Major League Baseball (MLB) clubs are in a pickle with their outstanding debt reaching $8.3 billion, a sum attributed to the downturn brought on by the covid-19 pandemic. MLB commissioner Rob Manfred outlined difficult times ahead for the league’s 30 clubs, which are experiencing a “historic high levels of debt,” he said.
MLB Won’t Weather Another Year
Operating losses hit another $3 billion adding to the franchises’ woes, Manfred continued. The league’s very survival may now depend on how the next year unfolds. Manfred and executives already have plans in place to try and allow limited attendance in stadiums starting next season.
However, the league would struggle to weather another year where its fans aren’t present at the ballpark, and outside forces determine how much teams can’t play and how they can play when allowed to, Manfred continued.
Manfred chose the time to comment well, shortly after the 60-game season wrapped up with the game between the Los Angeles Dodgers and Tampa Bay Rays 3-2. Fans are one of the lifelines baseball teams use to generate additional revenue.
Attendance made up $2.1 million out of the Braves’ $5.4 million per-home game revenue, Fortune reported earlier this year. MLB has been able to partially restore attendance in a bubble environment for the World Series with 11,500 fans present.
Preserving Liquidity, But Raising Debt
Missing gameday revenue and gateway receipts will continue to hurt teams’ purses until such time fans are allowed back, Manfred estimates. The commissioner didn’t give an exact account of what to expect next. In fact, Manfred argued that it’s nearly impossible to know due to the sporadic nature of the virus.
“We’ll just have to get closer and then we’ll make the best decisions we can,” he continued. He admitted that the incurred financial losses have been devastating for the industry and that the ramifications are already present, with clubs undertaking layoffs to cope with a mounting pile of debt.
One good thing that transpired from the situations is that clubs have been able to preserve liquidity, but had to carry that additional debt. The NFL found itself in a similar situation, taking on extra $3 billion debt at the beginning of the season, which now puts the football league’s outstanding debt at $10 billion.
Manfred’s commentary on the MLB’s debt comes amid falling viewership for the World Series opening games with only 9.07 million linear viewers tuning in.