MLB Franchises Shed Money During Pandemic, Could Impact Free Agency

The COVID-19 pandemic changed many of the norms we have become accustomed to in the sport of baseball. For Major League organizations, this became even more apparent as they suffered major financial hits.

Franchises had to struggle with having no fan attendance to make up a large portion of their revenue. Because of this, there were a variety of other financial impacts that followed shortly thereafter.

The most obvious was the prorated salaries that the league’s players took. This was a controversial topic for the first few months of the pandemic due to the players’ and owners’ disagreements.

Because they were unable to reach any kind of agreement for some time, there was worry that a lockout would ensue.

Eventually, the two sides opted for a prorated pay option that gave players’ their salary based on how many games were played. This was one of the biggest reasons for a 60-game season.

Of course, nobody likes to talk about the financial aspect of the sport, especially in a time where many people are struggling. However, now that the season is over, we are able to reflect upon the decisions made and the impacts they had.

Decreasing Payroll

The decision resulted in a collective $2.47 billion drop in MLB payrolls during 2020, with many sharp decreases from different organizations.

The Los Angeles Dodgers and New York Yankees are two examples of teams that typically lead the league in payroll, always being above $200 million. However, this season they just had $98.6 million and $86.3 million payrolls respectively.

In a year when MLB organizations were not able to benefit from in-person finances, this payroll cut should aid in keeping themselves afloat. Many early projections had each MLB club losing $640,000 per game on ticket sales alone.

As a whole, MLB lost $3.1 billion as a result of the pandemic, resulting in about $100 million per team.

These losses were expected, however.

How will this impact decisions teams make moving forward?

Revenue Loss Impact

Because of the major loss of revenue, there may be some cuts that teams making moving forward. One such that we have already seen was the furloughing of employees.

Many of these happened back in May, and a large portion of these employees were unable to return to work later in the year. On top of this, many scouts and player development employees were let go to save costs.

Minor League players were also the target of some of these pay cuts, as some organizations didn’t pay them after August. For most of these players, they already make below minimum wage as a Minor Leaguer.

Major League Baseball has also announced the intentions of shuttering well over 100 Minor League affiliates and severing their ties to the organizations. In some cases, they are opting to convert these into collegiate summer leagues.

However, this is still a measure that hopes to cut costs.

This season will also be difficult for MLB organizations as they deal with more impacts of the COVID-19 pandemic. Fans will probably be able to see this in free agent signings this offseason.

Pandemic Impacts on 2021 Free Agency

With the financial hit that the franchises endured, player contracts will likely be impacted greatly. While players like Trevor Bauer and George Springer would normally command large, long-term contracts, it is likely that these will be greatly reduced.

However, the interesting thing is the difference in ownership groups. For example, teams like the Toronto Blue Jays, who are owned by a telecommunications giant, have not been as impacted by the pandemic. As a result, they have more to spend this free agency.

Regardless, it is expected that contracts across the board will be lower.

There is a fear among agents, such as Scott Boras, that MLB owners will use these losses as an excuse to not pay the players what they deserve. If this does happen, expect there to be backlash from the players’ union.

From here, it will be interest to see how this shifts the conversations players and owners will have as they prepare for a 2021 season.

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