Beyond the Lines: Major League Baseball’s top business stories of 2020
A number of business issues will dominate MLB’s off-field headlines in 2020, with the three biggest discussed below.
- MLB's investigation into the Houston Astros' sign-stealing scandal has been resolved and the discipline is the harshest in baseball history. Penalties include 1-year suspensions for GM Jeff Luhnow and manager A.J. Hinch, who were then fired by owner Jim Crane, a $5 million fine against the team and loss of first and second round draft picks in each of the next two years.
Red Sox manager Alex Cora was also part of the Astros’ coaching staff when the cheating took place and several Boston players allegedly used technology to decipher signs during the 2018 World Series.
Boston fired Cora on Tuesday.
The Astros’ precedent doesn’t bode well for other scoffers.
- MLB’s Collective Bargaining Agreement between players and owners expires at the end of this year and the negotiations are expected to be contentious. On the plus side, this winter’s free agent market actually lived up to the hype for the first time in three years. Owners have already spent approximately $2 billion with more signings to come. But don’t expect that to quell union saber rattling.
A confluence of factors, which are unlikely to be repeated next off-season, led to the spending spree, suggesting this year was a one-off. A group of quality free agents which were clearly superior to recent years, resulted in spirited bidding by the usual spendthrifts – Yankees, Nationals, Angels – and a few teams that normally sit on the sidelines – White Sox, Toronto and Cincinnati. The latter group elected to spend their riches, fueled by MLB’s lavish revenue streams, in an effort to win now.
But don’t be fooled. More than half of the teams failed to reach for their checkbooks, including some – Red Sox, Houston, Cubs – that have been big spenders of late. That won’t sit well at union headquarters. A work stoppage, something the sport hasn’t seen in more than a generation, is a possibility, although there are 11 billion (the sport’s potential total revenue in 2020) reasons why the parties should seek peace.
- If you live in or near one of the 160 communities with a Minor League team you no doubt have heard the Professional Baseball Agreement, which governs the relationship between the majors and the minors, is up after this season. Since the early 1990’s, the parties have rubber stamped extensions, after MLB extracted its usual pound of flesh, i.e., additional revenue, from MiLB teams. Not so this year.
MLB charged out of the gate with a proposal to cut as many as 42 MiLB teams, more than one-fourth of the total, which not surprisingly raised the ire of MiLB owners, fans and communities that have invested hundreds-of-millions of dollars in new ballparks. To date, the negotiations have been acerbic, consisting primarily of accusations lobbed at each other through the press.
The final agreement will undoubtedly result in an increase in the cost of operating a MiLB club, stricter facility standards, geographic realignment, and perhaps, fewer teams.
Let’s hope this year’s on-field stories are just as interesting as those off the diamond.
Jordan Kobritz is a non-practicing attorney and CPA, former Minor League Baseball team owner and current investor in MiLB teams. He is a professor in the Sport Management Department at SUNY Cortland and maintains the blog, sportsbeyondthelines.com. The opinions contained in this column are the author’s. Kobritz can be reached by email at firstname.lastname@example.org.