ARLINGTON, Tex. – Major League Baseball’s 30 clubs have amassed an unprecedented $8.3 billion of debt from their various lenders and will post $2.8 billion to $3 billion in operational losses this year, Commissioner Rob Manfred told Sportico Monday in an exclusive interview.
The debt was accrued so the clubs could fund their businesses during this COVID-affected season without fans in the stands and negligible ballpark revenue.
“We are going to be at historic high levels of debt,” Manfred said. “And it’s going to be difficult for the industry to weather another year where we don’t have fans in the ballpark and have other limitations on how much we can’t play and how we can play.”
The first neutral-site World Series will end either Tuesday or Wednesday at Globe Life Field, but it will bring no closure to the myriad problems MLB must address ahead of the 2021 season, many of them dictated by the coronavirus.
The Los Angeles Dodgers hold a 3-2 lead over the Tampa Bay Rays heading into Game 6 Tuesday night and are poised to win their first World Series title since 1988.
Manfred said it was miraculous that baseball has arrived at this point.
“The players worked hard and really sacrificed. The club people have been great,” he said. “My staff has done a phenomenal job. The [players’] union has really helped. When you get that kind of cooperation you really have to feel good about it.”
The World Series has been attended by close to 11,500 fans a game, but those numbers are not enough to offset revenue losses if that’s the maximum number attending games next season. Due to the surging pandemic in the U.S. and Canada, ballparks in New York and California would still be closed to fans in 2021 because of state health and safety rules.
Other issues will have to be resolved. For example, the Toronto Blue Jays undoubtedly won’t be able to play again at the Rogers Centre because of restrictions at the border. They played their home games during this 60-game abbreviated regular season at a Triple-A park in Buffalo.
Manfred said he had flexibility from rules limiting debt for each club after negotiations with the MLB Players Association.
“I think the one thing we’ve learned is that COVID is a really unpredictable virus,” Manfred said. “We don’t know what’s next. But at this point it’s just impossible to speculate what next year’s going to look like. We’ll just have to get closer and then we’ll make the best decisions we can.”
That uncertainty is causing a lot of consternation among owners and players alike. From the players’ perspective, hundreds of them will become free agents after the World Series, including six key Dodgers. The players’ union will distribute a comprehensive list of available free agents as soon as the Fall Classic is over.
Clubs that don’t offer contracts to players under their control in early December will put another group of players on the open market, then in January teams must exchange figures with their arbitration-eligible athletes.
With no certainty about revenues or costs, some club executives are already saying they may not be willing to commit dollars to players, which makes the start of spring training as usual in mid-February highly improbable.
“The economic losses [this season] have been devastating for the industry,” Manfred said. “You’re seeing the ramifications of that in terms of decisions clubs are making with respect to [laying off] baseball operations and business employees. I mean, you’ve never seen those type of decisions, at least since I’ve been around.
“In order to get through the year the clubs did a great job preserving liquidity, but they also took on a lot of additional debt.”
Manfred praised the intensity of play under very trying circumstances, including the 16 playoff teams operating out of bubble environments since the waning days of the regular season. The bubbles have worked. MLB and the union reported no positive COVID tests since the playoffs began, compared with 57 positives among players and staff during the regular season.
He also praised the cooperation of the players and union with toughening protocols and agreeing to the bubbles, even after several months of contentious negotiations to come to terms on playing a shortened season.
“I feel good about what we’ve accomplished,” Manfred said. “The best part of it is, it’s been a real team effort.”
That “team effort” will have to continue in negotiations with the union during the offseason even before collective bargaining begins next year on a new Basic Agreement. The current one expires on Dec. 1, 2021.
“It’s absolutely certain, I know, that we’re going to have to have conversations with the MLBPA about what 2021 is going to look like,” he said. “It’s difficult to foresee a situation right now where everything’s just normal. And obviously, if it’s not normal we’re going to have to have conversations about it.”