Official *MLB Season Delayed* Thread

[cavebird]

If nobody else is playing, you could see that as a smart investment to get more fans---if that is all any sports fan has to watch, it would be a really savvy move to try to get some back. And baseball has an advantage over basketball and football in that the players are just not in such close contact that it would spread on the field too much.

But wow, I though those TV contracts were so huge they wouldn't want to just lose that money (I assume TV won't pay them for games not played.). But maybe the model is too dependent on fans in the seats (even 10K x 81 home games is a lot of fans paying significant money) for this to happen. Still, it would be nice, even if wishful thinking, to expect serious foresight. Baseball has tried all kinds of things recently to get young fans, with limited success. Being the only sports on TV just seems to be such an obvious tactic to try to me.

That being said, if the model doesn't work without fans in the seats, you can chuck the season right now. Yeah, Seattle will be okay be June or July because they got it early, but there are still relatively few cases in Minnesota, Missouri, and Arizona, just to name three. That doesn't mean they won't get it (especially if they try to do sporting events with tens of thousands of fans), it just means they get it later. And if they don't play, I doubt they pay the players any more than they already have and will refuse to do empty stadium games. That will likely leave enough bad blood that 2021 might be the only season played in three years, assuming that 2022, in this scenario, is lost to labor strife. That will go down well with the fans. Sheez.

[Kevin Seitzer]

How many people do you know that have billions in cash lying around to make a bet on your smart investment for the future?

[Kevin Seitzer]

Also, I don't see how there is an iota of appetite left for a strike if this season is lost (or significantly shortened, which it is). The clubs will be loaded with huge new debt to service, and the players wouldn't have been so eager for the cash advance from the teams if they were sitting on the cushion of a huge strike fund.

[Kevin Seitzer]

BTW, I went through the revenue calculations in the other thread on this topic.

[cavebird]

I missed that thread. Which one is it? And $2 billion to burn among the 30 MLB owners? That's $67 million each---one bad contract. Yeah, the Rays can't afford that, but they probably get $8 million in gate each year (81 games, 10K fans per game, $100 per fan is about $8 million).

[Kevin Seitzer]

How many billions depends on how many games you want them to play in empty stadiums and whether players would agree to further salary concessions. But regardless, let's say hypothetically $2B. You think most or all of the clubs have $67 million in cash sitting around? (Spoiler: they do not.) Saying "that's one bad contract" is a non sequitur. People like to throw owners' money around like it's magically generated and endless, but it isn't, particularly in the midst of a liquidity crunch.

[Kevin Seitzer]

http://forum.rotojunkiefix.com/showt...l-season-begin

[cavebird]

How many billions depends on how many games you want them to play in empty stadiums and whether players would agree to further salary concessions. But regardless, let's say hypothetically $2B. You think most or all of the clubs have $67 million in cash sitting around? (Spoiler: they do not.) Saying "that's one bad contract" is a non sequitur. People like to throw owners' money around like it's magically generated and endless, but it isn't, particularly in the midst of a liquidity crunch.

Well crap. I thought the usual purchase price of a team was *way* more than $67 million, and nobody but a fool spends half their money on a vanity effort like a baseball team. I get that the Marlins get bought on credit all the time, but that's just one team. Per an old article from 2 years ago, the top 18 MLB owners were all billionaires. Malone and Johnson certainly have it. And hell, Malone owns DirecTV, so he could recoup some. As for liquidity, I am sure the players would take deferred money rather than nothing---even for no cost to the owners. But you're an old timer here from when before I worked for the federal courts and could talk about politics, so you can remember what I would think here. But yeah, I get the point. But at some point the system will break. There will likely be no distractions from the shit going on until sometime after what would normally be opening day in 2021. Or we'll all die. Or something.

As for what I want. I want to turn my TV on to watch something live again. It's been a while. MLB could actually bankrupt their TV partners, along with the other sports---TV ad revenue is heavily dependent on live sporting events because that's the only thing people don't record and fastforward through the commercials. How long do the TV partners survive?

[cavebird]

But yes, interesting points in the other thread. What percentage of MLB revenue is gate and related ballpark (i.e. food, beer, jerseys sold at stadiums) revenue? I have no idea.

[cavebird]

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.

[revo]

Jeff Passan, who broke this news, also said there was a “caveat” that would allow neutral site games and/or empty stadiums. Honestly, it was very unclear what that meant.

The reality is places like NYC and the California cities almost certainly won’t allow for mass gatherings in stadiums for the rest of this year, so if those teams aren’t thinking outside the box for a solution, then yeah, we’re done.



Also, I've merged the two threads.

[chancellor]

How many billions depends on how many games you want them to play in empty stadiums and whether players would agree to further salary concessions. But regardless, let's say hypothetically $2B. You think most or all of the clubs have $67 million in cash sitting around? (Spoiler: they do not.) Saying "that's one bad contract" is a non sequitur. People like to throw owners' money around like it's magically generated and endless, but it isn't, particularly in the midst of a liquidity crunch.

Seriously - no sarcasm intended or meant - I'm shocked to find out most or all clubs do not have ready access to $67 million in cash or cash equivalents. Not because "Owners are rich" or such nonsense, but simply due to robust corporate financial management. It's been quite a while since I was in business school, so I looked up Fed recommendations for cash or cash equivalents for non-financial corporations, and they're lower to what I remember so I'll use those as my reference. Fed considers a non-financial corporation to be "healthy" if it has 10% cash or cash equivalents (or more) relative to total assets and "unhealthy" at 6% or lower.

Given that every team has a roughly $400 MM asset floor just from co-ownership of the MLB Advanced Media, assets in BamTech and MLB Network, and other co-owned MLB investments, that's a starting floor of $40 MM cash or cash equivalents every team - even the Marlins - should have.

The Milwaukee Brewers have roughly $400 - 600 MM in other non-goodwill based assets, and they're one of the lowest asset teams. That would indicate they should have another $40 - 60 MM in cash or cash equivalents available to them.

My reference is Forbes "Baseball Team Values 2019"; assumption is Market and Brand figures are goodwill assets; 50-100% of Sport assets are non-goodwill, all of Stadium assets are non-goodwill.

If you look at it through a different financial lens - that of Corporate Acid Test or Quick Ratio, which in simple terms is one-year liquid assets versus one-year debts/obligations, having less that $67 million in cash or cash equivalents would leave most clubs woefully under the recommended 1:1 ratio of liquid assets versus one-year debts/obligations.

[Kevin Seitzer]

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

But yes, interesting points in the other thread. What percentage of MLB revenue is gate and related ballpark (i.e. food, beer, jerseys sold at stadiums) revenue? I have no idea.

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.

[Kevin Seitzer]

Seriously - no sarcasm intended or meant - I'm shocked to find out most or all clubs do not have ready access to $67 million in cash or cash equivalents. Not because "Owners are rich" or such nonsense, but simply due to robust corporate financial management. It's been quite a while since I was in business school, so I looked up Fed recommendations for cash or cash equivalents for non-financial corporations, and they're lower to what I remember so I'll use those as my reference. Fed considers a non-financial corporation to be "healthy" if it has 10% cash or cash equivalents (or more) relative to total assets and "unhealthy" at 6% or lower.

Given that every team has a roughly $400 MM asset floor just from co-ownership of the MLB Advanced Media, assets in BamTech and MLB Network, and other co-owned MLB investments, that's a starting floor of $40 MM cash or cash equivalents every team - even the Marlins - should have.

The Milwaukee Brewers have roughly $400 - 600 MM in other non-goodwill based assets, and they're one of the lowest asset teams. That would indicate they should have another $40 - 60 MM in cash or cash equivalents available to them.

My reference is Forbes "Baseball Team Values 2019"; assumption is Market and Brand figures are goodwill assets; 50-100% of Sport assets are non-goodwill, all of Stadium assets are non-goodwill.

If you look at it through a different financial lens - that of Corporate Acid Test or Quick Ratio, which in simple terms is one-year liquid assets versus one-year debts/obligations, having less that $67 million in cash or cash equivalents would leave most clubs woefully under the recommended 1:1 ratio of liquid assets versus one-year debts/obligations.

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.

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).

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.

[Kevin Seitzer]

Jeff Passan, who broke this news, also said there was a “caveat” that would allow neutral site games and/or empty stadiums. Honestly, it was very unclear what that meant.

The reality is places like NYC and the California cities almost certainly won’t allow for mass gatherings in stadiums for the rest of this year, so if those teams aren’t thinking outside the box for a solution, then yeah, we’re done.



Also, I've merged the two threads.

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.