to them. But yeah, this is a normal
• 1:49
  Speaker 3: part of the collective bargaining cycle where the players and
• 1:53
  Speaker 3: the owners, as they prepare for the possibility of work stoppage,
• 1:56
  Speaker 3: put many aside so that they can pay their bills.
• 2:00
  Speaker 3: And if there's a lockout that lasts into the regular
• 2:02
  Speaker 3: season twenty twenty seven, some of that money goes out
• 2:05
  Speaker 3: to the players. Same thing on the owner's side. Some
• 2:07
  Speaker 3: of that money will go out to the team to
• 2:09
  Speaker 3: cover expenses and whatever else they need to deal with.
• 2:13
  Speaker 1: All right, Evan, so where does this money You kind
• 2:14
  Speaker 1: of mentioned a little bit. The players would get about
• 2:16
  Speaker 1: four hundred grand each if they'd missed the whole season,
• 2:20
  Speaker 1: and the owners would get obviously more than that. Well,
• 2:23
  Speaker 1: my question is the employees. If the owners decide to
• 2:26
  Speaker 1: do this lockout, was this money go to the employees
• 2:29
  Speaker 1: to pay the employees of these teams or does it
• 2:32
  Speaker 1: just go in the owner's pocket and say, sorry, you
• 2:34
  Speaker 1: missed a year or here's you know, whatever billions of
• 2:37
  Speaker 1: dollars that you each team gets.
• 2:40
  Speaker 3: Yeah, as you would have to see what they would do. Presumably, yes,
• 2:43
  Speaker 3: some of the money that the owners are putting aside
• 2:45
  Speaker 3: would go to employee salaries. Now, would they furlough some people,
• 2:48
  Speaker 3: would they let some people go in the event of
• 2:51
  Speaker 3: a really long workstoppage. It's totally possible. We just aren't
• 2:56
  Speaker 3: there yet, but yeah, some of that would go to
• 2:58
  Speaker 3: their payroll expenses. Because you don't get to automatically kind
• 3:03
  Speaker 3: of shut the whole thing down. You still have people
• 3:06
  Speaker 3: on your payroll. They are employees who are expecting some
• 3:09
  Speaker 3: amount of money, so some of that would go there.
• 3:14
  Speaker 3: My feeling on this like as much money as we're
• 3:17
  Speaker 3: talking about here, it really only becomes relevant if there
• 3:21
  Speaker 3: is a really long workstoppage, like whether the number was
• 3:25
  Speaker 3: one point seventy five billion or three billion for the owners,
• 3:28
  Speaker 3: whether it was three hundred million or six hundred million
• 3:30
  Speaker 3: for the players, to kind of get to the upper
• 3:33
  Speaker 3: limits of that something's gone really really wrong here, and
• 3:36
  Speaker 3: we know it's possible something could go really really wrong here,
• 3:39
  Speaker 3: But there's also a lot of motivation. I think that
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  Speaker 3: everybody will have to try to find a way to
• 3:45
  Speaker 3: avoid having to dip that far into their coffers.
• 3:48
  Speaker 2: Correct me if I'm wrong. Here. There's a lot of
• 3:50
  Speaker 2: money saved for both sides, and I get the narrative
• 3:53
  Speaker 2: that the Players Association has saved a lot more money
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  Speaker 2: than they have in the past. They've put away license
• 4:00
  Speaker 2: checks for a couple of years. Cool, but playing off
• 4:02
  Speaker 2: what you're saying right now, it's like they're both like
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  Speaker 2: putting their dukes up for a fight, and they're like, yeah,
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  Speaker 2: we're ready to fight. But then there's a comet coming
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  Speaker 2: called if you miss a full season, you're kind of
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  Speaker 2: screwed anyway. So cool, you guys saved enough that you
• 4:15
  Speaker 2: can both sides get through not having baseball and still
• 4:18
  Speaker 2: paying bills that you need to pay. But I just
• 4:22
  Speaker 2: don't see how this is that relevant to me. My
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  Speaker 2: take from the fan perspective is cool. Both sides have
• 4:27
  Speaker 2: enough money that they're not going to be like desperately
• 4:30
  Speaker 2: after a month or two going to the table going
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  Speaker 2: we're broke, we give in.
• 4:35
  Speaker 3: Yeah, I think that's largely right Scott. Again. For this
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  Speaker 3: to become material to the moment, the moment's got to
• 4:42
  Speaker 3: drag out for a very very long time here. It's
• 4:47
  Speaker 3: what I don't know if I said it here, I
• 4:49
  Speaker 3: haven't used it in print yet. I think I'm going
• 4:51
  Speaker 3: to early next week welcome to leverage theater. That is
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  Speaker 3: what all of this is. It is expected that they
• 4:57
  Speaker 3: are going to put money aside. They have to do it. Certainly.
• 5:00
  Speaker 3: You wouldn't want to go into a workstoppage without having
• 5:03
  Speaker 3: something to draw on because it's it's a projection of strength.
• 5:08
  Speaker 3: Everybody's going to go to the table very soon here.
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  Speaker 3: We expect sometime in April, probably late April, the bargaining
• 5:14
  Speaker 3: is going to start. You want to have power behind
• 5:19
  Speaker 3: whatever you're proposing that. Yeah, Look, if if you guys
• 5:22
  Speaker 3: don't accept our deal, we're willing to wait out a
• 5:24
  Speaker 3: very long time. And the player position, of course is
• 5:27
  Speaker 3: for decades been we don't want a salary cap, and
• 5:30
  Speaker 3: the owners seem at the moment quite intent on pursuing
• 5:33
  Speaker 3: a salary cap, so leverage theater. Welcome to the show.
• 5:38
  Speaker 1: But by the way, just to follow up on what
• 5:40
  Speaker 1: Scott said. You know, he's saying this and that, But
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  Speaker 1: I thought all the plan all the owners say they're
• 5:43
  Speaker 1: broke anyway, So I mean that's just fine. This is
• 5:46
  Speaker 1: like normal one oh one for the owners. Every owner
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  Speaker 1: is like, oh, I don't make as much money as
• 5:50
  Speaker 1: I'm supposed to, and I'm not making this and I'm
• 5:52
  Speaker 1: not making that. So you're talking about leverage theater, This
• 5:54
  Speaker 1: just sounds like an average Friday for most owners in baseball.
• 5:58
  Speaker 3: Yeah, the bottom line is, if it really came down
• 6:02
  Speaker 3: to if the question was who could better survive three
• 6:05
  Speaker 3: years without baseball? And I'm not saying we're gona have
• 6:07
  Speaker 3: three years without baseball, the owners aren't a better position.
• 6:10
  Speaker 3: That's obviously the case. They're net worth, they're all billionaires,
• 6:16
  Speaker 3: and they all have access to credit lines. Now one
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  Speaker 3: component of that, I think that kind of speaks to
• 6:23
  Speaker 3: what you're talking about. AJ they have debt many or
• 6:27
  Speaker 3: all of these owners that they have to service, you know,
• 6:31
  Speaker 3: and there are operational when the owner's talk about not
• 6:35
  Speaker 3: making money. They're talking about the year to year operational
• 6:40
  Speaker 3: financial reports. They're not talking about the franchise value increases.
• 6:44
  Speaker 3: That's not part of the equation they're considering there. And
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  Speaker 3: so parsing owner finances is its own endeavor and sport
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  Speaker 3: onto itself. And fortunately we occasionally get the Atlanta Braves
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  Speaker 3: reports as a publicly owned team. But yes, the owner
• 7:03
  Speaker 3: position is, we don't make a lot of money on
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  Speaker 3: an operational basis. The player position would often point out,
• 7:09
  Speaker 3: but your franchise values increase every year by a good amount,
• 7:13
  Speaker 3: and you could borrow against that.
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  Speaker 4: Evan as the owner of the cub said Biblical losses
• 7:19
  Speaker 4: during the COVID shortened season. So biblical losses was their leverage.
• 7:25
  Speaker 4: And they've been painting that and yelling about that for
• 7:28
  Speaker 4: the salary cap. But the money that's saved up for
• 7:31
  Speaker 4: the union doesn't pay the players. That's for the things
• 7:35
  Speaker 4: that goes into it. Because when I was part of
• 7:37
  Speaker 4: the union, they would always say, and Tony Clark would
• 7:39
  Speaker 4: get up there and say, save your money. Well, we're
• 7:41
  Speaker 4: getting close to CBA, save your money. Do you feel
• 7:44
  Speaker 4: like the players are in a spot because we know
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  Speaker 4: players are rich now, even guys that are getting called
• 7:51
  Speaker 4: up to the big leaues are making seven hundred plus
• 7:55
  Speaker 4: thousand dollars without any service time. So are the players
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  Speaker 4: in a spot to be leveraged in the sense that
• 8:03
  Speaker 4: crap I make twenty million dollars a year. I don't
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  Speaker 4: think that I have enough money saved up myself, because
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  Speaker 4: your union is not just gonna replace their checks with
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  Speaker 4: their war chest money that they've saved up.
• 8:16
  Speaker 3: That's largely right. I do think some of the union
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  Speaker 3: money would go to players, but it is not nearly
• 8:20
  Speaker 3: going to replace what they would otherwise make. Right, they'd
• 8:24
  Speaker 3: get some sort of distribution check at some regular period.
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  Speaker 3: You know, here's whatever X amount for every month that
• 8:31
  Speaker 3: you're not playing games, and it'd be something. It certainly
• 8:34
  Speaker 3: wouldn't be what they would normally be getting. I think
• 8:38
  Speaker 3: on the player side, in a way, it's just like
• 8:40
  Speaker 3: the owner side, it's all case to case. You know,
• 8:43
  Speaker 3: Steve Cohen isn't a better position than Bob Nutting, Wan Soto,
• 8:47
  Speaker 3: isn't it a better position than the guy who just
• 8:50
  Speaker 3: got called up today? Connor Griffin. Right, it's everybody's in
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  Speaker 3: a different boat there, and those pressures on both sides
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  Speaker 3: will become very real if we are in the middle
• 9:02
  Speaker 3: of a workshoppage and you're gonna have varying perspectives. You know,
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  Speaker 3: it's interesting the amount of extensions that are that are
• 9:09
  Speaker 3: going on now. I think about it in terms of, well,
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  Speaker 3: these are guys who who are delaying free agency largely,
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  Speaker 3: and so do they care as much about fighting to
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  Speaker 3: preserve the salary cap, a cap free system and the
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  Speaker 3: opportunity to get to free agency and make a huge
• 9:28
  Speaker 3: amount of money down the road. And it's just you know,
• 9:33
  Speaker 3: you talk, one agent's gonna have a different perspective than
• 9:35
  Speaker 3: the next agent down the list. With players as.
• 9:38
  Speaker 1: Well, Evan, I'll say this, the players that are signing
• 9:43
  Speaker 1: these extensions, if they go against what everyone else is saying,
• 9:47
  Speaker 1: meaning no salary cap, that's what the majority of the
• 9:52
  Speaker 1: union wants, it's not going to be good, okay, because
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  Speaker 1: one of the great strengths of the union is being
• 9:56
  Speaker 1: able to get everybody on board of fight for the
• 9:59
  Speaker 1: scene thing. And again, I'm not in the union meetings anymore.
• 10:03
  Speaker 1: I used to be in there and there was always
• 10:05
  Speaker 1: infighting amongst players about things, little things, this and that
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  Speaker 1: in every CBA, But there was always one thing that
• 10:12
  Speaker 1: everybody understood is that if you stick together and you
• 10:15
  Speaker 1: have a nice career, everyone will make the money they're
• 10:18
  Speaker 1: supposed to make. Right So for you to say that, oh,
• 10:20
  Speaker 1: they're signing these deals because you know they're worried about
• 10:23
  Speaker 1: coming down the line, well, then I feel like they're
• 10:26
  Speaker 1: doing it for the wrong reason. They need to be
• 10:27
  Speaker 1: signing these deals because it's the right thing for them,
• 10:29
  Speaker 1: it's the right thing for their family, and it's the
• 10:31
  Speaker 1: right thing for players coming behind them. And we saw
• 10:34
  Speaker 1: that already in Connor Griffin, who doesn't have a who
• 10:37
  Speaker 1: doesn't have a deal done yet, although we all know
• 10:39
  Speaker 1: it's going to be announced a couple of days after
• 10:41
  Speaker 1: he makes his debut today. So I think, if that's
• 10:43
  Speaker 1: what you're saying, that's for the wrong reason for me.
• 10:46
  Speaker 3: Now, I'm not saying they're signing it for that reason.
• 10:49
  Speaker 3: I'm saying that once a guy has signed it, because
• 10:52
  Speaker 3: he is now further away from free agency, maybe he
• 10:54
  Speaker 3: just cares a little bit laughs about what happens to
• 10:57
  Speaker 3: the free agency system. But I'll make a counterpoint to
• 11:01
  Speaker 3: my own point here, which is that when you sign
• 11:04
  Speaker 3: these extensions as young guys, yes, you might give up
• 11:07
  Speaker 3: a year or two of free agency, but you are
• 11:09
  Speaker 3: still very hopeful that you're going to get back to
• 11:12
  Speaker 3: free agency and that you're going to get another bite
• 11:14
  Speaker 3: at that apple. And if you do allow a salary cap, well,
• 11:18
  Speaker 3: guess what, the potential bite at that apple just got
• 11:20
  Speaker 3: a lot smaller if you are particularly if you are
• 11:23
  Speaker 3: an elite player. So I don't think that's an overriding
• 11:26
  Speaker 3: factor here. But my overall arching point is everybody's position
• 11:33
  Speaker 3: is going to inform you know what they do. It's
• 11:36
  Speaker 3: the same thing with guys who take extensions. Right Nick
• 11:39
  Speaker 3: Kurt's got a big signing bones I think about seven
• 11:43
  Speaker 3: million dollars. He doesn't have that urgency to take an
• 11:45
  Speaker 3: extension that that maybe some of the other guys do.
• 11:48
  Speaker 3: It's it's all individual.
• 11:52
  Speaker 4: What's the most valuable piece? What's the most valuable thing
• 11:56
  Speaker 4: that the owners have to offer the players first salary cap?
• 12:01
  Speaker 4: Is it the fact that they would disclose their actual
• 12:07
  Speaker 4: earnings and then okay, well we would be willing to
• 12:10
  Speaker 4: share those earnings. Or is it because everyone just says, well,
• 12:13
  Speaker 4: it would just be more fair if we had a
• 12:15
  Speaker 4: salary cap. But the reality is that's an owner to
• 12:18
  Speaker 4: owner thing like it's not an owner to player thing.
• 12:21
  Speaker 4: Owners are just gonna all get richer. So what is
• 12:24
  Speaker 4: the most valuable piece that they would give to players
• 12:27
  Speaker 4: to be able to get their coveted salary cap.
• 12:31
  Speaker 3: One thing on this disclosure point here, the league at
• 12:35
  Speaker 3: now and for a long time does receive financials. I'm sorry,
• 12:40
  Speaker 3: the union receives financials from the league. It is not
• 12:44
  Speaker 3: the case that the league gets to hide its book
• 12:47
  Speaker 3: from the union. The union gets them. They just are
• 12:50
  Speaker 3: legally bound to not share it publicly. And so you'll
• 12:53
  Speaker 3: often get these comments from Bruce Meyer and Tony Clark
• 12:55
  Speaker 3: perform that are kind of alluding to the owner's finances
• 12:59
  Speaker 3: without any great specifics. Now, in a salary cap setup,
• 13:04
  Speaker 3: you would have to define the revenue streams. Revenue definition
• 13:08
  Speaker 3: becomes a big discussion point and a big argument over
• 13:13
  Speaker 3: what do you include, how do you account it? So
• 13:15
  Speaker 3: it is possible in a cap system that there could
• 13:17
  Speaker 3: be ultimately more transparency over different areas. You know that
• 13:23
  Speaker 3: they could kind of share more than they end up
• 13:26
  Speaker 3: doing now. But to the overall question of what would
• 13:29
  Speaker 3: the owners kind of give the players here, the argument
• 13:34
  Speaker 3: that they're going to make is, well, once you're in
• 13:36
  Speaker 3: a cap system, we are free to make much broader,
• 13:40
  Speaker 3: wide sweeping changes than we are otherwise. Right, maybe you
• 13:44
  Speaker 3: lower the time to free agency, maybe you lower the
• 13:46
  Speaker 3: time to arbitration. But the player argument on those things
• 13:49
  Speaker 3: is it doesn't really matter that much anymore because you
• 13:52
  Speaker 3: set a limit on how much revenue the players are
• 13:56
  Speaker 3: going to get. Because the cap system, you say, okay,
• 13:58
  Speaker 3: one side is getting let's say fifty two percent, the
• 14:00
  Speaker 3: other side is getting forty eight percent. So within that,
• 14:03
  Speaker 3: if you're the fifty two percent, you're the players. It's
• 14:06
  Speaker 3: all just moving money around. At that point, the effect
• 14:09
  Speaker 3: of getting to free agency earlier, the effect of going
• 14:12
  Speaker 3: to arbitration earlier or greatly even raising the minimum salary,
• 14:17
  Speaker 3: is lesser than it would be in the overall if
• 14:22
  Speaker 3: you were to do it outside of the cap system.
• 14:24
  Speaker 3: If you make if you get to free agency earlier
• 14:27
  Speaker 3: in the current system, it's a much bigger difference economically
• 14:31
  Speaker 3: than whatever you kind of change in a cap system,
• 14:34
  Speaker 3: because it's just fixed at that point.
• 14:37
  Speaker 2: Right, this would just be shifting money essentially to younger players,
• 14:40
  Speaker 2: which we can make a case that more of that
• 14:43
  Speaker 2: should be going on right now. And we did get
• 14:45
  Speaker 2: a little bit of that after the last CBA with
• 14:47
  Speaker 2: some of the bonuses that get handed out to younger players,
• 14:50
  Speaker 2: now that bonus pool that they put together. Do you
• 14:53
  Speaker 2: think that any of these extensions that have dripped into
• 14:56
  Speaker 2: the season have anything to do with the CBA. I
• 15:00
  Speaker 2: don't really think so, because how can they predict what's happening?
• 15:03
  Speaker 2: And I'm like trying to come up with conspiracy theories
• 15:06
  Speaker 2: as one, thinking like, oh, maybe they'll limit the free
• 15:10
  Speaker 2: agency number to a year knocked off, and then teams
• 15:13
  Speaker 2: think they're getting a value by signing a player to
• 15:16
  Speaker 2: a seven, eight, nine year deal stuff like that. Right
• 15:20
  Speaker 2: for guys like Connor Griffin and even Cooper Pratt and
• 15:23
  Speaker 2: Colt Emerson, Right, do they end up getting basically an
• 15:25
  Speaker 2: extra year out of them because they would have hit
• 15:28
  Speaker 2: free agency sooner? Or is this just Hey, it's a
• 15:31
  Speaker 2: good player, and I think we can get him for
• 15:33
  Speaker 2: a long time for way less than what he's worth
• 15:35
  Speaker 2: it if he becomes a star.
• 15:38
  Speaker 3: Yeah. I just have a hard time believing the teams
• 15:40
  Speaker 3: are going to make eight or nine figure deals with
• 15:42
  Speaker 3: these guys, which is what these contracts are based on
• 15:46
  Speaker 3: a hypothetical that very well might not come to pass,
• 15:50
  Speaker 3: the players might well fight off a salary cap and
• 15:52
  Speaker 3: the current system will keep them on. Here it's bad math,
• 15:57
  Speaker 3: and I think we have enough evidence of how these
• 15:59
  Speaker 3: teams think that they're not going to orchestrate the whole
• 16:03
  Speaker 3: thing around that. Now could they look at and go, well,
• 16:06
  Speaker 3: this is nice if we do end up in a
• 16:07
  Speaker 3: cap system. Sure, but you know they're still getting great
• 16:12
  Speaker 3: value or kind of projecting and hoping they're getting great
• 16:16
  Speaker 3: value from these contracts. And you don't do that unless
• 16:20
  Speaker 3: you believe, kind of regardless of the system, that the
• 16:24
  Speaker 3: guy is going to be worth what you're paying him
• 16:26
  Speaker 3: on the field. So, yeah, it's not a conspiracy theory
• 16:31
  Speaker 3: I subscribe to.
• 16:33
  Speaker 2: Yep, Okay, fair, Yeah, it's quite the risk you'd be
• 16:37
  Speaker 2: taking on to just be banking on what you think
• 16:38
  Speaker 2: he's going to happen, you know, from December onward in
• 16:42
  Speaker 2: terms of negotiations with your current players and salary and
• 16:45
  Speaker 2: all of that. Evan always enjoyed the conversation. Insightful, thoughtful,
• 16:49
  Speaker 2: Thank you very much. Good to see you. Enjoy the weekend.
• 16:51
  Speaker 2: Thanks man, see you, James,