Liverpool principal owner John Henry is expected to be a key figure in discussions in Florida this week as Major League Baseball (MLB) owners seek to find a common ground with players in a bid to avoid a financially damaging season delay.
Henry, the head of Reds owners Fenway Sports Group, has been facing a headache in the US with FSG's Boston Red Sox MLB team part of the league-wide lockout that has been in effect since December 1 due to a row with the Major League Baseball Players Association (MLBPA) over revenue sharing.
The MLBPA is the players' union of the MLB, and in his role as a member of MLB’s labour policy committee, Henry has been involved in the ongoing talks to end the dispute over the collective bargaining agreement (CBA), something that is now threatening the start of the lucrative spring training period for MLB teams, and potentially even the start of the regular baseball season at the end of March.
MLB team owners had sought to bring in a mediator in bid to find a solution, something that was rejected by the MLBPA, and with the lockout - the first in 26 years in Major League Baseball - now threatening to impact the revenue generation of teams in the coming weeks, there is concern among owners that losses could move into the millions if a resolution is not found soon, something that could well hand the balance of power in the hands of the players.
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Spring training, which takes place for the Red Sox at their custom-built facility at JetBlue Park in Florida and has become a lucrative pre-season revenue stream for FSG, is set to start in less than a fortnight, with Red Sox due to welcome Tampa Bay Rays at Fenway Park on March 31.
The stand-off has arisen due to members of the MLBPA wanting to get a greater share of the revenues that the MLB has been pulling in since the last CBA was agreed. The MLB last year agreed a new seven-year media deal with ESPN and Disney last year, worth around $3.8bn, while Turner Sports extended their deal for seven years in 2020 for a sum of around $3.2bn.
The CBA is there to look after the interests of players and ratify things from meal allowances and travel protocols to salary caps and how team revenues are shared.
Since the first CBA was introduced in Major League Baseball in 1968, there have been eight instances of labour disputes, some involving strike action that actually wiped out an entire post-season.
The revenues of the MLB, not including the severely COVID-impacted 2020 season, had risen from just over $9bn in 2016 to $10.4bn in 2019, something that is set to continue to rise once the sport navigates itself fully out of the mayhem caused by the pandemic.
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The competitive balance tax (CBT) that exists in baseball hasn't kept pace with rising revenues, with the CBT, while used to try and maintain competitiveness among the league's teams, having also helped teams keep their payroll costs down. That CBA expired on December 1 and the two sides remain at an impasse.
The MLBPA believes that the current system de-incentivises winning for smaller market teams and keeps an unfair balance of money in the hands of the team owners instead of with the players.
At present the model can see team owners purposely nosedive their organisations in a season and spend less in the hope that they will have a greater chance at success through receiving higher draft picks as a result poor on-field performance.
According to the Boston Globe 'that could mean a proposal that eliminates draft pick compensation for free agents and/or establishes a lottery for a still-to-be-determined number of top picks'.
Another sticking point will be the desire from the MLBPA to reduce revenue sharing by $100m, something that the MLB owners are unlikely to be in agreement with.
The MLBPA has previously expressed concern about whether smaller-market clubs adequately reinvest revenues distributed from bigger teams to smaller market ones and have previously filed grievances against teams like the Pittsburgh Pirates, the Rays, Billy Beane's Oakland A’s and the Florida Marlins in years past.
The 2016-21 CBA agreement required teams to use revenue sharing money “to improve its performance on the field."
However investments in such things as scouting and player development staff tick those boxes without offering direct financial benefits to players, something of which they are opposed to as a union.
For some time the Red Sox were the most valuable team in the FSG empire. But having acquired Liverpool for £300m back in 2010, the value of the Reds has risen north of £3bn, making the Reds the 12th most valuable sporting team in the world. The Red Sox, by contrast, are at number 20 with a value of $3.6bn (£2.6bn), according to the Forbes 2021 money list.
But the current row is threatening the chance of driving the value higher at present, with the squabbling between owners and players, allied with an on-field product that isn't as appealing to fans as it once was, could mean that the upward trajectory of value for teams in Major League Baseball slows, possibly even regresses.
That creates a headache for FSG. A chunk of capital has been invested in and around Fenway Park in Boston to provide further revenue streams for the business. A successful Red Sox and MLB is key to FSG's plans for future growth, and successful FSG is key to Liverpool's own hopes and aspirations moving forward.
Henry and other MLB team owners are expected to convene in Orlando from Tuesday through to Thursday this week in a bid to try and present a workable solution to the MLBPA.
