The Cubs’ layoffs reflect the way the baseball business is going

Wednesday, Patrick Mooney and Sahadev Sharma of The Athletic posted this long article detailing the layoffs that have “decimated” (their word) the Cubs organization, on both the baseball and business sides.

The reason you didn’t see anything from me yesterday on this topic was that I read, and re-read, and re-read the article thinking about all this and what I might want to say about it.

Before I get to that, I want to single out two people mentioned in the article who were always kind and helpful to me: Carl Rice and Peter Chase. Rice had been with the Cubs for 39 years in various roles and always answered my questions regarding Wrigley Field while he was heading up the 1060 Project. Chase’s media relations department also answered questions for me when I needed information.

The most important part of Mooney and Sharma’s 1,500-word article is the very last paragraph:

This is how it works in baseball. Teams talk about creating an identity, doing things a certain way, using proprietary information, finding the hidden advantages. And then, when it’s convenient, say everyone else is doing it. That is the story of Corporate America in the middle of a pandemic and a global recession. The players viewed as assets through the game’s analytics movement already know this: In the end, everyone is a number on a spreadsheet.

In the end, yes, that’s absolutely true. While it is absolutely true that Major League Baseball teams, as a whole, lost 40 percent of their revenue in 2020 due to not having fans in the stands, what the sport and its teams actually “lost” is opaque. We’ll never know because MLB and its teams won’t even open their books to players when negotiating, as happened last spring when the parties were trying to put a season together. The general public will never know these figures.

What I do know is this: The billionaires who own and operate the 30 MLB teams would appear to be much better positioned to ride out the “pandemic and global recession” than smaller business owners. That’s not my opinion — read this:

The world’s billionaires “did extremely well” during the coronavirus pandemic, growing their already-huge fortunes to a record high of $10.2tn (£7.8tn).

A report by Swiss bank UBS found that billionaires increased their wealth by more than a quarter (27.5%) at the height of the crisis from April to July, just as millions of people around the world lost their jobs or were struggling to get by on government schemes.

The report found that billionaires had mostly benefited from betting on the recovery of global stock markets when they were at their nadir during the global lockdowns in March and April. UBS said billionaires’ wealth had hit “a new high, surpassing the previous peak of $8.9tn reached at the end of 2017”. The number of billionaires has also hit a new high of 2,189, up from 2,158 in 2017.

As far as Cubs ownership is concerned, remember how much they have invested in properties around Wrigley Field through the Ricketts family’s Hickory Street Capital, detailed in this 2019 article from Crain’s:

“Their intent is to be very, very long-term neighbors in Lakeview and Wrigleyville,” said Jones Lang LaSalle Senior Managing Director Danny Kaufman, who along with JLL Director Chris Knight represented Hickory Street Capital in securing the new loan. “Their goal with this real estate is to plant a sturdy, stable set of properties in the heart of Wrigleyville and operate them well.”

Stipulated: Those businesses have also suffered losses in 2020 due to the pandemic.

But the logical conclusion from all that is that team owners probably could have given their teams an infusion of cash to ride out the pandemic, to keep employed some of the folks they let go. Instead, MLB seems to have become a business fearful of where its next dollar is coming from — this despite a recently-signed deal with TBS that will provide a lot more money over the next eight years:

According to Sports Business Journal’s John Ourand and Eric Prisbell, Turner Sports will pay $535 million annually in the new agreement. That’s a significant increase (65 percent, to be exact) over what Turner paid per season in its previous agreement ($325 million annually).

You can bet that when ESPN’s contract with MLB comes up for renewal after 2021, they’ll throw similar amounts of money at the league. Teams now get $90 million each from national TV contracts and that figure is bound to go up.

All of this comes as MLB is cutting minor-league teams and taking control over the minor leagues in Commissioner Rob Manfred’s “One Baseball” initiative. Maury Brown of Forbes wrote about the pros and cons of “One Baseball” last month. Maybe it’ll turn out to be a good thing, maybe minor leaguers will make more money, but in the end Manfred and team owners are going to turn “One Baseball” into a profit center, whether it’s good for growing the sport or not.

I grant that we do not know at this time whether fans will be allowed into MLB (or minor-league) parks in 2021, and if not, yes, MLB teams will suffer another major hit to revenues. But it seems to me that owners could keep things afloat, more or less the way they are now, ride out the pandemic and recession, and hope that a year or two from now we can be close to the “normal” that the 2019 baseball season was.

Instead, they’re choosing to retrench. They do so at their peril, because doing that might prompt fans who had previously spent money on baseball to think hard about doing that in the future. Baseball fandom cannot and should not be taken for granted.