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Report: MLB proposal would cut some player salaries as much as 85 percent

MLB owners have proposed an economic structure that would slash salaries for higher-paid players this season. We break down what it means.

Mike Trout of the Los Angeles Angels gets ready to step into the batters box against the Cleveland Indians during a spring training game at Goodyear Ballpark on March 03, 2020 in Goodyear, Arizona. Photo by Norm Hall/Getty Images

Major League Baseball owners submitted an economics proposal to the players’ union on Tuesday, and the negotiations have officially begun in earnest. The two sides are still sorting out health and safety issues, but they also need to figure out player salaries for a restart of the season.

The two sides agreed to prorated salaries in March, but the deal included language for revisiting the economics if games were going to be played without fans. That is virtually guaranteed at this point, and so the owners finally proposed how they would further cut salaries. There had been talk of a revenue sharing proposal, but when the union made it clear that would be unacceptable, the league adjusted their proposal.

While it is not a revenue share, the proposal is not making players much happier. The owners proposed a cut in pay that would impact higher paid players more than lower paid players. One thought is that it provides a little more security for the lower paid. The other thought is that it is meant to drive a wedge between the players and divide the union.

The proposal involves different tiers of salary, with players getting a lower percentage of their pay the higher their salary. Passan put together a helpful thread going into extensive detail about what it means. The scale broke down as follows:

  • $0 to $563,500 (league minimum) paid at 90%
  • $563,501 to $1 million paid at 72.5%
  • $1,000,001 to $5 million paid at 50%
  • $5,000,001 to $10 million paid at 40%
  • $10,000,001 to $20 million paid at 30%
  • $20,000,001 and up paid at 20%

It is not a flat rate for a player’s salary, but rather based on a given dollar in the contract. For a player making $30,000,000, the first $563,500 would be paid at 90%, the amount from $563,501 to $1 million would be paid at 72.5% and so forth. Using Mike Trout and his $37,666,666 salary as an example, Passan’s math has him earning $5,748,577. Our friends at True Blue LA put together a breakdown of how this would impact Dodgers players.

There is additional money to be earned if the playoffs happen. The owners proposal would distribute $25 million to the players if the division series are played, $50 million for the LCS, and $125 million for the World Series, with the highest-paid players getting the biggest splits of those distributions.

That provides some bit of evening out, but it also puts the risk on the players. If a second wave of Covid-19 emerges and wipes out the playoffs, the players are left holding the bag.

It’s worth noting the owners proposal is not the end of this negotiation. The players will return to the table at some point with their own proposal and the two sides will attempt to find some kind of middle ground. Reports have said a deal needs to be done by the first week of June to get the season started the first week of July. There’s still some time, but the players counter-proposal will give us an idea of how far apart the two sides are in the negotiation.