Official *MLB Season Delayed* Thread

[Kevin Seitzer]

And please understand, it is nothing personal with you. Just frustrated by the whole situation. Then again, if I have not been infected already, I am certain to be soon (in one of the hotspots for Covid-19, married to a nurse who works in a hospital that is well short of sufficient protective equipment), so what I think shouldn't matter much longer.

I wish the best for you and your wife and appreciate the service that she is giving.

[revo]

I can imagine there being some sort of compromise where some games are played in empty stadiums or at neutral sites, whether at the beginning of the season or during the postseason, and that the players might potentially be willing to bargain away part of their salaries on a per-game basis in order to make a season feasible and get more total salary as a result. But if people are expecting multiple months of a season to be played at empty stadiums, that is just not financially reasonable.

What if all teams played in Florida? I think it's pretty clear the Mets and Yanks will have to anyway. A big concern is obviously travel, so if they all just play in Florida and can travel via bus or car rather than plane, that would help out a lot. Each stadium could host 2 games, an afternoon and night game, each day. With the weather, they can continue the season into December if need be (although the rainy season of November would probably hurt).

As far as empty stadiums, I just don't think there will be much of a choice. The players will have to compromise to get something rather than nothing, as will the owners. If there's no season, the owners would lose all the TV revenue as well, since the networks would get a make-good year for free.

[chancellor]

Not every team is in the same situation by any means. Some teams have deep corporate pockets and lines of credit that they can draw upon. But some do not.

I appreciate the information - again, I'm very surprised any team does not have a strong line of credit they can draw on, especially at the $67 MM level mentioned earlier. There's not a team out there not worth somewhere $900 MM or north - even the Marlins - and not having a line of credit for below 10% of team/corporation market value is....well, shocking.

However, the assets you mention of MLBAM, etc., how much do you think you can borrow against an asset that isn't producing any revenue for the near future? Also, an individual team doesn't own MLBAM and I'm guessing couldn't use their ownership stake as collateral for a loan? I'm struggling to think how an MLB team would have anywhere near $400-600M in other assets, not including the expected value of player contracts, which again, aren't producing revenue right now. Most teams lease their stadiums (with some exceptions).

The issue that shocked me isn't the loan issue, but the lack of cash or cash equivalents for corporations of such value. That - based on your note, which I consider absolutely accurate - most teams lack $67 MM in cash or cash equivalents was very stunning. If I'm reading your note above correctly, you're indicating not only do teams lack that kind of money in cash/equivalents, they don't even have lines of credit to support a force majeure event that could impact 10% of their value. If I'm misreading your post, please let me know. But if not, that's appallingly poor fiscal management compared to other billion dollar corporations.

A typical team would have something like $300M in obligations over the course of the year. I can't imagine many teams outside of maybe the Yankees have anywhere close to $300M in cash or cash equivalents on hand. The majority of the obligations are player contracts, which if there's no revenue, they aren't going to be obligated to pay. I don't know how well that situation compares to a typical corporation.

The Corporate Acid Test is considered a conservative test at a 1:1 ratio. But from your earlier post, typical teams don't even have $67 MM of cash or cash equivalents, so they're under a 25% level. That would be considered very, very bad in a typical billion dollar corporation.

[cavebird]

I very much want baseball season to happen, assuming it could happen safely. I also don't think it will happen.



It's at least 60%. Maybe a little higher than that. And I'm guessing that some of the parts that are not related to gate/ballpark are also down (non-ballpark merchandising, some portion of corporate sponsorships). Special events at the ballpark (e.g., corporate meetings, concerts) are also a revenue stream you might not think about but also are gone at this time. Special events are maybe 1% of the revenue, but there are a lot of little revenue streams like that that are gone even though they are not directly game-related.

Wow, I didn't realize how much the gate meant. I just assumed the huge TV deals were a bigger part---although I imagine that teams with bad contracts (say the Braves) would have a bigger portion of receipts being from gate than teams with huge TV contracts (say the Dodgers). It is a shame. One would think the players and owners could get together and find something that would work for everyone since nobody is getting anything otherwise--but the history between the two is not exactly encouraging on that front. I do agree that unless they get creative, 2020 is pretty much finished and 2021 could be in question in a second or third wave of Covid-19.

[Gregg]

I wish the best for you and your wife and appreciate the service that she is giving.

Amen!!

[Hornsby]

Chance, I'm not a forensic accountant, nor do I play one on TV...check this link out and see if it makes sense in this debate. Thanks...

https://www.forbes.com/mlb-valuations/list/#tab:overall

[chancellor]

Chance, I'm not a forensic accountant, nor do I play one on TV...check this link out and see if it makes sense in this debate. Thanks...

https://www.forbes.com/mlb-valuations/list/#tab:overall

That's even more data than I had, thanks.

Sorry I made it sound like a debate. Let me clarify - I think Seitz is dead accurate in his assessments of available cash and owner readiness.

Based on the additional info you've provided, clearly the Rangers and Marlins are at significant risk. Heck, I can hardly see how the Rangers meet their debt requirements with that kind of load - if my math is right, they're carrying $760 MM in debt load.

But for the remainder, I'm still really surprised by their inability to have standard levels of cash or cash equivalents available and/or access lines of credit that should easily carry their expenses minus player salaries, or a limited liability of player salaries. Take the Pirates as an example - they have a fairly clean debt to value at 8%, good income stream once we're back to playing baseball - they should easily be able to tap a line of credit for $70 million given that balance sheet, valuation, and potential income stream.

I'll also add that I'm even more impressed with Brewers owner Mark Attansio and his financial management team as I've dug into this more. Everyone noticed some of the cost-cutting moves, which was attributed to saving to get Christian Yelich on a long-term deal. But what also didn't get noticed in the background was the Brewers retired some high risk/cost debt and built more cash reserves. Exactly how much wasn't mentioned, but it's pretty clear his team has done an exceptional job keeping their financial house in order.

[cavebird]

Wow. I had no idea that there were several teams in that bad shape. The more and more I read of the agreement, while it talks about playing as many games as possible, it sure looks like a deal on canceling the season.

[revo]

Virginia Gov Northam issued a mandatory stay at home order until JUNE 10.

Maryland also issued one, but with no date attached. DC is in the same boat.

Obviously, this is probably going to be the norm in many other states. That means a June start date is probably out of the question, and July is starting to look more and more unlikely, and we all know what that means.

[madducks]

How about 80 games in August-September-October? Then post-season games in warm weather neutral sites.

[Sour Masher]

I thought commerce would overcome best safety practices, but it looks like that won't be the case. It is crazy how much worse this thing is in the US than elsewhere. It is a shame we can't do the simple thing and just all lock down hard for two weeks. This whole thing would be totally gone if the whole world did that, but that isn't really practical, and we seem to be doing a worse job with it than anyone else. If we were better, we'd have baseball, but we have sucked at containing this more than any other country. It isn't even close.

[revo]

Virginia Gov Northam issued a mandatory stay at home order until JUNE 10.

Maryland also issued one, but with no date attached. DC is in the same boat.

Obviously, this is probably going to be the norm in many other states. That means a June start date is probably out of the question, and July is starting to look more and more unlikely, and we all know what that means.

MLB is closely watching Florida, where a stay at home advisory is imminent. If an advisory similar to Virginia is issued there, well......



The NBA, by the way, is looking to hold its post-season in July or August and is looking to have it contained in a single city, which is similar to what I alluded to with MLB earlier in this thread about having all their games in Florida.

The only way MLB will be able to play this year is in a single state with empty stadiums. If they're not interested in something like that, well let's just say every pitcher should get TJ surgery now and won't miss any time, lol.

[revo]

The city of Toronto decreed that there can be no “public events” until June 30.

[cavebird]

I thought commerce would overcome best safety practices, but it looks like that won't be the case. It is crazy how much worse this thing is in the US than elsewhere. It is a shame we can't do the simple thing and just all lock down hard for two weeks. This whole thing would be totally gone if the whole world did that, but that isn't really practical, and we seem to be doing a worse job with it than anyone else. If we were better, we'd have baseball, but we have sucked at containing this more than any other country. It isn't even close.

A two-week hard lockdown wouldn't do it unless it was Chinese hard---i.e. those with it just dying at home. If you allow exceptions for groceries/food and medical care, a two week total lockdown that is lifted afterwards just won't stop it. If there was a magic bullet, it would have been fired by now. Pandemics happen. They are bad, they last a long time, and lots and lots and lots of people die. Even modern technology cannot apparently stop that.

[chancellor]

The city of Toronto decreed that there can be no “public events” until June 30.

Doesn't affect sports teams - https://www.nytimes.com/reuters/2020...ronto-ban.html