I've done a bunch more thinking about the @MLB @MLBPA negotiation, fueled by readers' comments as well as a deeper think on the dynamics between the parties. It also helped me reframe the players' position relative to how most people (and certainly I) had thought about it. /1

For starters, let's be clear. The disagreement is about how to best pay for losses sustained by a business. It is no more complex than this. The owners have suffered losses and face additional losses before prospects are likely to improve. This is what we're dealing with. /2

In business, when this happens, the owners of the business need to figure out how to pay for these losses. Sometimes businesses have enough cash to deal with them, other times they don't. Let's for the moment assume that the baseball owners don't have the cash. Now what? /3

I offered some suggestions in yesterday's post. But I should have started with first principles and asked: what is the best metaphor for baseball players in an ordinary business? I kept throwing around the term "employee" but this actually isn't correct - they're DEBTHOLDERS /4

This is when the light bulbs went off. The players aren't at-will employees, they're akin to buyers of bonds who help finance businesses. Rather than give cash upfront for future repayment, they give services. /5

But just as companies can't normally disavow this obligation, neither can the owners. So to be clear, this isn't like a normal business either firing their employees or forcing pay cuts to generate financing, the owners have the contractual obligation to pay. /6

Just like the relationship between businesses and their bondholders. And when businesses run into trouble, they have to negotiate with their bondholders and try to induce them to restructure these obligations - unless they declare bankruptcy, which is a different matter. /7

So as I said yesterday's post, this really reduces into how owners finance current and projected losses. But the status of the players heavily impacts their negotiating position, which is actually stronger than I had fully internalized. /8

So what are the possibilities? To extend the debholders' metaphor, owners could offer a mix of lower cash payments (salary cuts) in exchange equity upside (higher % of future share of revenues for a period, a share of the increase in appraised team values post-recover, etc.). /9

The owners hold the equity. The players hold the debt. If the owners can't pay the debt, the owners need to offer some of their equity. Either the owners have the wherewithal to pay the debt (bank loans, issue new debt, sell part of team) or they don't. /10

And if they don't, then the debtholders' should rightly assume that in exchange for relief they should get a piece of the equity. As mentioned, this can be through a royalty (revenue share) structure or an increase in asset value (appraise team values) approach. /11

But these are just mechanics. The dynamics are crystal clear. Hopefully this is helpful to @MLB @MLPBA and the players who have commented such as @Max_Scherzer and @BusterPosey. /12

One more thought for those who think both sides suck because of the "millionaires vs. billionaires" narrative separate from principle. All across the globe "the best at x" in the world receive large amounts of money. It could be athletes, media stars, executives, whatever. /13

The fact that athletes perform in front of live crowds, and have contracts, is what makes their presence so powerful, and the lack of their presence so galling. But we are all part of this system. This is how they're valued by society. It's not their "fault." /14

They are taking what society gives them. So sure, I get that the optics are bad, but that's really not the point. They're players, parents, children, siblings, friends - they're normal people. They just happen to be among the rare few who can do what they do. Let's play ball!