MLB Debt Reaches $8.3 Billion Debt as Free Agency Looms

The 2020 season has been incredibly tough on everyone. Even if you have remained in your job/role for the entire year, you know someone close to you that has lost their jobs due to the COVID-19 pandemic. I would be willing to bet you have come across several in your circles that have contracted the virus, and unfortunately, we all seem close to one that has lost their lives during this time.

This has reached the sports world as all organizations have had to make difficult staffing decisions, something that has ravished the Chicago Cubs as they have laid off more than 100 themselves. Just as an exciting World Series is beginning to wind down, which could end either Tuesday or Wednesday evening, Rob Manfred suggests MLB teams will post $2.8 billion to $3 billion in operational losses this year. This loss has led to an unprecedented debt of $8.3 billion.

“We are going to be at historic high levels of debt,” Manfred said. “And it’s going to be difficult for the industry to weather another year where we don’t have fans in the ballpark and have other limitations on how much we can’t play and how we can play.”

The Cubs themselves aren’t planning on sellout crowds at Wrigley Field next season either. Their expectation is that there will be some “limited seats available” but they are unlikely to fit more than 8,000 in Wrigley for any single-game. In 2020, the Cubs will have lost around 75% of all their revenue, and even after 25% reductions in staffing, they anticipate another $100+ million loss in 2021.

“This is through no fault of their own and had nothing to do with their performance, talent or contributions,” a team source explained to ESPN when discussing the lost jobs. “This was a difficult decision but the goal was to restructure the organization based on the current operating environment with losses of more than $100 million anticipated next year. We’re no longer a business that welcomes 3.3 million fans and we’re not sure when that business will resume.”

Jesse Rogers, ESPN

This seems to back an idea that Chicago Style Sports covered this weekend, suggesting there could be an established star player (or more) that is non-tendered before December 2nd of this offseason.

This is absolutely accurate, the league had a financial ruin in 2020. To start, 100 games were stripped from the schedule. That’s 100 games of ticket revenue, TV revenue, advertising revenue, merchandise revenue, concessions revenue. This accounted for roughly 75% of the Cubs revenue, or essentially $350 million!?

And the Cubs are one of the more financially stable organizations.

This announcement came out at just the right time if you are an owner of an MLB franchise. While baseball’s free agents wonder where their big-money contracts are, owners will likely ask players for salary relief for the second consecutive season. They will play this off as it is either the millionaire players that need to sacrifice or more team staff may need to be let go. The owners will, yet again, will in the court of public opinion and it will sound like the players are greedy and not understanding of the environment they currently live in.

I certainly cannot wait to hear thousands of fans say, “hOw MaNy MiLLiOns dOeS sOmEoNe nEeD!?”

I don’t disagree, I think that this unprecedented time requires a very delicate look into baseball’s finances. I think that everyone needs to own it, especially if we are limited in our social gatherings. But, I think both the owners and the players should take a fair amount of the burden.

But, like with any potential labor dispute, ownership owns the public opinion. They are almost always the first to get out in front of any possible labor dispute and understand exactly how to press the buttons to get the fans to back the billionaires and not the labor force.

I wouldn’t be surprised if this offseason gets pushed back a bit and it has the timing of that weird 2018 offseason. That year we saw most of the bigger-names sign very late in the year. Remember the Yu Darvish signing? He agreed to terms in mid-February. Jake Arrieta, the second most coveted pitcher that offseason, signed in Philadelphia on March 12th.

Eric Hosmer signed on Feb. 19th, J.D. Martinez signed on Feb. 26th, Mike Moustakas signed on March 8th, nearly 60% of the free-agent signings happened after January where typically something like 80% of the signings are completed before the new year.

While the annual GM meetings are still scheduled as normal, just remotely, I can see the larger Winter Meetings to be pushed back to after the new year. This will help any negotiating that might need to be made, accommodating for what will absolutely be a reduction in league revenue.

I do not think that pushes the start of Spring Training back, and I don’t think it changes plans for a 162-games season (baseball needs the full season). I do think it puts teams and players on a shorter clock. I think this will be a completely weird offseason. I think that some teams will react with some chaos, while others will remain calm. I don’t think teams with grand schemes of trading multiple pieces before the start of the season will accomplish their goals – but I do see many more moves made after Spring Training starts.

If players are not signed late in 2021, and when Spring approaches, I think free agents will look to create a free agent camp in Florida and Arizona. If this sounds familiar, that is because there was talk of one in that 2018 offseason.

Buckle up buckaroo’s, this will yet another weird offseason.