Baseball’s Wage Scale: An Argument for a Safety Net

Over the weekend, Pirates ace Gerrit Cole expressed some unhappiness with the organization based on his 2016 salary.

On Saturday, Cole grudgingly signed a deal for $541,000 in base salary. That’s the same amount he made last year — $531,000 in base pay play a $10,000 bonus for making the All-Star team.

According to Cole, the team’s initial offer last week was for $538,000 – which was less than his total pay last year. The team refused to go higher than $541,000.

“They even threatened a salary reduction to the league minimum if I did not agree,” Cole said.

As a pre-arb player, Cole’s salary is dictated to him by management, and per the rules of the Collective Bargaining Agreement, he has no recourse but to accept whatever they offer. If he chose not to sign for the $541,000 they offered him, they had the power to unilaterally renew his contract at whatever price they wanted, even down to that $507,500 league-minimum number. Until a player reaches arbitration eligibility, they have no negotiating power whatsoever, so even elite players like Cole make something close to the league minimum.

MLB’s pay scale is intentionally designed to restrict the earnings of young players, with the resultant savings being passed on to veterans who are free to negotiate their wages in free agency. As with many unions, length of service is a larger factor than performance in determining wages, with younger players subsidizing the wages of older workers. Cole understands this system, and his grief doesn’t appear to be with the wage scale itself, as much as the Pirates’ implementation of their system of pre-arb raises.

Many organizations have created algorithms that generate a number for pre-arb players based on their prior season performance, so that they can remove the human variable from the equation and simply say that every player’s pre-arb contract is handled objectively. As GM Neil Huntington said in response to Cole’s public comments:

“Gerrit strikes a note that most people can empathize with,” Huntington said. “I’m sure there are many people in this world who don’t feel they are adequately compensated for what they do. The challenge we have is there is a collectively bargained system in place and it’s been in place for years.

“Once you make an exception, how do you draw the line?” Huntington said. “If it’s only for MVPs, what if someone wins a Cy Young? Or what if someone finishes fifth in the Rookie of the Year voting? Some clubs have the ability to go in different directions, higher or lower. We believe our system is consistent and it’s the right way to do things for us.”

Of course, he also notes that because they feel Cole made “a fair point,” they’ve manually adjusted his salary up to the $541,000 he earned a year ago, and with the same $10,000 bonus for reaching the All-Star Game, so Cole could make up to $551,000 this year. The Pirates clearly don’t want their ace to be venting publicly about his earnings, but at the same time, they don’t want to establish a precedent where they’re raising their own costs during the period of time in which the system gives them the most latitude in minimizing their expenses.

But this brief spat shines a light on a larger issue, which I tackled in some depth in my Hardball Times Annual piece this year, which just happened to run over at THT today. Baseball is undergoing a dramatic demographic shift right now, with more and more value being created by young players, and teams are shifting their resources away from 30-plus players in a significant way. Borrowing a table from that THT piece:

PERCENTAGE OF SALARY, BY AGE GROUP, 2004-2013
Year 25 & under 26 to 30 31 to 35 36 & up
2004 3% 35% 40% 22%
2005 3% 33% 41% 22%
2006 3% 32% 48% 18%
2007 4% 30% 47% 19%
2008 4% 28% 47% 21%
2009 4% 32% 50% 15%
2010 3% 33% 50% 14%
2011 4% 36% 44% 16%
2012 4% 40% 41% 15%
2013 4% 42% 38% 16%

In 2003, players 31 and older made 62% of all the money paid to players in MLB; by 2013, that number was down to 54%, with almost the entirety of that shift going to players in the 26-30 bracket. These numbers reflect the trend of locking up players to long-term extensions before they reach free agency, guaranteeing them more money during their more productive years in exchange for not having to sign on for as many unproductive years at the end. Essentially, the teams and players themselves decided to shift the wage scale, moving more money into the earlier years of a player’s career.

With the current CBA expiring on December 1st, the wage scale is likely to get more attention than it has in other years, as the player’s association has to decide whether they want to continue to back a platform that intentionally takes money from younger players and gives it to older players at the same time that teams are attempting to take money from older players and give it to younger players. But, as I noted in that THT Annual piece, the issue isn’t solved by simply raising the minimum salary.

This is the same issue the league would likely raise if the players asked for a higher league-minimum salary. A significant increase in the minimum salary would act as a regressive tax, increasing the marginal costs for the lowest-spending teams more than the teams in large markets with plenty of disposable income. While the minimum salary is likely to increase in a significant way, using a league-wide increase in the baseline salary of all players would make it more difficult for the league to sustain the current level of competitive balance; the Dodgers and Yankees can absorb an extra $10 or $15 million in mandatory spending a lot easier than the A’s or Rays can.

The wage scale issue is inextricably linked to the competitive balance issue, and any move towards flattening the pay between young and old players will directly benefit larger-revenue organizations, as they will be the ones benefiting most from a decrease in free agent prices. If you double the league-minimum salary, the teams operating on payrolls under $100 million will be most heavily impacted, especially given that arbitration salaries will also rise if the minimum salary goes up.

The current evolution towards production from younger players has been a driving force in the parity the game has experienced lately, as lower-payroll teams have been able to find and develop elite players before they get too expensive, and the decreasing production of older players has made it harder for high-revenue teams to simply buy elite performance on the open market. But that strategy becomes more difficult if players cost more before they reach free agency, and MLB is likely not in a big hurry to implement financial advantages for high-revenue clubs, which may erode the parity that they’ve worked so hard to achieve.

So if you can’t flatten the wage scale without harming competitive balance, but the changing demographics of the sport are incentivizing teams to reduce spending on older players, how do we reconcile these competing ideas? In the THT piece, I put forth a suggestion for a broad safety net, something akin to worker’s compensation, as something to consider.

If an increase in revenue sharing proves too difficult, the MLBPA may have to get creative. One interesting suggestion I’ve heard bandied about, albeit as a long-shot possibility, is that MLB could fund a comprehensive insurance plan for all players—similar to worker’s compensation—providing a significant benefit to players whose careers are prematurely derailed by injury. Currently, players are able to buy individual insurance policies, but they are prohibitively expensive and often don’t provide payouts unless it is proven that the injury sustained is career-ending. These policies are often of little help to a pitcher who undergoes Tommy John surgery, missing out on years of prime-aged earnings, but has no desire to retire after one elbow problem.

With the significant increase in Tommy John surgeries, pitchers are particularly harmed by a system that limits their earnings until the second half of their careers, so a comprehensive insurance plan that paid out a percentage of expected earnings while a player is rehabbing may be one way to not only distribute a higher percentage of revenues to the players, but to compensate the players who carry the most risk.

Additionally, a comprehensive insurance plan would limit the needs of players to self-insure by signing early-career extensions that keep them from reaching free agency after six or seven years. With a systematic safety net in place, individual players would not be carrying as much personal risk, and would have more incentive to try to maximize their earnings through arbitration and reaching free agency in the shortest time possible. Beyond just the actual payouts to players who become disabled, a worker’s compensation agreement would push more players into the open market, and theoretically drive an increase in wages by reducing the number of star players playing at wages that don’t reflect their contributions on the field.

The idea is light on specifics, as I’m not claiming to have any kind of magic bullet here, and people I’ve talked to in the industry about this idea have expressed significant skepticism that either side would be all that interested. After all, Gerrit Cole isn’t complaining that the wage scale is withholding his earnings and putting them at risk due to his chances for an arm injury; he’s noting that he simply didn’t get a big raise after performing well last year.

But I do think there’s merit to the idea of creating a safety net for players who are intentionally underpaid early in their careers, especially pitchers. If MLB had a system in place that allowed young players to be guaranteed some kind of significant compensation in case of a serious injury, then they could offload some of the risk that comes with being underpaid during your productive years, and could essentially raise the level of compensation for young players relative to older players without changing the wage scale itself.

It wouldn’t help Gerrit Cole feel better about his 2016 salary, necessarily, but if highly productive young players knew that they had guaranteed income in the future as long as they remained productive — either because they’d stayed healthy enough to reach free agency, or because the safety net paid them a percentage of loss potential wages if they suffered a significant injury before reaching free agency — then the inequity of paying guys like Cole a fraction of their market value would be reduced to some degree.

The logistics of implementing the system are not simple, but I’d at least like to put it forward as a point of consideration as both sides attempt to determine how to compensate the game’s best players for their production without making it more difficult for low-revenue teams to remain competitive.



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Dave is the Managing Editor of FanGraphs.


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tz
Member
tz
2 months 27 days ago

I thought about Cole’s comments when I read your article too. It leads me to believe that it might be better for baseball to pull arbitration eligibility back to one full year of service, which would boost the relative pay for guys in that category, and maybe have a ripple effect on players with 2-6 years of service time.

I like the safety net idea as well, if there’s a way to actually implement it.

TKDC
Member
Member
TKDC
2 months 27 days ago

I agree with this 100%. It would not even need to be that much money if it were implemented correctly. Assuming the hope would be that years 4-6 end up the same as they are now (or years 3-6 for super 2 guys), you’d likely be starting out with guys making somewhere between the league minimum and $1.5 million in almost all cases (maybe $2.5 million for a guy like Trout coming off a 10 WAR season).

It just seems crazy that you just pay everyone pretty much the exact same for their first 3+ years in the league.

Famous Mortimer
Member
Member
2 months 26 days ago

Sounds reasonable. Really, the young players need to be organising inside the MLBPA, because there’s no way the veterans can continue to justify their monster-sized slice of the pie.

tz
Member
tz
2 months 25 days ago

I’d think agents would be all over this too. First, it would boost the overall share of revenue going to the players. Second, over time it would decrease the relative appeal of younger players, which would help veteran players in their later years.

afnj
Member
afnj
2 months 27 days ago

If players are concerned about long term security, there is nothing stopping them from signing longer term deals. Cole wants to have his cake and wants to eat it to.

macesq
Member
macesq
2 months 27 days ago

Of course, any longer term deal is signed in light of the fact that the system currently gives him no security. To stay on the baked goods theme, that’s because owners say to the players providing the majority of their value in 2016: let them eat cake.

Shirtless Bartolo Colon
Member
2 months 27 days ago

The Mets told me they’d let me eat cake. That’s why I keep signing with them at dirt cheap prices.

finman
Member
finman
2 months 27 days ago

Well, if the Pirates don’t wish to offer Cole a longer term deal (because it would cost them more money sooner), then that would be something stopping Cole from signing one.

Zonk
Member
Member
Zonk
2 months 27 days ago

What if this “Insurance” was funded the same way workman’s comp insurance is funded? A payroll tax. Rate would be higher than RL, but it would be proportional to what that club was spending in payroll, and like RL could be adjusted/set every year.

The collected “Tax” would go into a central MLB fund that would pay the insurance costs

Arjon
Member
Arjon
2 months 27 days ago

If it’s an insurance-type situation, where does the money to fund payouts come from? The players association seems likely to want the teams to foot the bill, but if so, how is that effectively different from raising the MLB minimum unless it’s a payroll-related “tax” which seems like it would raise other objections? It could be co-funded, but would the players go for that?

frugalscott
Member
frugalscott
2 months 27 days ago

I see the issue, but fail to see the problem or any need to solve it. MLBPA has negotiated their collective bargaining agreement in the way they feel best serves their members while working within the framework of needing to provide some degree of concession to the owners. Guys who reach free agency can maximize their earnings (and do). The flip side for the owners has to be a space where they can have some control and cost certainty for the players they sign/draft/develop.

Gerrit Cole got an $8 million signing bonus. By the time this season is over, he will have just turned 26 and will have earned approximately $10 million overall. If he never throws another pitch, he is young enough to have a long and productive career in some other industry. He does not need any insurance (that he is not paying for himself) to assure that he never has to work in any other capacity.

It feels like we are saying that because he has an extraordinary ability he should be assured of being able to make his living as a result of that ability, even if he no longer has it. I don’t see the logic there.

This ties into the idea that the QO needs to change because a few guys made poor decisions this winter and suffered for it. The system is there. If you play within the system, you get what the system gives you.

I completely understand that some players suffer within the current system. I also understand that some teams (and their fan bases) suffer within it as well. No one is completely happy. Often, that is the sign of a relatively fair deal.

Within the current system, salaries are going up. According to BP, teams spent a total of 2.2 billion on salaries in 2005. In 2015, that number was 3.7 billion. That’s more than a 50% increase. There are multiple factors involved here and it may be noted that revenues have grown faster than salaries in that period, but it is also true that all teams, especially those that feel they need to plan their expenses carefully, have been spending more and more on scouting, analytics and international signings.

Overall, players are well compensated for what they do and that compensation is growing at a healthy rate. There is an adage in the legal profession that tough cases make bad law. We should not be making sweeping decisions/generalizations based on Gerrit Cole, Mike Trout (remember when we had this discussion when he was renewed a couple of seasons ago?)Dexter Fowler or Ian Desmond.

My thought is to just let the MLBPA and the owners continue to negotiate and make adjustments in each direction as they see fit to try to maintain balance. That seems a better plan than for us to try to solve their problems when we appraoch them with our own biases toward either management or labor.

Famous Mortimer
Member
Member
2 months 26 days ago

I think your comment about the QO is a complete straw man – have you got any quote that backs you up?

Curacao LL
Member
Curacao LL
2 months 25 days ago

A quote? It’s self-evident.

A few guys decided they could do better than $15.8M; it turns out by the numbers they made poor choices, having to settle for a lower AAV (and in Desmond’s case, only the one year). They gambled and lost.

All this stuff (three years at/near minimum, QO…) is stuff the union agreed to. Now Gerrit Cole has to somehow try to feed his family on $541K/yr., and Desmond on $8M. Oh the humanity! So they need to get their union bosses to negotiate for the whole membership, not just the post-arb guys.

Eminor3rd
Member
Eminor3rd
2 months 27 days ago

Would this not also harm parity? Low revenue teams are able to retain the services of their young stars by purchasing their players’ risk. If teams lose this leverage and more players get to free agency, are we not then distributing talent back toward the biggest spenders at the top?

srpst23
Member
srpst23
2 months 27 days ago

Did he already spend his record $8 million signing bonus? I mean that was literally the largest singing bonus by a drafted player ever. How much more does he want before arbitration? If he keeps pitching well the Pirates will probably have to trade him like David Price anyways as his last year of arbitration will be very expensive.

finman
Member
finman
2 months 27 days ago

So, if we replace Cole with DeGrom, would your response be the same? Degrom’s signing bonus in 2010 was $95,000. If the Mets give him a take-it or leave-it “raise” of 1.88%, is he allowed to complain?

srpst23
Member
srpst23
2 months 27 days ago

Well people might be a little more sympathetic towards him (approx $1.1 in career earnings vs approx $10 million), but lets not act like either is hurting. The MLBPA negotiated this deal so they have to deal with it like it or not. I actually don’t think that Cole’s statements are necessarily his own. I think that it is just more posturing by Boras. I don’t blame the Pirates, why should they pay him more, what incentive is there for them. Cole isn’t signing a long term deal.

jfree
Member
jfree
2 months 27 days ago

What incentive is there for ANY player in Pittsburgh to perform better during their seven years of indentured servitude? If Gerritt Cole can’t get paid for performance – then no one else can either.

Pittsburgh has designed its pay system to mimic a government bureaucracy. You gotta be a real moron to think that that can create success. I’ve been generally impressed with Pittsburgh as a ‘small-market’ model. But maybe they really are just a two-bit mom-and-pop shop owned by a millionaire looking to milk subsidies from taxpayers and other teams.

RoyalsFan#14321
Member
RoyalsFan#14321
2 months 26 days ago

Free Agency. That’s the incentive.

Perform poorly and you can hang out with Pedro Alverez.

Famous Mortimer
Member
Member
2 months 26 days ago

“Free agency” is a good argument for playing well in your walk year, but a poor one to keep slogging for your team when you can see it’s your skill that puts asses on seats, but your team gives you absolutely no reward other than the absolute minimum possible.

rosen380
Member
rosen380
2 months 25 days ago

So a replacement level player with a 4 win season at age 28 is bound to get a similar FA deal as a player who average 4 wins for 6+ years?

What about in arbitration? Does performance not play a role in what you get, or would a replacement level player have gotten the same $48M that David Price got?

finman
Member
finman
2 months 22 days ago

I only picked deGrom as an example of someone with similar success and time. Here’s the other shoe:

http://espn.go.com/mlb/story/_/id/14900603/feeling-undervalued-jacob-degrom-declines-sign-new-york-mets-contract-protest

The Mets are paying him more than Cole is getting, and there doesn’t appear to be any acrimony. The Mets didn’t threaten to drop him to the minimum if he didn’t sign, as the Pirates did to Cole.

frugalscott
Member
frugalscott
2 months 26 days ago

Sure, anyone can complain. The point is that this isn’t anything we should be wringing our hands about. It needs no solution. Teams do this all the time. Every team does it to some extent. It’s the only place they have to exert some control over costs.

This is really not about Cole or even the theory. It’s about Scott Boras and also about the Pirates. Boras is a drama queen. He feels that is his best approach to best represent his players. That’s fine. On top of that, everyone loves to kill the Pirates. Apparently, they are gaming the system and pocketing millions of dollars in revenue sharing each season and not spending on their team.

It comes down to whether you believe the narrative or whether you take a closer look at what is really happening. The Angels had Mike Trout put up 10+ WAR in 2012 and he got just 12k more than the minimum in 2013. The Yankees paid Dellin Betances $2100 above the minimum in 2014. He put up a 3+ WAR season and was paid just $500 more than the minimum in 2015. Neither play for the Pirates and neither are represented by Boras. Though there was some controversy over the Trout situation it didn’t stop him from signing a long term deal with the Angels.

Most players and agents see the situation and how it works and they understand it and work within it. Some feel it is in their best interests to make noise, though there is really nothing they can do about it.

The Pirates are not the bad guys here. They have, over the last several seasons, invested in scouting and signing guys wherever they can find them. They have built both a winning product on the field and a solid minor league system that should help them through the times when guys like Cole decide to take the money and run.

Famous Mortimer
Member
Member
2 months 26 days ago

So your argument is people should just shut up about what they see as manifestly unfair?

rosen380
Member
rosen380
2 months 25 days ago

“So your argument is people should just shut up about what they see as manifestly unfair?”

It is what the league and MLBPA agreed to. If it is such a bad situation, why would the organization whose only job is to look after the interests of the players let this happen?

EMH
Member
EMH
2 months 12 days ago

So the current system is perfect and should never be changed? The CBA is regularly re-negotiated as the game evolves. If it can be improved, why not discuss it?

The teams aren’t the “bad guys”, agreed. But that doesn’t mean there’s no reason to consider changing the system to better reward performance in the future.

theorioleway
Member
theorioleway
2 months 27 days ago

I’m a little confused about the presumption that a flatter payroll structure benefits the richest teams. Is it because the marginal dollars available to small market teams to procure market rate talent are now fewer, exacerbating the relative difference between the haves and have nots? Given the various constraints on how talent is acquired, I think this is far from clear. For instance, if young, cost controlled players suddenly cost more, their value as amateurs declines, meaning small market teams might be better able to compete for international talent or fund their draft pool. As we’ve seen in the latest CBA (international bonus pools, draft pick compensation), restrictions on a purely market base allocation have lots of unintended consequences and foreseeing their impacts ahead of time can be quite difficult.

jfree
Member
jfree
2 months 27 days ago

What a prick Huntington is. This is a perfect example of something that doesn’t have ANYTHING to do with the CBA. The Pirates have chosen (via their ‘algorithm’ – which quite clearly doesn’t reward ‘performance’ much at all contrary to his assertion) to be tightwad assholes during the one period when they reap massive financial rewards because of their anti-trust exemption created monopoly power. As a small-market team, they are unlikely to ever be active much in the FA market.

Who on Earth can actually think that poisoning the well with a potential long-term core player is worth saving a few thousand dollars? Even if Cole, by hiring Boras, is playing this game too. The personification of ‘penny wise and pound foolish’.

vivalajeter
Member
vivalajeter
2 months 27 days ago

Of course it has to do with the CBA. In their first few seasons in the majors, the team picks their salary. The Players Association agreed to that in the CBA.

As for poisoning the well, I doubt this is something that will linger. As you said in the prior sentence, they are unlikely to ever be active much in the FA market. Assuming he continues to pitch well, he’s gone as soon as he’s eligible for Free Agency. If they can’t sign him to a long-term deal, then there’s not much incentive to pay him more than they have to right now. It’s not like he’ll give them any sort of future discount because they were kind to him this off-season.

jfree
Member
jfree
2 months 27 days ago

The CBA only creates a league minimum and other rules (eg arbitration/etc). Everything else is completely up to the team – as you yourself state – ‘the TEAM picks their salary’.

And I’ve designed incentive compensation plans. The purely financial incentives that the Pirates have created here are perverse. By being as cheap as possible during their period of control, all they do is transfer more value to the FA players (which is a market that Pittsburgh doesn’t benefit from) and create zero rewards/incentive for a player to go above-and-beyond during their team control years (which Pittsburgh is much more reliant on).

Pittsburgh could quite easily pay more to MiLB and ramp up pre-arb more (merit pay works in every other organization – and its not rocket science) – and likely recoup that negligible cost on either the front-end (lower signing bonuses because its a better organization to develop in) or the back-end (yes – a minor hometown discount because inertia has a chance to work magic after 7 years in a ‘better’ organization)

It isn’t the CBA that forces Pittsburgh to do this. Pittsburgh CHOOSES their path. And it is a path that ends up benefiting the big-market FA teams – because they end up with a lot more players choosing to escape from tightwads. Supply and demand 101.

srpst23
Member
srpst23
2 months 27 days ago

Well since he is a Boras client, there is no such thing as “good will”. He’s not signing an extension. The Pirates are a business, not a charity, why would they spend more on payroll than necessary. Do you honestly think that if the Pirates gave him a million this year that he would take a huge discount on a long term deal. If you do, I have some oceanfront property in Kansas to sell you. How would the Pirates paying twice what is required on a pre-arb player affect what the Yankees or Dodgers do in free agencey. The two are totally unrelated.

jfree
Member
jfree
2 months 27 days ago

This really has nothing to do with Pirates v Cole individually. It has everything to do with Pirates v ALL their players. Their ‘algorithm’/system/etc.

And yes – every single organization out there that has to COMPETE for talented people pays them more than they do less-talented people – because otherwise talented people check out.

Just because MLB has the anti-trust exemption so talented people cannot actually leave doesn’t mean a well-run organization should change that competitive mindset. Because there are a lot of ways talent can check out anytime they want but never leave (and not just in Hotel California)

vivalajeter
Member
vivalajeter
2 months 26 days ago

Your argument makes a lot of sense in an everyday job. People are free to leave their company whenever they want, or switch jobs within that company, and if a group (or company) pays their higher performers, their higher performers are more likely to stay.

That’s simply not the case in MLB, due to the CBA. They have control of Cole for a set number of years, and then he’s gone. Whether they give him a nice raise or give him a $10K raise, it doesn’t matter – he’s leaving (unless they pony up when he’s a free agent). His incentive to perform doesn’t decrease. He’s going to pitch as well as he can regardless of how they handle his raises, for a few reasons. First of all, the better he pitches the richer he’ll get through arbitration. Second, the better he pitches the richer he’ll get through free agency. And third, every player wants to win. As an elite pitcher, he wants to go out and win the CY Young every year.

As for what this means for future draft picks, it shouldn’t impact them. As mentioned earlier, they gave him the highest signing bonus of all-time when he was drafted. Future picks won’t turn that down because they might not get bigger raises pre-arb. If it was an open draft, that might be different. But since a player has to sign with the Pirates or wait until next year, this is a non-factor.

And then when you look at other players who spoke out, they didn’t hold it against the team. Trout spoke out, and then signed a deal selling some FA years. Cole Hamels spoke out when he was younger, and less than a year later he signed a deal locking up his Arbitration years – and then he signed an extension to stay with the Phillies. I highly doubt this would happen with here due to the Boras factor, but that’s also the reason he’ll likely leave the Pirates regardless of his raises over the next couple years.

jfree
Member
jfree
2 months 26 days ago

I actually agree with you re Cole/Boras. It seems completely reasonable for Pittsburgh to believe that there is nothing they can do with that player – so don’t spend anything to even try. Hey – put in an explicit ‘Boras flag’ or ‘not gonna extend flag’ in the algorithm that deducts 100% of any pay increase due to performance. If the player bitches about it, then hints can be dropped about why it is being done and that is a consequence of player decisions.

But the way this issue is presented, it seems a lot bigger than just one players impact. At core, it forces players to look out for their welfare via the union – because the team won’t ever be a ‘good faith’ partner. And that’s the worst possible outcome for a small market team cuz the union will always ally with the bigger pocket teams.

Famous Mortimer
Member
Member
2 months 26 days ago

So, vivalejeter, you think incentive-based pay, unlike every other business on earth, doesn’t work in professional baseball for some reason?

rosen380
Member
rosen380
2 months 25 days ago

“So, vivalejeter, you think incentive-based pay, unlike every other business on earth, doesn’t work in professional baseball for some reason?”

The CBA specifically limits the teams ability to put in incentive-based clauses, so the teams and PA have decided that players should generally not get incentive-based pay.

Granted once the players get to arbitration and FA, isn’t the incentive that you’ll have a third party [or 29 third parties] there looking at what you’ve done to help set you future pay rates? That seems like an incentive to perform.


This all said, how many businesses really have an incentive-based system? Sales folks on commission, I guess. At my company, sales aside, the factors are job title and years of service. And there certainly isn’t a high-end that is 60x+ of the minimum.

vivalajeter
Member
vivalajeter
2 months 25 days ago

Mortimer, what I’m saying is that I don’t think his performance will suffer from this. Whether they gave him a $100K raise, or gave him the $540K offer that they wound up giving him, I would expect the same performance either way.

And MLB does have incentive-based pay. The better he pitches, the more he’ll make in arbitration. But pre-Arb salaries shouldn’t impact how well someone plays.

scooter262
Member
Member
scooter262
2 months 27 days ago

One possible solution is to make it easier to reward smart, small-market teams with a bigger piece of the revenue sharing pie than their less-smart peers.

For example, most of us consider the Rays and A’s as smart, and the Marlins (and possibly Twins) as less smart.

How you actually quantify “smart”–so that you reward teams that are trying to win vs. ones that are merely pocketing their revenue sharing dollars–is the key. In this case, MLB could significantly increase revenue sharing: this could help to keep the parity that’s been achieved, and also increase the percentage of revenue that goes to the players.

blue fountain
Member
blue fountain
2 months 27 days ago

I’m glad Cole spoke out, since as someone with a large signing bonus and big name, he’s one of the few young players that can voice anything disapproving of ownership with little risk of repercussion. If down the line Cole continues to speak up for the majority of players when he himself is in line to earn tens of millions of dollars a year, that could be very interesting.

However, I see this as little more than posturing from Boras that is self-serving for the best players (ie, those that can make the case for earning more pre-arb). The main salary problem in baseball is the minor leagues and guys who don’t receive large signing bonuses. That’s where ownership money should go: paying the guys who aren’t millionaires. The guys who are already millionaires don’t need more money. Instead, the prices for tickets and merchandise and cable TV should go down. After all, the baseball fans buying those things (mostly) don’t make $500K a year.

scooter262
Member
Member
scooter262
2 months 27 days ago

I don’t fault Cole for speaking out. However, the Pirates are doing the exact right thing for them, based on their revenue limitations and the collectively bargained agreement with the MLBPA.

Famous Mortimer
Member
Member
2 months 26 days ago

So, the absolute bare minimum, then?

scooter262
Member
Member
scooter262
2 months 27 days ago

I think one problem that is difficult to overcome is that agents want less parity — they want rich teams to spend a lot on free agents–whether or not they are being paid for past performance and for “dead” years at the end.

So most of the solutions (e.g. less time to become arbitration eligible & less time until free agency) that would help get more money to the younger, more productive players help the rich teams, and penalize small-market teams.

ginsugarland@gmail.com
Member
ginsugarland@gmail.com
2 months 27 days ago

Guess those voting members of the MLBPA voted themselves out of the league with the salary structure. The free agent values for the less than top tier FA’s are equivalent to the replacement player from the minors.

Uncle_Remus
Member
Uncle_Remus
2 months 27 days ago

Kill revenue sharing and use the money to create an insurance fund. Or you could make the revenue sharing go to the players, instead of the cheap clubs.

Phillies113
Member
Member
2 months 27 days ago

This is an issue I feel the union needs to resolve internally, at least before they present a unified case to the owners as to how they want salaries to be scaled. The union is mostly made up of these older players who want to receive their due; they had to endure it when they were young, and it’s about time they get their share. That’s gonna be their mentality; they have the longevity and, in many cases, the pull within the union to ensure that they are taken care of. If it’s at the expense of younger players, again, they had to endure it. Those young players will get their due when they’ve been in the league longer, at which time they’ll face the same issues against THAT younger group of underpaid players.

I don’t know if there’s an easy solution to this; would the union support a position that potentially screws over its longest tenured members in exhange for helping out the kids who are, really, just starting to break into the bigs, and thus have spent less time in the union? I know the union’s job is to ensure the best interests for ALL its members, but what if what’s best for one member isn’t what’s best for another?

Famous Mortimer
Member
Member
2 months 26 days ago

It’s not screwing one at the cost of the other – players get less of a share of revenue than they did 10 years ago, so if they went towards rectifying that, everyone could make out.

rosen380
Member
rosen380
2 months 25 days ago

Players are getting a much smaller share, but they’ve also been collectively going up rather quickly as well.

http://www.fangraphs.com/blogs/the-mlbpa-has-a-problem/

From that, 1995-2014, the players salaries have averaged +7.3% per year. That is pretty good I think. The league revenues averaged about +10% which is better.

Maybe teams should have been bumping up salaries by the same rate as league revenue growth- is that how things work in other industries?

Hard to compare as when McDonalds revenue grows by 100% over some period of time, it is likely that it involved adding lots of restaurants which means adding lots of bodies to run them.

What about a company like Apple? Most of their manufacturing workforce is external, so maybe looking at their revenue growth next to the growth of engineer salaries would be interesting?

Paul G.
Member
Paul G.
2 months 25 days ago

It would be unusual for salaries for ordinary employees to follow the company’s revenue/profit. The reality of it is that an employee getting paid $50K is going to get paid roughly $50K wherever he or she goes, assuming the company is properly valuing the employee (and sometimes they don’t, which is why employees change companies to large raises). It is somewhat like saying that the company would pay a vendor double for office supplies because it had a good year.

This is not to say that companies won’t pay more. Retaining useful employees is typically more cost effective than having to recruit and train a replacement every couple of years, so somewhat higher salaries can be a good thing. Competent employees get promoted and paid more that way. But they are not going to double salaries when profits double, especially in labor intensive businesses. First, it eats up that additional profit. Second, if the next year is not so good, cutting salaries is very painful and will be heavily resented. They would be better off giving everyone a one time bonus. Third, they don’t need to pay more to either retain the employee or hire a replacement if they are valuing the position properly. Why pay the head widget inspector $100K a year when every other company pays no more than $65K?

Now, non-ordinary employees are another story. If you have, say, an Apple engineer that keeps churning out million dollar projects, he or she is going to get paid a lot more very quickly before someone either poaches the employee or the employee quits to start a business. Star baseball players are not typical employees.

Mike NMN
Member
Mike NMN
2 months 26 days ago

Modest increases in the minimum wage are not back-breakers even for lower-revenue teams. If you bumped the MLB minimum by $50K you’d be talking about maybe $500K per year for virtually every team that wasn’t in the middle of a complete teardown/tank job–and in those cases, those teams are already pocketing revenue sharing, etc. But I like the insurance idea even more–for $50K per player per year, you could probably purchase long term annuities against catastrophic injury.

RoyalsFan#14321
Member
RoyalsFan#14321
2 months 26 days ago

Do you think that Gerritt Cole thinks he’s underpaid by $50k? Ha.

vivalajeter
Member
vivalajeter
2 months 25 days ago

Regardless of what the minimum is, a player would still complain about his (lack of a) raise. If everything was pushed up $100K so he was making $640K instead of $540K, I have no double that he’d complain because he didn’t get a raise after putting up a strong 2015 season. To RoyalsFan’s point, I do wonder what he would consider to be an acceptable salary considering his performance and service time.

As to the modest increases in the minimum wage, MLB’s minimum wage has grown more than modestly. In 2000, the minimum salary was $200K. As recently as 2009, it was $400K. It’s not like MLB has been stuck at $507K for the last decade and they refuse to budget.

Paul22
Member
Paul22
2 months 26 days ago

The simplest solution is to reduce the minimum to the first 2 years of service, making everyone a Super 2 and ending the nonsense we saw with Bryant last year and see every year.

Alternatively, have a progressive minimum, 500, 750, 1 million.

I think also MLBPA should push to have all players regardless of service time free agents after their age 28 season, with earlier free agency for those who hit 6 years before age 28. This will encourage teams to bring up younger players at 22 rather than wait until 24 for all but the elite players

With minor league salaries so low and bonuses restricted, the amount of surplus value MLB teams are getting from cost controlled players is at record highs, even when adjusting it as a percentage of total payrolls. Also, total payrolls as a percentage of revenue are at 20 year lows which means the savings on older players are not being passed on to younger players to a sufficient degree, and are instead going into owners fat wallets

Dave T
Member
Dave T
2 months 25 days ago

Bryant’s situation wasn’t about arbitration eligibility. He will almost certainly be a Super 2 because he was called up only a couple weeks into the season.

His situation was about free agency. Bryant got just under 1 year of service time last year. As a result, he’ll be a free agent after just under 7 full years in MLB – because free agency is after 6 years of service time – instead of after exactly 6 years if he’d been on the roster last Opening Day.

rosen380
Member
rosen380
2 months 25 days ago

“The simplest solution is to reduce the minimum to the first 2 years of service, making everyone a Super 2 and ending the nonsense we saw with Bryant last year and see every year.”

“Alternatively, have a progressive minimum, 500, 750, 1 million.”
One issue– not even all arbitration eligible players are presently getting $1M. So then the 23 players who got $590-1000k in arbitration this year have to expect a bump that puts them at over a million right?

If you make $12/ hour as a technician with 10 years of experience for a company and minimum wage was raised to $12/ hour, so the new guy you are training going from $8 to the same $12 as you, you expect a bump to around $16 right? Or are you OK making the same as the new guy and the cashiers and CSRs and such that don’t have a specialized skill or experience?

Probably not, so double all of those making the low-end first year arb player a little above what a third year pre-arb player is getting.

Then the 44 players that got more than $1-2M should still be making more than those 23 players, right? So now we’re doubling them as well? Then the 54 players that got $2-4M in arbitration need a bump to stay ahead of that group. Etc, then Stephen Strasburg, Neil Walker, Kenley Jansen, Jake Arrieta and Aroldis Chapman who all got $10M+ end up at $20-22M.

If they are getting that, do the actual FAs demand a bigger piece of the pie too? At some point there is only so much more you can give without taking from somewhere else.


It is up to the MLBPA to negotiate more money all around and to get something they’ll have to give something– like a salary cap.

Paul G.
Member
Paul G.
2 months 25 days ago

I think we need to remember that the CBA is negotiated by the union which technically represents all the players but in reality represents whatever faction has the most sway. Typically, rookies do not have a lot of sway, even when there are a lot of them. Most young players are just trying to stay in the majors and making a big fuss over their salaries will make few friends and is not worth the risk. You think that a 24-year-old utility infielder who is currently making an order of magnitude more money than he could expect outside of baseball is going to stick his neck out so that a few players like Cole make more money? Why?

I’m not saying things could not change, but the cohort of players already benefiting from free agency and those that are about to benefit from free agency are not especially concerned with the plight of second year players. If they have to settle for less in the negotiations, then the sophomores are going to take the brunt.

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