Latest / Halo Territory: A Los Angeles Angels Podcast / NUCLEAR WINTER: Looming labor war will shut down the sport; the big question is, for how long?

Transcript

NUCLEAR WINTER: Looming labor war will shut down the sport; the big question is, for how long? · Halo Territory: A Los Angeles Angels Podcast

• 0:08
  Speaker 1: Will the Angels and Major League Baseball start the 2027
• 0:12
  Speaker 1: season on time? How long could a work stoppage last?
• 0:15
  Speaker 1: Can the owners and players who see miles apart in
• 0:19
  Speaker 1: negotiations for a new CBA hammer out an agreement in
• 0:22
  Speaker 1: time to salvage the bulk of the 2027 season? With
• 0:28
  Speaker 1: us to provide some answers to these very difficult questions
• 0:31
  Speaker 1: today is Evan Drellich, who covers the business of baseball.
• 0:35
  Speaker 1: and the commissioner for The Athletic, Evan. Welcome to the show.
• 0:40
  Speaker 1: Thanks for joining us. How are you doing today?
• 0:44
  Speaker 2: I'm just getting ready for the storm. I always think
• 0:47
  Speaker 2: of that scene in one of the Batman movies. I
• 0:49
  Speaker 2: think it was Anne Hathaway, like, whispers in, I guess,
• 0:52
  Speaker 2: Christian Bale's ear, storm is coming, Mr.
• 0:55
  Speaker 1: Wayne.
• 0:55
  Speaker 2: Something like that. Like, that's the point we're at. Try
• 1:00
  Speaker 2: to enjoy the postseason, but you know this thing is around.
• 1:03
  Speaker 1: I do want to establish something for our Hello Territory
• 1:06
  Speaker 1: listeners right away. Is there essentially a 100% chance the
• 1:10
  Speaker 1: owners will lock out the players on December 2nd?
• 1:13
  Speaker 2: Or is there even a.
• 1:15
  Speaker 1: Sliver of hope,. 0001 %, that there's some kind of
• 1:20
  Speaker 1: agreement hammered out before then?
• 1:23
  Speaker 2: It's 100% that the lockout will begin on December 2nd.
• 1:26
  Speaker 2: What is unclear is whether that lockout will cost regular
• 1:29
  Speaker 2: season games. Yes, there's always a theoretical 0.001% chance that
• 1:35
  Speaker 2: something unpredictable happens, but also it would be entirely impractical,
• 1:40
  Speaker 2: if not virtually impossible, for them to come together. They
• 1:44
  Speaker 2: are so far apart. The systems they're talking about are
• 1:48
  Speaker 2: so disparate that it's a foregone conclusion. There will be
• 1:53
  Speaker 2: a lockout, at least for the offseason.
• 1:57
  Speaker 3: Great.
• 1:59
  Speaker 4: Before we get into the issues, how will the lockout
• 2:03
  Speaker 4: impact the free agent market before December 1st? Will free agents,
• 2:06
  Speaker 4: especially big name guys like Tarek Skubal, want to sign
• 2:10
  Speaker 4: in November in hopes their deals won't be impacted by
• 2:12
  Speaker 4: a salary cap or some new restrictions? Will the owners
• 2:15
  Speaker 4: hold off on signing the higher priced free agents potentially?
• 2:21
  Speaker 2: It's going to be case by case, and I think
• 2:23
  Speaker 2: a lot of it will come down to what the
• 2:24
  Speaker 2: individual player needs. is comfortable with and to some degree
• 2:28
  Speaker 2: what the team is comfortable with, you know, it's very
• 2:31
  Speaker 2: hard to predict what's going to happen in the system.
• 2:33
  Speaker 2: If you're a player who's sitting there thinking, you know what,
• 2:36
  Speaker 2: I think there's going to be a cap and you
• 2:39
  Speaker 2: can make the assumption that could be wrong. That if
• 2:43
  Speaker 2: you sign a contract in November, that whatever you sign for,
• 2:48
  Speaker 2: it won't be modified under a cap that it'll essentially
• 2:50
  Speaker 2: be grandfathered in. The problem is you just don't know what,
• 2:53
  Speaker 2: what's actually going to happen there. And, If you look
• 2:57
  Speaker 2: at your offers in November and go, you know what,
• 2:59
  Speaker 2: they're really trying to squeeze me here, you're probably not
• 3:02
  Speaker 2: going to sign. And so I think it's risk tolerance
• 3:05
  Speaker 2: for a lot of guys. If you look around in November,
• 3:08
  Speaker 2: it's not what you want it to be. You're probably
• 3:13
  Speaker 2: going to wait. And so I don't think there's a
• 3:15
  Speaker 2: blanket answer for it. I do think it is probably
• 3:19
  Speaker 2: high time I look back at exactly all the signings
• 3:21
  Speaker 2: from the last time because we did have a month
• 3:24
  Speaker 2: in November of 21. before the lockout, just like we'll
• 3:27
  Speaker 2: have this time as well. And I think you'll see
• 3:30
  Speaker 2: some guys who just want to get it done, want
• 3:32
  Speaker 2: to have the contract signed, and other guys who are
• 3:36
  Speaker 2: going to say, no, this isn't good enough. Let's see
• 3:39
  Speaker 2: what I can get whenever we come back here. But
• 3:41
  Speaker 2: it's risky business for anybody on either side to assume
• 3:45
  Speaker 2: there will be a cap because you just don't know.
• 3:50
  Speaker 2: That's the whole central fight we're about to see unfold.
• 3:54
  Speaker 1: Yeah, the owners' hopes of implementing a salary cap is
• 3:57
  Speaker 1: clearly the major sticking point in negotiations. How would you
• 4:01
  Speaker 1: describe the distance between the owners and players on this issue?
• 4:07
  Speaker 2: The number of changes a cap brings that the union
• 4:12
  Speaker 2: and players look at is bad for players. It's hard
• 4:17
  Speaker 2: to imagine them being farther apart. It's not like the
• 4:20
  Speaker 2: players are looking at a cap and going, well, this
• 4:23
  Speaker 2: part of the cap system is good and this part
• 4:25
  Speaker 2: of the cap system is good, but these are the
• 4:27
  Speaker 2: parts that are bad. It's as polarized as can be.
• 4:34
  Speaker 2: And I think one of the hard things to appreciate
• 4:36
  Speaker 2: in this is that a cap system is much more
• 4:39
  Speaker 2: than just the maximum salary number for a team and
• 4:44
  Speaker 2: the minimum salary number for a team. It creates all
• 4:47
  Speaker 2: these other huge changes. The sides would agree formally ahead
• 4:51
  Speaker 2: of time on how much revenue they split. Then they
• 4:55
  Speaker 2: have to work out a very complex and long agreement.
• 5:00
  Speaker 2: How do you define that revenue? What counts toward it?
• 5:02
  Speaker 2: What doesn't count toward it? There's all these other effects.
• 5:06
  Speaker 2: The owners want escrow. So players would put a percentage
• 5:08
  Speaker 2: of their annual salary in escrow every year. And then
• 5:11
  Speaker 2: if you hit that revenue target, you get that money.
• 5:16
  Speaker 2: You might even get more money. Or if you don't
• 5:17
  Speaker 2: hit that revenue target, you get less money. it's just,
• 5:22
  Speaker 2: it's so much more than a upper and lower limit
• 5:24
  Speaker 2: on what teams can spend. And the distance on it
• 5:29
  Speaker 2: is very far and wide. And if the players are
• 5:34
  Speaker 2: going to cave on it, I think essentially they would
• 5:37
  Speaker 2: have to be broken. That is the history of the
• 5:39
  Speaker 2: MLBPA and MLB's labor discussions over a cap. It is
• 5:45
  Speaker 2: not that the players are like kind of waffly on it.
• 5:48
  Speaker 2: It is that the league would have to basically do
• 5:51
  Speaker 2: it by force, which in this case would mean a
• 5:54
  Speaker 2: long work stoppage, unless some things change, unless the players are,
• 5:57
  Speaker 2: unless there's some undercurrent I'm not aware of, a player's
• 6:01
  Speaker 2: newly looking at a cap differently. But that's never been
• 6:04
  Speaker 2: the history. None of the other sports leagues that have
• 6:06
  Speaker 2: a cap look at it and go, the players in
• 6:09
  Speaker 2: those leagues didn't look at it and go eagerly, we
• 6:12
  Speaker 2: want a cap. They arrived at a cap essentially because
• 6:16
  Speaker 2: they lost various negotiations.
• 6:18
  Speaker 1: Now, Artie Marino has always been known as a hawk
• 6:21
  Speaker 1: among owners in Anaheim. Has the ownership change in Anaheim
• 6:25
  Speaker 1: with the Kroenke group coming in changed anything from the
• 6:28
  Speaker 1: owner's standpoint at all?
• 6:32
  Speaker 2: I think to some degree it does. And I'm curious
• 6:35
  Speaker 2: to see how the collection of new owners plays out.
• 6:39
  Speaker 5: Oh, yeah.
• 6:39
  Speaker 2: Artie, I don't think it's a stretch to say was
• 6:42
  Speaker 2: a thorn in Rod Manford's side. You know, he was
• 6:45
  Speaker 2: always among a group of owners.
• 6:46
  Speaker 5: He was.
• 6:48
  Speaker 2: not supportive of Rob's candidacy to become commissioner. Of course,
• 6:53
  Speaker 2: in the end, they always do a unanimous vote. But
• 6:56
  Speaker 2: if you go back to the time, the Reds, the Diamondbacks,
• 7:01
  Speaker 2: the Angels, there's a group of smaller market plus the
• 7:04
  Speaker 2: Angels owners, Reinsdorf, who have just not been the most
• 7:10
  Speaker 2: cooperative with Rob Manfred over time. And so on one hand,
• 7:16
  Speaker 2: Rob's getting in somebody who We'll probably want to play
• 7:20
  Speaker 2: nice with him and play nice with the other owners
• 7:22
  Speaker 2: from the get-go. But you do wonder what all these
• 7:27
  Speaker 2: owners who have two new ownership groups coming in this year,
• 7:32
  Speaker 2: how does that all play in terms of unity? That
• 7:37
  Speaker 2: kind of trite buzzword, but that's what it takes. If
• 7:42
  Speaker 2: you're going to get a salary cap for the owners,
• 7:45
  Speaker 2: you've got to stick together. Just as on the player side,
• 7:47
  Speaker 2: if you're going to avoid a salary cap, you've got
• 7:50
  Speaker 2: to stick together. And so watching how the David Rubenstein's
• 7:55
  Speaker 2: and Steve Cohen was around at the– he was around
• 7:59
  Speaker 2: last time. He was still new. It's a changing group
• 8:02
  Speaker 2: on the owner's side. What does that do?
• 8:08
  Speaker 4: How might the salary cap even work? What kind of
• 8:13
  Speaker 4: cap system do the owners– in theory, potentially want? And
• 8:18
  Speaker 4: what kind of payroll thresholds, excuse me, are we talking about?
• 8:24
  Speaker 2: So it's a hard cap system. You're not going to
• 8:26
  Speaker 2: have leeway to go over it, over the maximum, which
• 8:30
  Speaker 2: let's see how good my memory is. $ 245. 3 million is
• 8:34
  Speaker 2: what they're proposing for 2027. Then future years would be
• 8:36
  Speaker 2: set based on the revenue. But $ 245. 3 is what they're
• 8:39
  Speaker 2: proposing for 2027. The floor is a little trickier. The
• 8:48
  Speaker 2: way they described it is 171.2 million. That is not
• 8:52
  Speaker 2: the actual number that a team has to spend to
• 8:56
  Speaker 2: in 2027. The actual number the team has to spend to,
• 8:58
  Speaker 2: or else it would have to make up the difference,
• 9:00
  Speaker 2: like literally cut a check at the end of the year,
• 9:02
  Speaker 2: is 159, about 159, 160 million. It's 90% of that
• 9:05
  Speaker 2: floor is the kind of year to year amount that
• 9:15
  Speaker 2: you have to spend. But there's a wrinkle, which is
• 9:19
  Speaker 2: that there is over time a minimum floor you have
• 9:23
  Speaker 2: to meet. So in this case, what the league proposed
• 9:26
  Speaker 2: was for 27 to 2030, you have to have met
• 9:31
  Speaker 2: the total of the full floors in each of those years.
• 9:34
  Speaker 2: So in 2027, the full floor is 171 million. So
• 9:38
  Speaker 2: whatever that is, plus whatever, so that number plus what
• 9:41
  Speaker 2: it is in 28, 29 and 30, you have to
• 9:45
  Speaker 2: have done that number in total over that four year period.
• 9:49
  Speaker 2: And then in future years, they want to go make
• 9:51
  Speaker 2: it a three year span. So the floor is annoyingly complicated.
• 9:56
  Speaker 2: It's the actual minimum amount, though, a team would have
• 9:59
  Speaker 2: to spend in 2020.
• 10:03
  Speaker 1: Many teams are below that floor right now? And I'm
• 10:07
  Speaker 1: assuming some of.
• 10:08
  Speaker 2: Them are still playing. I have not looked below $ 159.
• 10:12
  Speaker 2: When the league put out the news of what it
• 10:17
  Speaker 2: was proposing, They did do the math on, well, 12
• 10:20
  Speaker 2: teams would come up to 171.2 and eight teams would
• 10:23
  Speaker 2: come down, if I'm remembering right, to make those numbers work.
• 10:29
  Speaker 2: But in reality, you don't actually have to get to 171.
• 10:33
  Speaker 2: So it's a little misleading to call 171. It's not
• 10:38
  Speaker 2: totally inaccurate because, again, over the length of time, you
• 10:43
  Speaker 2: do still need to– that value does matter. But it
• 10:47
  Speaker 2: does not matter– from one year at a time. So
• 10:52
  Speaker 2: that's the core of it. But the bigger piece, really
• 10:57
  Speaker 2: probably the most important piece of the cap system, is
• 11:00
  Speaker 2: the revenue split. It's how much the owners would get
• 11:05
  Speaker 2: and how much the players would get year to year.
• 11:08
  Speaker 2: What the league proposes is 50%. What the players say is, A,
• 11:13
  Speaker 2: we make more than that now. We're up around 55%.
• 11:17
  Speaker 2: in 2026, that's what they're projecting, the overall industry revenues.
• 11:21
  Speaker 2: And B, what are you counting in that 50%? And
• 11:26
  Speaker 2: what are you counting is something that's argued over in
• 11:29
  Speaker 2: all the other cap leagues, continuously. Every negotiation, there's a
• 11:33
  Speaker 2: fight over what you count in it or not, because
• 11:36
  Speaker 2: that can increase the pie. In an example, in the NBA,
• 11:41
  Speaker 2: the players until their most recent deal were not getting
• 11:45
  Speaker 2: a cut of team merchandise. If it had like a
• 11:47
  Speaker 2: player's name on it, yes, they would get some of
• 11:51
  Speaker 2: the money. But in their cap system, if it was
• 11:54
  Speaker 2: just like a hat that had the Knicks on it,
• 11:56
  Speaker 2: the Knicks logo with no specific player, like just general
• 12:00
  Speaker 2: team merchandise, the players weren't getting a split of it.
• 12:03
  Speaker 2: And so now that's been added into the pot. But
• 12:06
  Speaker 2: they didn't actually change the number that they described the
• 12:10
  Speaker 2: split to be, right? I think in the NBA it's,
• 12:13
  Speaker 2: can range a little bit. It's basically a 51-49 split
• 12:16
  Speaker 2: in the NBA in the favor of the players, I believe.
• 12:22
  Speaker 2: So it becomes, Mark, the simple answer to your question,
• 12:26
  Speaker 2: it gets really annoyingly complicated in the cap system. It
• 12:29
  Speaker 2: is not a straightforward thing.
• 12:32
  Speaker 1: Eric, we're going to take a quick break for a
• 12:34
  Speaker 1: word from our sponsors, and when we come back, we'll
• 12:36
  Speaker 1: have more on the upcoming labor war with Evan Trelich.
• 12:40
  Speaker 2: Of The Athletic.
• 12:43
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• 13:45
  Speaker 1: And welcome back to Halo Territory with Mike DiGiovanna, former
• 13:48
  Speaker 1: LA Times baseball writer, Mark Trumbo, the former Angel Slugger,
• 13:52
  Speaker 1: and Evan Drelic of The Athletic. Well, Evan, is there
• 13:55
  Speaker 1: any room for compromise on the salary cap? And we
• 13:58
  Speaker 1: know that the players have won this battle time and
• 14:02
  Speaker 1: time again. Is there any room for compromise? Or maybe and,
• 14:07
  Speaker 1: are the owners willing to torch an entire season to
• 14:10
  Speaker 1: get what they want?
• 14:14
  Speaker 2: There's no indication from the player's camp at this point
• 14:18
  Speaker 2: that they're willing to entertain some form of a cap system.
• 14:22
  Speaker 2: The compromise, more intuitively, would be you stay in the
• 14:26
  Speaker 2: current system and the owners get some concessions, I don't know,
• 14:30
  Speaker 2: at CBT. There'd be some changes to revenue sharing. There
• 14:36
  Speaker 2: are things that both sides want to do that could
• 14:38
  Speaker 2: theoretically exist outside of a cap system. The international draft,
• 14:44
  Speaker 2: there's been some movement on that dating back to the
• 14:47
  Speaker 2: last one, something the owners have wanted for a long time.
• 14:50
  Speaker 2: And both sides want to make big changes to revenue share.
• 14:53
  Speaker 2: And there's a player argument that you could help the
• 14:59
  Speaker 2: small market teams in the competitive balance situation by making
• 15:03
  Speaker 2: adjustments to revenue sharing and incentivizing the smaller market teams
• 15:08
  Speaker 2: to spend more without it. Uh, and thus far the
• 15:13
  Speaker 2: league argument is, well, we don't accept that. And that
• 15:16
  Speaker 2: doesn't let us create the changes we want here. But
• 15:21
  Speaker 2: what we don't know is long, both sides are willing
• 15:25
  Speaker 2: to kind of stand their ground here. I am not
• 15:28
  Speaker 2: of the mindset that we're going to miss a year.
• 15:31
  Speaker 2: And I think it's because you just got to look
• 15:33
  Speaker 2: at the incentives, the damage you do, and the amount
• 15:37
  Speaker 2: of money missed in an industry that's approaching $ 13 billion.
• 15:41
  Speaker 2: with a misuse that is so immense that it becomes
• 15:46
  Speaker 2: hard to fathom but not impossible because there is also
• 15:50
  Speaker 2: a lot of money attached to getting a cap for
• 15:53
  Speaker 2: the owners. The franchise values would all increase. There's tremendous pressure.
• 15:57
  Speaker 2: You could argue it is the number one thing Rob
• 15:59
  Speaker 2: Manfred has to do is create shareholder value. The Major
• 16:04
  Speaker 2: League Baseball Constitution says the commissioner of baseball is the CEO.
• 16:09
  Speaker 2: That's what CEOs do. They raise the value of the asset. But,
• 16:15
  Speaker 2: you know, that tension between the long term and short
• 16:17
  Speaker 2: term and medium term, the owners have never shown great
• 16:22
  Speaker 2: discipline in that regard of, well, we're going to make
• 16:24
  Speaker 2: the better decision for the long run at the expense
• 16:28
  Speaker 2: of the short term. They're very often focused on the
• 16:32
  Speaker 2: short term and every owner is in a different position.
• 16:38
  Speaker 2: The proposition changes once you miss about 60 games. The
• 16:42
  Speaker 2: national media contracts get extended by a year. They could
• 16:47
  Speaker 2: always work something else out with their national media partners
• 16:50
  Speaker 2: to kind of forego that. But one way or another,
• 16:53
  Speaker 2: you've got to make good on those games that you missed.
• 16:56
  Speaker 2: And it's just huge money at stake. So the history,
• 17:01
  Speaker 2: last time around, the last time we had a lockout,
• 17:04
  Speaker 2: and also the last 30 years since the strike, does
• 17:07
  Speaker 2: show They find a way to play. To have something
• 17:11
  Speaker 2: different than that happen would be an anomaly. That is
• 17:14
  Speaker 2: not something that has happened in a very long time.
• 17:16
  Speaker 2: And I think the reason for that is they all
• 17:19
  Speaker 2: like to make money. But is there a chance the
• 17:22
  Speaker 2: owners stand there and say, this is the time. We're
• 17:25
  Speaker 2: doing it this time. We're getting a cap. And then
• 17:28
  Speaker 2: what happens on the player side? History says they'll stand
• 17:31
  Speaker 2: there and say, come and get it. You're not taking
• 17:34
  Speaker 2: it from us. Could that change? Could the players this
• 17:37
  Speaker 2: time cave? I don't know, Mark. Do you think the
• 17:40
  Speaker 2: guys today are weaker than they were 30 years ago
• 17:42
  Speaker 2: with this kind of stuff? My guess is it'd be
• 17:45
  Speaker 2: a pretty ugly long fight and not probably not worth
• 17:50
  Speaker 2: it to the owners for a very long time if
• 17:52
  Speaker 2: they succeeded in getting a cap. So I still lean
• 17:55
  Speaker 2: toward if there is missed games, it's not going to
• 17:58
  Speaker 2: be tremendous, but I don't know. And truthfully, nobody knows
• 18:03
  Speaker 2: at this point.
• 18:05
  Speaker 1: Good question, Mark.
• 18:05
  Speaker 5: What do you think?
• 18:06
  Speaker 1: Have you, You hear any rumblings? I saw somebody did
• 18:10
  Speaker 1: a survey where they quoted some players more anonymously, and
• 18:15
  Speaker 1: some of the younger players are like, yeah, we'd have
• 18:17
  Speaker 1: to take a look at it. Not that there's cracks
• 18:19
  Speaker 1: in the union. They've been a force. But you wonder
• 18:22
  Speaker 1: if some of these younger players, when they talk about
• 18:24
  Speaker 1: raising the minimum salary to maybe $ 1. 5 million instead of $ 700, 000,
• 18:28
  Speaker 1: that might appeal to some of these guys who don't
• 18:31
  Speaker 1: see or foresee super long big league careers.
• 18:35
  Speaker 2: Mark?
• 18:35
  Speaker 1: Do you think players are any different? You were lucky
• 18:38
  Speaker 1: enough to not go through a labor war, but have
• 18:41
  Speaker 1: players changed at all in your eyes along these lines?
• 18:46
  Speaker 2: I'm just the co-host.
• 18:50
  Speaker 4: I don't know. To be honest with you, the players,
• 18:55
  Speaker 4: they're united. And that's always the core message every spring training,
• 19:00
  Speaker 4: every time bargaining comes around. And it's necessary. It can't
• 19:04
  Speaker 4: appear unnecessary. weak, even remotely weak. So I think that
• 19:10
  Speaker 4: the posturing by both sides is not my favorite. I'll
• 19:13
  Speaker 4: just leave it at that. That's not how I would
• 19:16
  Speaker 4: prefer to get a deal done. And although, you know,
• 19:19
  Speaker 4: this is a lot of money at stake. So I
• 19:21
  Speaker 4: think with that being said, Evan, you've written that franchise
• 19:24
  Speaker 4: values are a real driving force behind the owner's push
• 19:28
  Speaker 4: for a cap. How so?
• 19:31
  Speaker 2: Yeah, let's touch on a little bit just now in
• 19:33
  Speaker 2: the sense that like, The commissioner's job is largely to
• 19:39
  Speaker 2: make sure these things grow in value. You know, when
• 19:41
  Speaker 2: you have billionaires buying in, they're not buying in to
• 19:45
  Speaker 2: lose money in the long term, some of them on
• 19:49
  Speaker 2: an operating base. with their team year to year will
• 19:52
  Speaker 2: have a year where they'll lose money. Steve Cohen loses
• 19:55
  Speaker 2: money on the Mets. That conversation gets tricky because you're
• 20:00
  Speaker 2: not talking necessarily about the ancillary businesses and all that.
• 20:04
  Speaker 2: But if you look at how baseball franchise values have
• 20:08
  Speaker 2: trended compared to the NBA and NFL, baseball is weaker.
• 20:13
  Speaker 2: And the sports bankers who are facilitating these deals and
• 20:20
  Speaker 2: the owners, they all look at it and go, well,
• 20:22
  Speaker 2: if we had cap labor costs, if we had cost
• 20:24
  Speaker 2: certainty around what we're paying players, plus some of the
• 20:28
  Speaker 2: competitive balance arguments, this would be better. And that is
• 20:33
  Speaker 2: the easiest, theoretically, uh, fastest route to, to growing these things. Uh, and,
• 20:42
  Speaker 2: and their worth, uh, it's, it's, it's a good business.
• 20:45
  Speaker 2: If you know that, okay, I, I'm not paying my
• 20:49
  Speaker 2: workforce workforce any more than this amount. Uh, and you know, the,
• 20:54
  Speaker 2: the player side points do well, and then they don't share,
• 20:56
  Speaker 2: the owners don't share any of that franchise value increase, uh,
• 21:00
  Speaker 2: with them. So, It's not literally everything. Certainly the year
• 21:06
  Speaker 2: to year operational revenues matter. But when you can buy
• 21:12
  Speaker 2: something for a lot less than you can sell it
• 21:15
  Speaker 2: for many years later, private equity is not getting involved
• 21:19
  Speaker 2: in sports because it doesn't think it will make money.
• 21:22
  Speaker 2: And private equities foray into baseball as well as the
• 21:26
  Speaker 2: other sports leagues. That creates additional pressure to rise increase
• 21:35
  Speaker 2: the value of these things to have them grow even
• 21:37
  Speaker 2: further so um shareholder value man that's that's what it
• 21:44
  Speaker 2: comes back to in a lot of ways.
• 21:47
  Speaker 1: Uh salary cap is not the only issue on the
• 21:49
  Speaker 1: table uh this winter and their most recent proposal owners
• 21:53
  Speaker 1: actually offered to reduce the season from 162 to 154
• 21:55
  Speaker 1: games with a monday off day that sounds kind of
• 21:56
  Speaker 1: nice They want to expand the division series from five
• 22:03
  Speaker 1: to seven games, earlier free agency for players and max
• 22:07
  Speaker 1: free agent contracts of five years for players switching teams
• 22:12
  Speaker 1: or six years for players who remain with their original team.
• 22:16
  Speaker 1: You think the union can find any common ground with
• 22:18
  Speaker 1: the owners on some of these issues?
• 22:22
  Speaker 2: It all depends on whether they're in a cap system
• 22:24
  Speaker 2: or not. And the other interesting caveat here is going
• 22:27
  Speaker 2: to be, how do the owners over time increase the
• 22:32
  Speaker 2: appeal of the cap system to players? They're going to
• 22:35
  Speaker 2: sweeten this thing, right? They're going to try to make
• 22:37
  Speaker 2: it look better and more palatable, and whether players will
• 22:40
  Speaker 2: be convinced of that, we will see. But some of
• 22:45
  Speaker 2: those individual components, you can peel them off. It just
• 22:49
  Speaker 2: depends on what it is. For example, the 154-game system,
• 22:54
  Speaker 2: that's something, A, that used to exist, and B, has
• 22:57
  Speaker 2: been talked about before. If you're trying to do that
• 23:00
  Speaker 2: in the current setup, the players are going to say, okay, sure,
• 23:04
  Speaker 2: we'll play 154, but we're not going to take a
• 23:06
  Speaker 2: pay cut. The issue always comes down to what happens
• 23:09
  Speaker 2: to player pay. It's a different conversation in a cap
• 23:12
  Speaker 2: system because, again, you've agreed in advance what percentage of
• 23:16
  Speaker 2: revenues are going to both sides. And so you have
• 23:19
  Speaker 2: to do a little bit of math. Okay, if you're
• 23:21
  Speaker 2: playing eight fewer regular season games, but you're getting more
• 23:24
  Speaker 2: postseason games, What does that do to the overall revenue?
• 23:27
  Speaker 2: What does it do to the overall amount of money
• 23:28
  Speaker 2: that goes to us, the players? You might still feel
• 23:31
  Speaker 2: comfortable with it, but in the current setup without a cap,
• 23:37
  Speaker 2: it just becomes a fight. It basically becomes a pro
• 23:39
  Speaker 2: rata fight over literally per game pay. That's what we
• 23:42
  Speaker 2: saw in 2020 with the COVID season. Everybody was fighting
• 23:45
  Speaker 2: over how much should players be paid for each, each
• 23:50
  Speaker 2: game and how many games should be played. So it
• 23:52
  Speaker 2: depends on the individual issue. This, Everything the owners have
• 23:56
  Speaker 2: proposed so far has been in the context of a cap.
• 23:59
  Speaker 2: There are things that they would say they will only
• 24:01
  Speaker 2: do in a cap system. They want to make big
• 24:03
  Speaker 2: changes to revenue sharing that so far their position is
• 24:07
  Speaker 2: we can only do this in a cap system. That's
• 24:09
  Speaker 2: the only way to make the money work. Then there
• 24:11
  Speaker 2: are other things that you look at and go, well,
• 24:14
  Speaker 2: maybe there's a way to do that. And, you know,
• 24:18
  Speaker 2: the playoff opponents being– being able to choose which playoff
• 24:23
  Speaker 2: team you're facing, which is something that the league just
• 24:26
  Speaker 2: proposed and the division series and the wildcard series, first
• 24:29
  Speaker 2: two rounds, uh, having some ability to pick your opponent
• 24:33
  Speaker 2: that could exist outside of the cap system. Right. So it's, it's,
• 24:37
  Speaker 2: it's frustratingly boring in the sense that it just all
• 24:41
  Speaker 2: comes back to money in, in what does each individual
• 24:45
  Speaker 2: change potentially do to both sides pockets. Um, It makes
• 24:51
  Speaker 2: you want to beat your head against the wall sometimes.
• 24:55
  Speaker 4: Well, I guess it's about the money. What is MLB
• 24:59
  Speaker 4: thinking about the draft? I mean, whacking the high school
• 25:03
  Speaker 4: picks entirely, reducing 20 rounds to 12. I mean, does
• 25:10
  Speaker 4: that impact the international draft? I don't really get their
• 25:13
  Speaker 4: thinking here, but maybe you can explain.
• 25:17
  Speaker 2: You just said it, Mark. It's about the money. Developing
• 25:21
  Speaker 2: players is a big cost, and a lot of them
• 25:25
  Speaker 2: don't pan out. So if you can outsource that to
• 25:27
  Speaker 2: colleges and basically have the colleges.
• 25:30
  Speaker 6: Be the funnel that sifts through the good players and
• 25:36
  Speaker 6: the players who probably aren't going to make it for
• 25:38
  Speaker 6: you without you having to take on that expense, great.
• 25:43
  Speaker 2: All right. Now your labor cost is lowered. You don't
• 25:47
  Speaker 2: have as many coaches to hire. You don't have to
• 25:49
  Speaker 2: do as many arrangements potentially with minor league teams. That'll
• 25:53
  Speaker 2: be a big topic a few years from now. There
• 25:56
  Speaker 2: are these 10-year contracts that MLB has with 120 minor
• 26:01
  Speaker 2: league affiliates. Will MLB seek to reduce them again? Remember,
• 26:05
  Speaker 2: they used to be about 160, and now they're down
• 26:07
  Speaker 2: to 120. So it's kind of a never-ending attempt to
• 26:13
  Speaker 2: reduce costs. And that, that is what you do. If
• 26:16
  Speaker 2: you outsource more of your pipeline to a third party,
• 26:22
  Speaker 2: which in this case would be colleges and saying, you know,
• 26:26
  Speaker 2: we're not going to touch the high schoolers. You deal
• 26:27
  Speaker 2: with kids that young.
• 26:29
  Speaker 3: And yeah, it's, there are other, the league would argue, well,
• 26:36
  Speaker 3: there's other components besides money, practical elements, logistics, but at
• 26:41
  Speaker 3: the end of the day, the core.
• 26:42
  Speaker 1: Element is, Now, the players did counter some of MLB's proposals,
• 26:47
  Speaker 1: most notably to open the draft to four-year college sophomores.
• 26:52
  Speaker 1: And this one's kind of interesting, to allow teams to
• 26:54
  Speaker 1: trade draft picks in the first 10 rounds. Could that
• 26:57
  Speaker 1: gain some traction? That seems a little interesting to me.
• 27:03
  Speaker 2: The trading draft picks conversation has existed for a long time.
• 27:08
  Speaker 2: And this is one where, again, I think I think
• 27:13
  Speaker 2: inside of a cap system, the league is going to
• 27:15
  Speaker 2: be willing to do things that it won't be willing
• 27:18
  Speaker 2: to do otherwise here. Could they finally, inside the current system,
• 27:23
  Speaker 2: gain some momentum on it? Sure, in the sense that
• 27:26
  Speaker 2: anything is theoretical, but it's never been the case before.
• 27:29
  Speaker 2: They've always, you know, the ability to trade the competitive
• 27:33
  Speaker 2: balance picks, the draft picks that were instituted, the last
• 27:38
  Speaker 2: CBA or the previous one, in a recent CBA, That
• 27:43
  Speaker 2: was a pretty novel thing. And so a cap system,
• 27:49
  Speaker 2: MLB is going to be willing to do a lot
• 27:52
  Speaker 2: of different things in a cap system. And some of
• 27:53
  Speaker 2: that is because once you've prefixed the money, it just
• 27:59
  Speaker 2: doesn't matter as much. A lot of things are like that.
• 28:02
  Speaker 2: The draft pick conversation is a little different because you
• 28:05
  Speaker 2: get into where you're trying to keep teams from winning.
• 28:08
  Speaker 2: harming themselves, essentially. It's a little bit of babysitting to
• 28:12
  Speaker 2: make sure that small market teams don't give them away.
• 28:15
  Speaker 2: I think in this day and age, it is less
• 28:17
  Speaker 2: likely that people will behave stupidly with those draft picks,
• 28:20
  Speaker 2: but you never know. The cap is this thing that
• 28:27
  Speaker 2: allows MLB to reimagine things because it gives them such
• 28:33
  Speaker 2: an economic benefit in one area that the rest of
• 28:37
  Speaker 2: the stuff doesn't matter as much. Like, for example, if
• 28:40
  Speaker 2: you let players get to free agency, whatever, really at
• 28:45
  Speaker 2: four years, the impact of that in a cap system
• 28:48
  Speaker 2: is much less than it would be outside of the
• 28:50
  Speaker 2: cap system. And a lot of different mechanisms are like that.
• 28:55
  Speaker 2: You can look at it all and go, wow, this
• 28:57
  Speaker 2: is so different and radical, but it's because it all
• 29:00
  Speaker 2: comes back to what is that revenue split? Once you
• 29:03
  Speaker 2: have the revenue split, it doesn't, everything below it is
• 29:05
  Speaker 2: just kind of musical chairs.
• 29:09
  Speaker 4: Speaking of free agency, the owners propose maximum contracts, something
• 29:15
  Speaker 4: like $ 202 million over five years for players switching teams
• 29:19
  Speaker 4: and $ 265 million over six years if you remain with
• 29:23
  Speaker 4: your team. So a little bit of loyalty, I guess.
• 29:28
  Speaker 4: Can you maybe explain those numbers or what's going on?
• 29:33
  Speaker 2: So a cap system doesn't necessarily have to have maximum
• 29:37
  Speaker 2: length and maximum pay. You could just do a cap system.
• 29:41
  Speaker 2: I think the NFL is closer to this compared to
• 29:44
  Speaker 2: the NBA and NHL. The way the union describes it
• 29:47
  Speaker 2: is that MLB took the worst parts for players from
• 29:51
  Speaker 2: all three of the other major men's sports and put
• 29:53
  Speaker 2: them all together into theirs. That's the way the union
• 29:56
  Speaker 2: describes it. So it's not just a spending limit for
• 30:02
  Speaker 2: each team on a yearly basis with the floor. It
• 30:06
  Speaker 2: is also when a player goes to sign a contract,
• 30:11
  Speaker 2: how much can he sign for and for what length
• 30:14
  Speaker 2: of time. And that system is annoyingly complicated as well.
• 30:19
  Speaker 2: It depends on basically what year you're in. If you're
• 30:23
  Speaker 2: a rookie, you can sign for the largest possible contract,
• 30:27
  Speaker 2: zero to one year service time. The maximum deal you
• 30:30
  Speaker 2: can sign for is more than somebody with one year
• 30:33
  Speaker 2: of service time. It gets kind of mind-numbing. But it
• 30:40
  Speaker 2: is a notable thing to mention when discussing what does
• 30:44
  Speaker 2: a cap do? And I didn't bring it up earlier.
• 30:47
  Speaker 2: That is one of the other changes that MLB is proposing.
• 30:50
  Speaker 2: It's not just the team limit. It is newly limits
• 30:54
  Speaker 2: on the individual player, both in length and in total guarantee.
• 30:59
  Speaker 1: There are many ancillary issues on the table, among them
• 31:03
  Speaker 1: the possible elimination of qualifying offers and deferred contracts. The
• 31:09
  Speaker 1: Dodgers might be interested in that one. Expanding active rosters
• 31:12
  Speaker 1: from 26 to 28 players, minimum salary and arbitration scales,
• 31:17
  Speaker 1: moving the draft back to June. That seems pretty minor.
• 31:20
  Speaker 1: And could any of these issues, or are there some
• 31:23
  Speaker 1: that I haven't mentioned, be sticking points or maybe deal
• 31:27
  Speaker 1: enhancers for along the way?
• 31:33
  Speaker 2: Some of them could rear their head in, it depends
• 31:37
  Speaker 2: if you get to a discussion of the current system,
• 31:40
  Speaker 2: you know, what, what could you transfer over or.
• 31:44
  Speaker 1: Not?
• 31:45
  Speaker 2: And until they can kind of solve what system they're
• 31:50
  Speaker 2: working in, this is a little bit of the difficulty
• 31:52
  Speaker 2: I have with every story I write on, on the proposals.
• 31:56
  Speaker 2: is that you want to tell people, well, the league
• 31:58
  Speaker 2: is offering to do this and the union is offering
• 31:59
  Speaker 2: to do this. The conversations just don't really matter until
• 32:02
  Speaker 2: they get some agreement on what system they're in. And
• 32:06
  Speaker 2: then at that point, you look around and go, okay, A,
• 32:10
  Speaker 2: that'll tell you a lot about what it'll look like.
• 32:12
  Speaker 2: And B, particularly if it's the current system, then you
• 32:17
  Speaker 2: start to do the math of what components that have
• 32:20
  Speaker 2: come up inside the context of the cap system could
• 32:24
  Speaker 2: actually be ported over to the current. that don't depend
• 32:28
  Speaker 2: on the economics of a cap to make it work,
• 32:32
  Speaker 2: particularly for the owners. And so it's, I'm basically saying
• 32:39
  Speaker 2: EDG doesn't matter yet. It just, you can start to
• 32:42
  Speaker 2: pick apart some things and go, if they stay in
• 32:44
  Speaker 2: the current system, this could be the area. But the
• 32:49
  Speaker 2: core of a cap system is that owners wouldn't want
• 32:52
  Speaker 2: it if it wasn't better for them, right? Just as
• 32:54
  Speaker 2: players wouldn't want the current system if it wasn't. Everybody's
• 32:58
  Speaker 2: just doing their part, playing their role as you would
• 33:01
  Speaker 2: expect here. The owners would have to make a cap
• 33:05
  Speaker 2: system for players to eagerly jump at it. You'd have
• 33:11
  Speaker 2: to make the revenue split so high that the owners
• 33:14
  Speaker 2: would never do it. So it's kind of moot in
• 33:18
  Speaker 2: a way. You know, the owners sit there and wonder, well,
• 33:22
  Speaker 2: is there a version of this cap system that players
• 33:24
  Speaker 2: would go for? I don't think there's a version of
• 33:27
  Speaker 2: it that players would go for that owners would also
• 33:30
  Speaker 2: go for. The version of it that players would go
• 33:33
  Speaker 2: for would be so clearly beneficial to players that the
• 33:36
  Speaker 2: owners wouldn't want.
• 33:39
  Speaker 5: It.
• 33:40
  Speaker 2: So the hand-wringing over the little particular– I'm kind of
• 33:44
  Speaker 2: ducking your question because it's just– there's no point in
• 33:47
  Speaker 2: sifting through those yet. You've got to get agreement on
• 33:51
  Speaker 2: the overall thing.
• 33:54
  Speaker 4: That's a lot to unpack.
• 33:59
  Speaker 2: I have one final question.
• 34:02
  Speaker 4: Should the Dodgers put Shohei on the bench?
• 34:10
  Speaker 2: I wouldn't dare risk angering Dodger Nation, Japan. There's too
• 34:19
  Speaker 2: many parties I could possibly upset here, so I'm going
• 34:22
  Speaker 2: to steer clear.
• 34:24
  Speaker 1: I wouldn't bench him. I would drop him to maybe
• 34:27
  Speaker 1: seven in the lineup, sort of shame him into hitting.
• 34:31
  Speaker 2: You love that seven hole.
• 34:32
  Speaker 5: I know.
• 34:33
  Speaker 2: You've been trying to put the Angels first baseman there.
• 34:35
  Speaker 5: I know, I know.
• 34:37
  Speaker 1: I just think even Domenic Shohei is still going to
• 34:41
  Speaker 1: be better than the rookie DePaulo. He's a nice-looking kid.
• 34:46
  Speaker 1: He's had some good at-bats, but I just think, you know,
• 34:50
  Speaker 1: you hear it how many times, his presence in the
• 34:52
  Speaker 1: lineup and I think with a guy like Shohei, I
• 34:55
  Speaker 1: really do think he's one good swing away. But getting
• 34:59
  Speaker 1: off track a little here, Mark, but go ahead. Mark's
• 35:01
  Speaker 1: going to have the final question for you.
• 35:04
  Speaker 4: So Commissioner Rob Manfred and union boss Bruce Meyer had
• 35:10
  Speaker 4: strong statements during the All-Star game. Manfred saying he has
• 35:14
  Speaker 4: an ownership group that is more united than any group
• 35:18
  Speaker 4: in his entire time in baseball. and Meyer calling owners'
• 35:21
  Speaker 4: claims that the sport is somehow broken perverse. Is this
• 35:25
  Speaker 4: the typical rhetoric you'd expect in such a fight, or
• 35:27
  Speaker 4: did this set the tone for the battle ahead?
• 35:30
  Speaker 2: It'd be weird if they sat there and went, you know,
• 35:38
  Speaker 2: we feel kind of strongly about this, but if you
• 35:41
  Speaker 2: wait us out until March, you know, we'll cave on it.
• 35:46
  Speaker 2: It's just.
• 35:48
  Speaker 2: Yeah, look, I think it's a little weird in that
• 35:52
  Speaker 2: if they were not talking tough, your eyes would pop.
• 35:56
  Speaker 2: But the fact that they are talking tough, that's what
• 35:59
  Speaker 2: you expect. That's what you're supposed to do is you're
• 36:02
  Speaker 2: supposed to build leverage for your side and for your argument.
• 36:06
  Speaker 2: And so the fact that they're talking tough, we're really unified.
• 36:11
  Speaker 2: Does that mean you're really unified just because you yell
• 36:13
  Speaker 2: it from the rooftops? And here's the real rub there.
• 36:20
  Speaker 2: you can think you're going to be unified come March
• 36:22
  Speaker 2: and April and May. You can stand there today and
• 36:25
  Speaker 2: believe with every bone in your body, you're going to,
• 36:29
  Speaker 2: the other side's got no chance and we will fight
• 36:32
  Speaker 2: as long as it needs. You have no idea what's
• 36:34
  Speaker 2: going to happen. None of these people have been through
• 36:37
  Speaker 2: that kind of work stoppage. It's a totally different environment than,
• 36:41
  Speaker 2: than 30 years ago. Uh, the 94, 95 stoppage. You
• 36:45
  Speaker 2: have a president who has been very inclined to get
• 36:47
  Speaker 2: involved in sports. Um, The pressure to play will be
• 36:53
  Speaker 2: so immense that whatever you think today maybe will be true,
• 36:58
  Speaker 2: but none of them actually know. But none of them
• 37:00
  Speaker 2: know how they're going to feel in April or May
• 37:02
  Speaker 2: or June. And I think that's the part that gets overlooked.
• 37:09
  Speaker 2: Whatever tough you want to talk– whatever tough you want– yeah,
• 37:12
  Speaker 2: whatever tough you want to talk now, it doesn't matter.
• 37:16
  Speaker 2: What matters is when the paychecks are on the line. Yeah. Yeah, well,
• 37:22
  Speaker 2: we got to wait to see when push comes to shove.
• 37:24
  Speaker 5: Yeah.
• 37:25
  Speaker 1: All right, we're going to close the show with that.
• 37:27
  Speaker 1: Angel fans, baseball fans, enjoy whatever baseball you have left
• 37:31
  Speaker 1: in this beautiful month of October for the game because
• 37:35
  Speaker 1: we may be in for a nuclear winter ahead. Whatever happens,
• 37:39
  Speaker 1: Evan Drellich, the athletic outstanding reporter and writer, will be
• 37:43
  Speaker 1: there to cover it. So please give him a follow.
• 37:46
  Speaker 1: Read everything he writes on The Athletic.
• 37:47
  Speaker 2: He's outstanding.
• 37:49
  Speaker 1: Mark Trumbo and I really appreciate you being here, Evan,
• 37:51
  Speaker 1: and breaking this all down. That's going to do it
• 37:54
  Speaker 1: for us today. Thank you. Please like and subscribe, and
• 37:57
  Speaker 1: we'll see you next time on Halo Territory.