Today’s guest columnist is Chris Koras, partner and head of sports at Working Capital Partners.
In December 2022, I flew to the Dominican Republic to break a year-long contract stalemate. Our firm represented Rafael Devers. The Boston Red Sox had sent ownership and front-office executives to settle the negotiation directly with the player, hoping relationship leverage would carry the economics. It moved nothing.
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We ended the negotiation in writing. Devers would play the season and enter free agency. Days later, facing the credible threat of losing a third consecutive star on the eve of ticket sales opening, Boston moved, agreeing to a record $331 million deal. It worked for one reason: Devers could afford the outcome he was threatening, and the Red Sox could not. Resolve is credible only when you can survive your own threat.
While an individual superstar can force a club’s hand in an isolated free-agency window, the landscape for league-wide labor disputes has fundamentally shifted. Over the past three years, ownership has built a systemic financial wall designed specifically to neutralize that exact leverage across an entire union.
Every negotiation ends at someone’s limit. MLB players are about to go looking for ownership’s, but the ground beneath that search has moved. Ownership wants a salary cap to give clubs long-term certainty over their largest cost. Buyers underwrite predictable margins at higher multiples than volatile ones. The cap is the prize.
Franchise valuations track those long-term economics over on-field performance. Stan Kroenke agreed to buy a controlling stake in the Los Angeles Angels at a record $4 billion valuation—a price that held despite a decade of losing seasons. In modern baseball, parity is a public position; valuation is a fiduciary commitment.
The institutional capital driving those valuations has arrived faster than the market realizes, operating on two distinct fronts: asset equity and debt insulation. Since MLB admitted private equity in 2019, firms including Arctos Partners, Sixth Street and Sportsology have taken minority stakes across 18 of the 30 teams.
Crucially, structures have matured past equity into standing credit facilities. Ares Management lent directly to the San Diego Padres, while Yankee Global Enterprises recently completed a $2.6 billion financing agreement with Apollo Sports Capital to refinance debt and buy out limited partners—all with the December labor expiration and cap proposals already public.
Institutional buyers price a work stoppage as a routine discount rather than a reason to walk away. When a lockout hits, a team’s operating cash flow goes dark, but an owner’s liquidity remains intact through standing institutional bids and private debt.
This insulation changes how ownership calculates risk. A lost or shortened season is a one-time expense, absorbed once. A structural salary cap recurs annually and is capitalized permanently into franchise value at a high multiple. The MLB Players Association estimates the league’s proposed cap changes would cost players over $500 million annually. Applied across 30 franchises trading at revenue multiples, the resulting equity appreciation runs into the tens of billions.
Trading a temporary delay in multibillion-dollar media rights for a permanent reduction in labor costs is a straightforward corporate calculation. The downside got cheaper because it is temporary; the upside got larger because it is permanent.
The players approach this lockout with far less financial architecture. While the MLBPA’s $415 million reserve is impressive compared with the $171 million held prior to the last labor fight, the distinction between the two sides remains structural. A union reserve is a savings account that amortizes—drawn down by legal fees, operations and support for members until it is gone. Ownership’s capital position revolves. It is a bank.
To weaponize this advantage, the 30 clubs have withheld roughly $75 million each in central-fund distributions, amassing a $2 billion liquidity holdback. Conversely, the players’ obligations remain individual, unfinanced and absorbed across 1,200 separate household clocks. A mortgage or tuition payment due in January is paid by an individual household, whether the stadium gates are open or locked.
When traditional lenders decline a career without conventional collateral, alternative capital fills the void—often on terms heavily stacked against young players. Fernando Tatis Jr. took $2 million from Big League Advance as a teenage minor leaguer in exchange for 10% of his future major league earnings, a stake worth $34 million after his contract extension. A judge recently upheld that agreement. When the vast majority of minor leaguers never reach the majors, the arithmetic clears only when the terms on the few who do are punitive enough to fund the rest. Through a long winter, more young players will be forced to sell off pieces of their future just to stay afloat.
Ownership is bringing an institutional balance sheet to a labor fight. Sixty years of union solidarity will be tested by an opponent that no longer needs a baseball season to survive its own demands.
Labor must modernize its financial architecture to counteract this evolution. Relying purely on cash reserves is no longer viable when ownership utilizes revolving institutional liquidity. To retain leverage at the bargaining table, players must establish contemporary financial counterweights, such as union-backed credit lines secured by collective IP and licensing rights, player-driven liquidity funds offering non-dilutive capital to protect younger players from predatory arrangements, and syndicated loan structures to help players maintain household finances through extended work stoppages.
Baseball’s labor pool cannot meet modern Wall Street tactics with a 1970s financial strategy; creating institutional liquidity is essential to preserving player leverage.
Chris Koras is partner and head of sports at Working Capital Partners. He was previously head of baseball at Klutch Sports and an executive at REP1, where he represented the firm’s capital partner, led the baseball division and oversaw its player negotiation operations. During his tenure, REP1 negotiated billions in player contracts and completed a successful sale of the firm.
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