Pirates suspend some 401(k) contributions as they try to ‘hold the line’ on expenses

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PITTSBURGH — As the coronavirus pandemic has brought sports — and pretty much everything else — to a costly and frustrating halt, the Pirates have been forced to mitigate their own financial damage, general manager Ben Cherington said.

With Major League Baseball still mulling dozens of startup plans and trying to let COVID-19 call as many of the shots as possible, the Pirates on Tuesday took a step they hope will prevent further damage during these difficult times. It’s one for which they’re likely going to be criticized, at least until it becomes public that other MLB clubs are considering the same sort of measure.

The Pirates have suspended contributions to employees’ 401(k) plans, a move that affects people inside and outside of baseball operations. Furthermore, vice president of communications and broadcasting Brian Warecki said all members of the executive leadership team have voluntarily taken salary reductions, while the Pirates have also halted fellowship and internship programs.

“(COVID-19) has turned our business upside down,” Cherington said Tuesday on a conference call with local reporters. “Revenues aren’t coming in. Cash is still going out. A big focus of ours in recent weeks has been to try to figure out how to solve for that problem in a way that minimizes impact on our people, their families and our core activities … but with a clear knowledge that we need to find savings in 2020 so that we avoid placing too much long-term pressure on the business and potentially impacting short- or long-term goals.”

The Pirates on Tuesday became the first known team to take these steps, although they’re hardly the only ones thinking about them. Other teams around baseball have endured more severe pay cuts, some of them voluntary.

Mets employees are taking pay cuts for the rest of the year beginning on June 1. Those earning $500,000 or more will incur a 30% pay cut, while those making below $45,000 will lose 5%.

In Cleveland, 42 members of upper management took pay cuts to ensure the rest of the full-time staff would receive 100% of their salaries through June 30.

Another small-market team, the Tampa Bay Rays, made more drastic moves Tuesday, furloughing some staff and cutting the pay of most other full-time employees. The Rays canceled their internship program for 2020 and, like other MLB teams, are handling pay cuts on a tiered basis, with those making more having a larger percentage of pay cut.

The Padres have committed to paying baseball operations employees for the whole year, although at a reduced rate. According to multiple league sources, there are several MLB teams in worse financial shape than the Pirates, who last week followed the industry trend and committed to pay non-playing baseball operations employees through the end of May.

“We are all in this together and have been on board with finding ways to hold the line of some expenses to best position us moving forward,” Warecki said. “Not only to lessen any impact on jobs, but also with investments into our operations moving forward.”

One of the things the Pirates considered was shaving this money off the top for everyone versus furloughing a group of people. There’s no good choice here, obviously, but the hope was to keep everyone employed and avoid any sort of layoffs to achieve the same sort of savings.

“We did identify the retirement contributions, at least temporarily, as an opportunity, an area where we might find some savings without too much impact on people and their everyday lives,” Cherington said. “The full expectation is that contribution will go back into effect as soon as possible. I think that’s a lever, frankly, that other teams either are or will soon or will certainly consider pulling as the year goes on, just because every team is going through that same exercise.”

It’s one Cherington definitely did not expect to go through in his first year, though the former Red Sox general manager expressed plenty of appreciation for his new employer.

“I will say, I’ve been really inspired by not just the level of thought and collaboration amongst the senior leadership team and with (owner) Bob (Nutting) about how to do this in the most thoughtful, human way, but also response from our staff, both on the business and baseball side,” Cherington said.

“Everybody has been overwhelmingly aware and ready to participate in some level of sacrifice to protect our long-term goals.”


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