Why the coronavirus shutdown could lead to MLB expansion in the near future

Major League Baseball, like most sports leagues around the world, is on indefinite hiatus because of the COVID-19 pandemic. Last week the 30 owners approved a plan that would begin the 2020 season in July. Teams would play an 82-game regular season with a 14-team expanded postseason field. MLB and the MLBPA are now negotiating the restart plan and details.

Baseball is a $10 billion per year industry and already 30 or so percent of regular season games have been missed. There’s no gate revenue coming in (ticket sales, merchandise, etc.) and there may not be any this year if games are played without fans. There’s also no television revenue because there are no games to broadcast. The financial losses are already enormous and growing. 

“The economic effects are devastating, frankly, for the clubs,” commissioner Rob Manfred said last week. “We’re a big business, but we’re a seasonal business. Unfortunately this crisis began at kind of the low point for us in terms of revenue (because) we hadn’t quite started playing our season yet. If we don’t play a season the losses for the owners could approach $4 billion.”

The financial recovery will be a multiyear effort for both the average American and billion-dollar baseball franchises. Player salaries will be slashed as teams get their payrolls in order — free agency could be ugly this winter — and, according to ESPN’s Jeff Passan, the MLBPA has already agreed not to challenge MLB’s debt-service rule. That allows teams to borrow money to avoid financial ruin.

MLB will undoubtedly explore ways to generate additional revenue going forward to get its head back above water following the pandemic. New broadcast packages and ticket options will be on the table. Beyond the usual, the league has another, more significant option to create a large cash infusion in the near future: Expansion. Bring two new teams in the league.

Truth be told, expansion has only a tiny little bit to do with growing the game and a lot to do with the big cash influx, historically. The Marlins and Rockies exist in part because clubs had to pay their $280 million collusion settlement to the MLBPA prior to the 1991 season. Former commissioner Fay Vincent admitted as much in a 2005 interview with The Biz of Baseball:

“Look, each owner had a $10 million bill and there were about 26 clubs before expansion and 30 at the moment, then $280 million, let’s say $10 million a club – they didn’t have the money. So they did what most would business do, they sold stock, they sold interest in the clubs, in the expansion clubs. In my day two of them – Miami and Denver. And that money, which was vital, paid off their collusion debt. Without it I think baseball would have had a very serious time.”

Expanding to pay off debt? MLB has done it before. The league did it following the collusion settlement and they could do it again after the pandemic, and the…

- Advertisement -

Read More: Why the coronavirus shutdown could lead to MLB expansion in the near future 2020-05-21 14:56:27

- Advertisement -

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments