Boston Red Sox President and CEO Sam Kennedy, left, welcomes Baseball Commissioner Robert D. Manfred Jr. to speak before the Boston College Chief Executives Club luncheon at the Boston Harbor Hotel on Wednesday, March 6, 2019 in Boston, Massachusetts. (Staff photo by Nicolaus Czarnecki/MediaNews Group/Boston Herald)
It’s a good thing the Internet hasn’t been invented yet, because if it had, Major League Baseball Commissioner Rob Manfred might have some explaining to do when he returned home to his wife, Colleen, mother of the couple’s four children.
Yesterday’s hallmark of the Boston College Business Leaders’ Luncheon at the Boston Harbor Hotel, Manfred answered questions posed by Red Sox President Sam Kennedy for 40 minutes.
Kennedy broached the subject of labor in baseball, and Manfred tried to present the relationship between owners and players in terms that everyone could understand.
“You’re stuck,” Manfred said. “It’s like being married. You’re here for better or worse, and you need to find a way to get along.
Oh man. He didn’t mean he felt stuck. Oh whatever. He can explain how to get out of it. He doesn’t need my help.
Regardless, he continued: “So in our current situation, I think the players are frustrated with some of the developments that they’ve seen in this deal.”
The frustration began to dissipate when free agents Manny Machado (10 years, $300 million, Padres) and Bryce Harper (13 years, $330 million, Phillies) finally signed. Former Red Sox closer Craig Kimbrel and former Astros left-hander Dallas Keuchel remain on the market.
“I think of these developments that way,” the commissioner said of the lag in spending on free agents. “We’re spending the same percentage of our revenue on players as we have for a decade and a half, so the money paid to them in total is the same. You know, in case you missed it, we spent $630 million on two players last week. … Players are still getting these mega-contracts, but the dissatisfaction is with individuals entering the free agent market who may not be those premier players and what they’re getting and what they’re not.
This sounds a bit like a declining middle class.
He went on to say that a company that generates almost $10 million in revenue a year has an EBITDA (earnings before interest, taxes, depreciation and amortization) of $300 million in a “good year for us.”
It’s when they sell the franchises that they kill them.
“I tried to make this point (about running a business essentially at break-even with the owners reinvesting in the product) to the stakeholders and explain to them: ‘You have a distribution problem. You might think some guys get too much, others get too little and you’d like to create more opportunities. It’s up to you to explain to us what you’re looking for in terms of how those dollars are distributed. I would love to have this conversation and have it now, but you need to identify for us what you think the problem is.
What no one explains to anyone, perhaps because neither the commissioner, nor the owners, nor the players really understand it, is the real problem: a growing number of general managers have identified that the best path to job security involves convincing owners to stockpile prospects. and refrain from spending for five years, then strike. This buys CEOs time as they reap life-changing money and extend jobs that might have lasted three or four years to seven or eight years, or even longer if the rebuilding project actually works.
The basic agreement expires after the 2021 season, at which point owners and players will be bickering and “built from within” general managers will be laughing all the way to the bank. Fewer clubs bidding translates into longer waits for free agents.
“I absolutely don’t think the system is broken,” Manfred told reporters after he and Kennedy finished their question-and-answer session. “I think free agency has worked in a way that we’ve seen work historically. …There are a small number of actors looking for work, but I think, like last year, this market will eventually clear up.
