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Sorry Pirates’ Fans, But The MLBPA Grievance Is A Farce

Pirates general manager Neal Huntington, team president Frank Coonelly and chairman Bob Nutting talk with MLB commissioner Rob Manfred talk before the team takes on the Cubs April 25 at PNC Park.

The MLBPA filed a grievance against four teams–including the Pirates–in February. From Left to Right — GM Neal Huntington, MLB Commissioner Rob Manfred, President Frank Coonelly, Owner Bob Nutting
Photo by Post-Gazette

Back in January, it was being reported that the Major League Baseball Players Association (MLBPA) had concerns about how the Pirates—along with the Marlins—were using their revenue sharing money. Then a month later, the MLPBA filed an official grievance against the Pirates—along with the Marlins, A’s, and Rays—claiming they had concerns with how these clubs were operating financially, specifically regarding revenue sharing money.

While the union may in fact have concerns about how these clubs operate, I believe it has nothing to do with revenue sharing itself. In my opinion, the union’s concerns are broader:

  • It has hit them that they did a poor job of negotiating the newest CBA in December 2016.
  • They realize they didn’t fight hard enough for protection against spending limits that they didn’t believe were a problem at the time.
  • They realize that most front offices now value production from cheap, young labor than they do from expensive, over-the-hill free agents, which is where the real money is for players.

I don’t know whether these statements are true or not, but let’s assume they are. If that’s the case, it’s also my opinion that the union felt they had to do something to show its members, teams, media, and fans that this wasn’t an issue they were going to take lightly. They spent nearly an entire offseason with the best available talent either signing for a fraction of what would have been expected only a few winters ago, or not signing at all. It was a bad look, and they had to make a move.

Personally, the grievance strikes me as a Hail Mary from a frustrated, desperate union that didn’t know what else to do about the current free agent market. They know it probably won’t lead anywhere—MLB has already come out in defense of the teams, saying the claims have no merit—but one of their ultimate goals may have been accomplished.

Many Pirates’ fans view this as a victory in their battle against Bob Nutting. They believe that everyone finally realizes what they’ve been saying all along—the Pirates are cheap, baseball needs to get involved, and Nutting must be forced to sell. But in this case, are these statements true and the desired outcomes actually possible? Much like my thoughts on the union’s stance, the fans feelings are only that—feelings, passion, opinion, and hope. Unfortunately, all these emotional components don’t come into play for what is in all actuality a legal matter. In arbitration, what matters is precedent, evidence, and facts. So, what are the facts in this case, and does the union have a leg to stand on?

A Matter of Precedent

The CBA states that “the Commissioner may impose penalties on any Club that fails to comply” with rules set out for use of the Revenue Sharing Plan; however, since the inception of Revenue Sharing in 1993, it appears that the Commissioner’s Office has never actually levied such penalties against any team receiving revenue sharing.

This could be considered an issue of semantics, however. In 2010, after inquiries from the union, the Marlins, the Commissioner’s Office, and the MLBPA came to an agreement that the team would make better use of their revenue sharing funds—even though the Marlins admitted no wrongdoing in the matter. From 2010 to 2012—the year that Marlins Park opened—the Marlins’ payroll went from roughly $47.5 million to $101.6 million, but was slashed in half come 2013, the first year after the 3-year agreement.

Typically, in a legal matter that has no precedent, a case must be rather strong to set said precedent moving forward; therefore, the question must be asked, “What kind of case does the union have against the Pirates?”

A Matter of Finances

This is where the details of both the CBA and Pirates’ finances are important. The CBA “acknowledge[s] that the Association has a significant interest in any aspect of any of the components of the Revenue Sharing Plan or its operation,” which is what allows the union to file the grievance and question how the Pirates are spending their revenue sharing funds. The union has no say in how other revenues are spent, which is one of the reasons I believe this grievance was actually filed—they weren’t happy with how teams were spending their money in free agency, and this was the only recourse they were legally allowed to take.

While actual revenue sharing amounts aren’t public, Jon Heyman reported the Pirates received $20 million in revenue sharing for the 2017 season, which is the season covered by the grievance. This amount seems to jive with Frank Coonelly’s claims that the Pirates’ revenue sharing has gone down in recent years. According to the CBA, “if a Club’s Actual Club Payroll…is equal to less than 125% of its revenue sharing receipts in a given Revenue Sharing Year, the Club shall have the burden of establishing in any Grievance that its use of revenue sharing receipts was consistent with this subparagraph 5(a).” We’ll get to Subparagraph 5(a), but this is basically saying that if Heyman’s report is correct, if the Pirates’ payroll was less than $25 million, they would have to prove that they were spending the funds correctly; however, they obviously aren’t anywhere near that level, so the burden of proof is on the union to show that funds are being misappropriated. As part of the grievance, the union has a right to all financials submitted as part of the revenue sharing process—including the Pirates’ plan of how to use the funds. This begs the question; what constitutes appropriate revenue sharing expenditures according to these plans?

Intentionally or not, the CBA is rather vague on how revenue sharing funds need to be used, simply stating that “each Club shall use its revenue sharing receipts…in an effort to improve its performance on the field.” One sentence in a 359-page document can make for murky translation, and while it doesn’t state what revenue sharing funds should be used on, Article XXIV(B)(5)(a) does state what they shouldn’t be used for:

payments to service acquisition debt or any other debt that is unrelated to past or future efforts to improve performance on the field; payments to individuals other than on-field personnel or personnel related to player development; payments to entities that do not have a direct role in improving on-field performance; and distributions to ownership that are not intended to offset tax obligations resulting from Club operations.

Since suggestions of how to spend these funds aren’t readily available, we must work backwards to determine how the funds can be used since we know how they can’t. The following are expenses that would probably be deemed worthy, along with amounts (if they are readily available):

Payroll: This is obviously the main contention of the grievance, and as I calculated recently, the Pirates ended 2017 with a payroll of nearly $101 million, and that doesn’t even count benefits of at least $7.3 million.

Draft Bonuses: For the 2017 Draft, the Pirates had a $10,135,900 pool allotment, with the right to spend up to 5% more without losing draft picks. The Pirates spent $282,400 of that overage, accounting for pool expenditures of $10,418,300, which doesn’t even account for additional draft bonuses that aren’t tied to the pool.

International Bonuses: This is kind of uncertain, as International Draft Signing periods go from July 2nd to June 15th, while a “Revenue Sharing Year” is “the fiscal year of the championship season that falls in that year.” Basically, this would cover the back half of the 2016-17 International Signing Period and front half of the 2017-18 period. The pool for 16-17 was $2,044,800, while the 17-18 pool is $5,750,000, which the Pirates are still using. Split these in half and you’re looking at roughly $3,900,000 spent, which only accounts for the pool itself, as—like the draft—not all international signings come out of the pool.

Personnel: This encompasses any individual tasked with on-field or player development. This would include coaches and scouts, and while I’m not sure it would include Neal Huntington’s salary—which would be among the largest—it would certainly include Clint Hurdle’s roughly $1 million salary, as well as many on the Baseball Operations side.

Player Development: The Pirates have four full-season affiliates, along with four short-season affiliates (five this season, as they’ll have two Dominican Summer League teams). This not only accounts for salaries of these roughly 250 players, but also any player development costs related to the affiliates.

Debt: It’s true that the agreement says the funds can’t be used to service debt, but that’s acquisition debt or any other debt not related to on-field performance. Therefore, something like payments to pay down any liability taken on for a project such as the new academy in the Dominican Republic in 2009 or renovations to McKechnie Field (now LECOM Park) in 2013 would qualify. These expenditures cost roughly $5 million and $10 million, which surely weren’t cash expenditures.

Everything Else: While I tried to point out the biggest and most noteworthy expenses, with a definition so vague, any number of expenditures could probably be classified or manipulated to fit revenue sharing regulations. The important thing to remember, and what many fans—and Scott Boras*—don’t seem to recognize, is that there are all kinds of expenses associated with running a baseball team, not just payroll.


So, does the MLBPA have a case? We are looking at an estimated $20 million in revenue sharing and $123.6 million in estimated qualifiable expenses, and that’s just the amounts that can be pinpointed. Of course, dollars are fungible—a dollar spent is a dollar spent—and it’s hard to determine what revenue source said dollar can be attributed to. So, the question in that case is, does the union have to prove whether the Pirates simply didn’t spend the $20 million, or whether they could have kept the same expense levels they did without the $20 million? The CBA doesn’t clarify this, but judging by other verbiage in the document, I would assume the latter. Either way—if I had to guess—it appears that history and the books are on the Pirates’ side in this case.

Many fans have problems with how the Pirates spend their money, but this case has little to do with the whole picture. This grievance has nothing to do with how the Pirates spend their revenues from ticket sales, TV contracts, or any other revenue source; it only has to do with revenue sharing funds. It’s also not about the spirit of the rule, but only the letter of it. Just because fans feel this money could get put to better use, or that they should be spending more than this money, that doesn’t matter. All that matters are that they are spending their revenue sharing funds and they are spending them correctly.

*I typed this with the idea of linking to a Pittsburgh based article quoting Boras as saying profit was equal to revenue minus payroll. I, along with other readers, kindly pointed out to the author on Twitter that this was a ridiculous statement and asked how they could print it with a straight face, but I never reread the article afterwards. It appears to have been updated, so maybe we actually did some good.

Ethan is a Pirates contributor to The Point of Pittsburgh. An Accountant by trade, Ethan is passionate about the business of sports and won't apologize for enjoying it more than the actual games. He's a believer in analytics, hasn't played a game since little league, and can be contacted via Twitter @EthanHullihen

8 Comments on Sorry Pirates’ Fans, But The MLBPA Grievance Is A Farce

  1. To be honest, I had forgotten about this. IMO, I doubt if anything will come of it.

  2. Harry Schade // April 17, 2018 at 10:37 AM // Reply

    Thoughtful analysis. Thank you.

  3. The Pirates, along with a couple other teams, were singled out by the union. It is easy to see why. With year after year of bottom feeder payroll, even despite record attendance, revenue sharing, and high operating profits. It doesn’t take an Einstein to figure out that something is rotten in the state of Denmark. These are more than just “feelings”, as the Nutter author tries to portray. They are hard core facts.

  4. Daquido Bazzini // April 17, 2018 at 3:25 PM // Reply

    I’m not falling for it for a minute, but MLB probably will.
    However, it’s always nice to pick a Pro-Nutter topic….Dress it up intellectually and back the Regime.
    It should be good for a couple free corndogs and a coke.
    If you’re lucky, you might get a Pittsburgh Paella thrown in for the family.

  5. I went to my first Pirates game 44 years ago, and have gone to multiple games every year since. I had full season tickets for the last four years of Three Rivers Stadium and the first four of PNC Park. I had multi-game packages in almost every year since I got out of school in 1990. And I will not buy a Pirates ticket or attend a Pirates game until Bob Nutting sells the team to someone who doesn’t prioritize profit over all else. This obviously means that I will most likely never attend a Pirates game again.

    It’s unfortunate that a writer from an otherwise solid site would choose to so blatantly defend the indefensible that is Bob Nutting’s greed.

    • Kevin Creagh // April 18, 2018 at 6:30 AM // Reply

      What Ethan is attempting to say is a little more nuanced than just defending greed. What he’s saying is that this particular grievance is just window dressing by the MLBPA to their union members, based on certain provisions in the CBA that he explained regarding percentages of revenue sharing received.

      I’ve long been saying that Bob Nutting has been underfunding the payroll by $15-20M, based on projected revenues and the 45% rule-of-thumb of revenue to payroll. This past offseason was especially frustrating for me, based on how the free agent market unfolded.

      • Kevin Schafer // April 18, 2018 at 10:50 PM // Reply

        I’ve long been saying that Bob Nutting has been underfunding the payroll by $15-20M,

        AT LEAST.

        If Forbes has it right, then it’s more like $20 to $30 million.

  6. The fact that Nutting is spending far less than he could be does not mean that the MLBPA grievance has any merit. The matter will proceed to Arbitration and the parties will be able to take depositions and exchange documents that will clearly spell out if the Pirates have failed to live by the revenue sharing rules by spending it appropriately. I don’t know the answer to that question, but my gut tells me that not only is Nutting cheap, he’s also wily and smart, and technically he will have crossed all his T’s and dotted all his I’s so that he won’t be in violation.

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