The MLBPA Has a Problem

The almost certain, impending demotion of Kris Bryant to the minor leagues for the season’s first couple weeks has brought renewed focus on Major League Baseball’s service time rules. As most readers are by now well aware, by sending Bryant to the minors for the first two weeks of the season, the Cubs will ensure that he fails to earn a full year’s worth of major league service time in 2015, preventing Bryant from becoming a free agent until 2021, rather than after the 2020 season. While it thus makes sense from a business standpoint for the Cubs to send Bryant to the minors for a fortnight to preserve an extra year of his services down the road, the thought that baseball’s top prospect – and MLB’s spring training home run leader – could begin the season in Triple-A has nevertheless led to calls for the Major League Baseball Players Association to take a stand on the issue.

Last week, for instance, Ken Rosenthal wrote a column arguing that the MLBPA should file a grievance if Bryant is demoted. Although he recognized that the union would almost certainly lose such a grievance – since arbitrators generally defer to teams on decisions regarding a player’s major-league readiness – Rosenthal nevertheless believed it would show the owners that the MLBPA won’t be pushed around on the issue. Meanwhile, others have taken a somewhat more patient approach, urging the MLBPA to address service time manipulation in the next round of collective bargaining talks following the 2016 season.

However, while service time manipulation certainly needs to be dealt with, the MLBPA has a much more significant and pressing – but often overlooked – issue to address in the next round of CBA negotiations: the players’ plummeting share of overall MLB league revenues.

Since 1995, MLB’s overall league revenues have increased nearly 650%, going from around $1.4 billion to over $9 billion in 2014. During that same time period, though, MLB payrolls have only increased by around 378%, from roughly $925 million in 1995 to just under $3.5 billion last year.

At first glance, an increase of $2.5 billion in annual salary divided among roughly 1,200 players doesn’t sound that bad. We should all be so lucky. But as the following chart shows, viewed as a percentage of overall league revenues, players’ salaries have been decreasing at a rather startling rate. (Payroll data from Cot’s Contracts and USA Today; MLB league revenue data from The Biz of Baseball).

mlb-player-share-1994-2014

After peaking at a little more than 56% in 2002, today MLB player salaries account for less than 40% of league revenues, a decline of nearly 33% in just 12 years. As a result, player payroll today accounts for just over 38% of MLB’s total revenues, a figure that just ten years ago would have been unimaginably low.

If I’m an MLB player, reversing this trend is my number one priority heading into the 2016 CBA negotiations. Unlike service time manipulation – which realistically impacts at most a few dozen players each year – the players’ declining share of league revenues is an issue that affects the entire union membership, young and old, rich and (comparatively) poor alike. Unfortunately for the players, solving this problem will not be easy, and may very well require the MLBPA to reexamine some of its bedrock principles.

Since the dawn of the free agency era in 1976, the MLBPA has relied on a simple but – for the most part – insanely effective strategy. By staunchly opposing a salary cap, the union ensured that owners would remain free to spend as much as they wanted on player salaries. And because a sufficient number of owners have always been willing to sign players to reckless contracts – gains that trickle down to the entire union membership through the salary arbitration process – players’ salaries rose exponentially throughout the 1980s, 1990s and 2000s.

So what’s changed? Rather than any one thing in particular, the decline in the players’ share of MLB revenues appears to be the result of the confluence of a variety of different factors.

Perhaps first and foremost, MLB teams have simply gotten smarter and more efficient in recent years. Gone are the days when a substantial number of teams were willing to throw boatloads of cash at free agent players on the wrong side of 30. Today, teams are increasingly signing their cornerstone players to team-friendly extensions before they hit the free agent market, while at the same time relying to a greater extent on cheaper, cost-controlled players to replace the holes they do need to fill. As a result, although the cost of wins continues to climb, that price is rising more slowly than one might expect given the hundreds of millions of dollars in additional television revenue that have been flowing into the game in recent years (more on this below).

At the same time, other factors such as revenue sharing and the luxury tax have further reduced the incentive for teams to spend on payroll. The decline in the players’ share of league revenues directly correlates, for instance, with MLB’s fine-tuning of its revenue sharing formula in the 2002 CBA. Unlike the days before revenue sharing, when a team would keep every dollar of extra revenue it generated locally, today clubs share 31% of their local revenues with one another.

In economic terms, this means that revenue sharing has caused teams’ marginal revenue product – the expected additional revenue generated from each additional dollar spent on payroll – to drop. Or, in plain English, revenue sharing has predictably caused the larger market teams to become less willing to invest in their on-field product, since they now retain a smaller portion of any additional in-stadium revenues that they generate.

Add in the luxury tax – which requires teams to pay a penalty of as much as 50 cents for every dollar spent on player payroll over $189 million – and the large market teams that the MLBPA has historically relied on to help drive the free agent market have now become more financially prudent.

Of course, one might expect that even if revenue sharing has reduced the large market teams’ incentive to spend on payroll, this would mostly balance out with increased spending at the lower end of the payroll spectrum, as the additional revenue flowing to the smaller market clubs would presumably allow these teams to spend more on player salaries. Unfortunately for the players, this has not proven to be the case.

Indeed, MLB’s payroll disparity has not changed appreciably in the revenue-sharing era, meaning that the smaller market teams are still spending roughly as little compared to the large market teams as they did before revenue sharing. As a result, revenue sharing and the luxury tax have combined to reduce the incentive for the large market clubs to increase their payrolls, without offsetting these decreases through increased spending by the smaller market teams.

A third but somewhat surprising factor contributing to the players’ declining share of overall league revenues is the recent explosion in MLB’s television revenues. With the league’s television profits tripling in recent years, many have assumed that teams would, in turn, spend this extra revenue on player salaries. In reality, though, teams have little motivation to use their television windfall to increase payroll.

Unlike ticket sales – which generally rise as a team improves on the field – television revenue is fixed via long-term broadcasting agreements. So while franchises can increase their in-stadium profits to some degree by spending more on payroll – thereby improving the quality of their team – the same is generally not true for television revenue. As a result, teams have little incentive to spend any added broadcasting profits on payroll (because, in economic terms, the added television revenue has not adjusted the team’s marginal revenue product).

So even though MLB’s television revenues have increased substantially in recent years, relatively little of this extra money is flowing to the players. Instead, teams are largely pocketing these additional revenues as extra profits, raising the league’s overall revenue without a corresponding increase in player payroll. As a result, the new television money is actually lowering the players’ share of overall league revenue on a percentage basis.

Beyond these baseball-specific factors, the decline in the players’ share of MLB revenues also reflects a trend occurring throughout not only the professional sports industry, but society as a whole. Economy-wide, workers are receiving a declining percentage of corporate profits, with a handful of the few wealthiest individuals – the owners, in MLB’s case – accumulating an increasingly disproportionate share of revenues. This trend is clearly visible in the professional sports industry, as reflected in the chart below. (MLB data the same as above; NFL and NBA payroll data primarily compiled from USA Today; NFL and NBA league-wide revenue data from Statista.)

mlb-nfl-nba-player-share-2001-2013_720

While player payroll accounted for over 50% of league revenues in all three sports back in 2001, today players in MLB, the NFL and the NBA are all receiving less than 43% of their respective league’s overall revenues. And, rather remarkably, MLB players went from receiving the highest share of overall league revenue in the three sports in 2003 to the lowest just ten years later.

So what can the MLBPA realistically do to reverse this trend? To some extent, the decline in the players’ share of revenues may be beyond the union’s control; the MLBPA can’t force teams to act less efficiently, for instance. And while the union could, theoretically, try to force MLB to reverse its course on revenue sharing and the luxury tax, those ships have likely already sailed (the MLBPA has agreed to some form of revenue sharing and luxury tax in each of the last four CBAs).

Recognizing all that, some folks – including, perhaps even Scott Boras – are of the mind that the MLBPA should consider doing the unthinkable: agree to a salary cap.

Because the salary caps in the other pro sports are generally fixed at a certain percentage of the league’s overall revenues, a salary cap could – rather counter-intuitively – help reverse the recent trend by allocating a higher share of league revenues to the players. However, because some teams will inevitably elect to spend less on player salaries than the maximum amount allowed under the cap, a salary cap alone is unlikely to guarantee players a consistent share of league revenues.

Rather than endorse a salary cap, then, the more attractive option for the MLBPA may be to seek a salary floor, establishing a minimum amount that each team must spend on player payroll each season. By tying the floor to the league’s expected overall revenues, the players would be able to ensure that they will receive a consistent percentage of MLB’s growing profits.

This option faces a couple of hurdles, though. First, the MLBPA has historically opposed a salary floor just as strenuously as it has fought against a salary cap. As the late MLBPA chief Michael Weiner explained in 2009, “Players historically have suspected that the request for a salary floor is a precursor to a request for a salary cap, and you know what the position of this union has been on salary caps.”

But even if the union were willing to reconsider this position and push for a guaranteed minimum share of league revenues in the next round of collective bargaining, there is no guarantee that the owners would agree. And even if the owners were amenable to such a proposal, there is no telling what concessions they would demand from the union in return. So, to the extent the MLBPA is able to address its plummeting share of league revenues via collective bargaining, the process could prove quite costly in other ways.

It is often said that the MLBPA is the strongest union in all of professional sports. In many respects, this is still true (it would be hard to imagine baseball players enduring the type of union dysfunction that professional football and basketball players have had to deal with in recent years). But based on the data above, in the most important respect – protecting the earning power of its members – the MLBPA is arguably performing worse than the unions in the NFL and NBA. Unfortunately for baseball players, reversing this trend may prove to be the most difficult challenge the union has faced in the free agency era.



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Nathaniel Grow is an Associate Professor of Legal Studies at the University of Georgia's Terry College of Business. He is the author of Baseball on Trial: The Origin of Baseball's Antitrust Exemption, as well as a number of sports-related law review articles. You can follow him on Twitter @NathanielGrow. The views expressed are solely those of the author and do not express the views or opinions of the University of Georgia.


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Steve
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Steve
1 year 2 months ago

Can’t they just fight to raise minimum wage to, say $1M? Would dramatically boost arb costs as well, and make using a marginal min player not as attractive as signing a free agent in many cases.

Bill
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Bill
1 year 2 months ago

So, a team minimum salary of $40 million a year? Every team is already over that. An owner who doesn’t care about winning could make out just as well as he is today. This may even have the effect of reducing the amount of money low income teams have to spend on mid range talent thus depressing the demand for this talent and depressing their salaries.

Billy
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Billy
1 year 2 months ago

Yeah, this is what I was thinking. Maybe even more than $1M. This would bring so much of the revenue into players’ pockets, and bring security to young guys who only play a handful of years in the big leagues.

Billy
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Billy
1 year 2 months ago

Just to add to what I said before:

We always worry about front offices getting the most wins per dollar they spend. Isn’t it in the players’ best interest to maximize the dollars they get per win they provide? The most obvious place where the player’s aren’t doing this efficiently is the ones that are very good during their first six or so years in the league.

By paying these guys more money, the players who are actually providing on-field ability are being better compensated. Yet, it’s not horribly inefficient use of funds for front offices. I have no idea how to actually give incentive for this behavior, but it would be nice.

Also, I think the new starting point for establishing league minimum would be $1M, but I would maybe even consider $5M or something. I mean, there are reasons posted below as to why this would be a problem if the market ever recedes, but this to me would be the ideal way to increase the player’s cut of the pie, if that’s truly necessary.

Jason B
Member
Jason B
1 year 2 months ago

$5M! A lot of players (more than are currently) would be done in their early 30’s. The superstars would still get theirs of course, but why pay for any middling talent’s decline years if you have to guarantee them $5M per year. I would suspect teams would (rightly) much rather bet on young talent progressing than mediocre veterans returning to some semblance of their former glory. Nori Aoki, Kris Medlen, Nick Hundley, Emilio Bonafacio, Brandon Morrow, Rickie Weeks, Chris Denorfia, Wandy Rodriguez, Ichiro, Ryan Ludwick, Mark Reynolds, etc: see ya! Have fun doing whatever you do in your mid-30’s outside of baseball.

I do agree that raising the minimum salary is worthy of strong consideration, but you have to be reasonable in your approach (and know that the owners would never, never, never, never, never agree to something like a 1000% increase).

placidity
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placidity
1 year 2 months ago

Well right now they’re paying more than the minimum for those guys you named when they could be betting on young talent.

Billy
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Billy
1 year 2 months ago

Sorry, I was only setting $5M as the highest figure off the top of my head. The point was something more than $1M, not that I felt that $5M was the exact number. This wasn’t any kind of formal proposition.

We’re just a bunch of guys shooting the breeze here, not writing formal academic papers. We shouldn’t be so hard on each other.

Jason B
Member
Jason B
1 year 2 months ago

I mean, I didn’t exactly kick your dog or pipe bomb your car, I just thought a $5M minimum salary was way crazy. I still think you’re a fine upstanding human and all.

Colonel Wishbone
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Colonel Wishbone
1 year 1 month ago

I would think if the minimum got too high it might actually really hurt the process of bringing in young guys… Why take a chance on a 2-tool “prospect” at $5mil when there is a dependable, if not spectacular, veteran willing to play for $5mil that is going to put up passable and predictable results?

Bryce
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Bryce
1 year 2 months ago

Logged in to post exactly Steve’s comment. This is clearly the simplest solution, and one that a huge fraction of MLBPA members would support because they would see immediate benefits.

M W
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M W
1 year 2 months ago

League minimum affects about 1/3rd of the 25 man rosters, so about 250 players.

Even if you doubled it (which I don’t see owners doing) you would only increase player salaries by ~ 125 M$ yearly – which is a big chunk of money – but only a 1.4% increase in their share (a bump from roughly ~ 40% to ~ 42%).

That’s not enough.

pitnick
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pitnick
1 year 2 months ago

Arb salaries would go up as well, though, and FA salaries, since they are (or can be) determined by figuring the marginal value over a replacement (minimum salary) player.

munchtime
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munchtime
1 year 2 months ago

Arbitration is determined by comparison to what other players received in arbitration. Marginal value and replacement level players aren’t considered, because some arbitration eligible players are below replacement level. They still get annual raises.

pitnick
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pitnick
1 year 2 months ago

The latter part of that sentence was about free agent salaries.

semperty
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semperty
1 year 2 months ago

Can you name a single benefit to the owners in doing this? Tossing out ideas is fun, but you’ve got to at least take into consideration positives and negatives from both sides. All this does for the owners is make them pay more for the same product – which absolutely no owner would be in favor of.

David
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David
1 year 2 months ago

The owners are also earning more for the same product. The players would be justified in asking for more than they give up to the owners in a new CBA.

Noah
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Noah
1 year 2 months ago

Two words: labour peace.

Matt P
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Matt P
1 year 2 months ago

Suppose the following deal was offered.

All pre-arbitration players would receive an extra $1 million per year of service time more than the minimum wage. So, players with 0-1 years of service would receive at least $500k, players with 1-2 years of service would receive at least $1.5m and players with 2-3 years of service would receive at least $2.5m.

In return, the Super Two would be abolished and players would become free agents after having six years and one day of service time. That way, a player can be called up to the majors right away without losing service time. Players would be arbitration eligible after having three years of service time.

Do you make that deal? I don’t think the owners pull the trigger but I think they consider it.

Lanidrac
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Lanidrac
1 year 2 months ago

So a top prospect who gets a cup of coffee the previous September can then be purposely held back in the minors at the beginning of the next season and then doesn’t even have Super Two status to help recoup some of his projected earnings? No matter where you draw the line for service time, teams will find ways to manipulate it.

Lanidrac
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Lanidrac
1 year 2 months ago

I don’t know if this would actually work, though. With the increase in payroll going to the pre-arb and arb-elgible players, teams would naturally just collectively cut spending on free agents, causing free agent salaries to rise at a much slower pace than they currently do. While this could be seen as beneficial to evening out the salaries between the players themselves, it wouldn’t do much to accomplish the goal of overall higher player payrolls.

Bill
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Bill
1 year 2 months ago

Could the problem be that this revenue is concentrated in a few teams? These teams are limited to the number of players they can field, so this diminishes the demand for top talent. If TV money were pooled and all teams had access to this, player salaries would increase, provided, of course, each owner was interested in winning. Owners would also need to be given strong incentives to try and win. Something along the lines of kicking a team out of the league if it is clear the owner isn’t trying to win.

jdbolick
Member
Member
1 year 2 months ago

Could the problem be that this revenue is concentrated in a few teams?

Exactamundo.

M W
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M W
1 year 2 months ago

All national tv revenue is shared. The problem exists with teams who own their own networks, they are never going to share those revenues equally.

jdbolick
Member
Member
1 year 2 months ago

Only a third of local TV money is shared.

pft
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pft
1 year 2 months ago

That is not necessarily true. Most teams don’t share any revenue. Those that do only share the revenue that is received by the team from the RSN as part of their rights fees (which teams who own their own RSN’s keep artificially low). For those who own their own RSN’s (or part of it), the vast amount of revenue comes from carriage fees that cable companies charge every household and pays the RSN. That revenue over and above the rights fee is not paid to the team.

The holding company for teams like the Yankees and Red Sox usually own the equity in the RSN, and they receive dividends which could be as much as 60% of their share of the RSN’s revenue (high profit margin). This is not shared at all since its not the MLB teams revenue.

Jonathan
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Jonathan
1 year 2 months ago

Are you really going to say that growth of 378 in relation to 650% is a problem?

Bill
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Bill
1 year 2 months ago

The market dynamics aren’t that simple. Yeah, in the real world organized labor loves to insist that they make more money when times are good, but when corporate profits are down, don’t even think of suggesting they take a paycut. The corporation takes all the risks and labor expects to share in the rewards while being disconnected from the risks. But, MLB players aren’t dime-a-dozen wrench monkeys. They are rare and unique talents who drive their industry. If the market they were in were open, their salaries would be tied relatively closely to team income. Maybe, there is just a lag, but I don’t think so. I think there are problems that the MLBPA needs to address.

BurleighGrimes
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1 year 2 months ago

“Labor doesn’t take on any risk” — yes I’ve definitely never seen 100s or 1000s of workers get laid off or salaries cut in non-boom times or for whatever reason.. Nope labor is definitely in a stronger position to withstand economic ups and downs than wealthy bosses of multi-million dollar corporations. It’s definitely not the workers who are in the most precarious positions.. Nothing to see here, move along.

<>

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

It’s much more difficult to get a union (or anyone, for that matter) to agree to a decrease in wages and bonuses once they have them. So if the league stopped being so profitable, but was giving out hundreds of millions in revenue sharings to give MLB players a larger piece of the pie, the union would fight tooth and nail to keep it. Honestly, players don’t need more money. If MLB went bankrupt tomorrow and all the franchises shut down, most MLB players would be fine for years.

a eskpert
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a eskpert
1 year 2 months ago

That’s what inflation is for. In such a situation it would decrease real player costs while continuing revenue growth.

Drew
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Drew
1 year 2 months ago

Are you referring to union labor, or non-union labor?

pft
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pft
1 year 2 months ago

Absolutely

Eric the Clown
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Eric the Clown
1 year 2 months ago

The biggest issue has nothing to do with free agents or team-friendly extensions. It’s the vast majority of players who are earning league minimum, or even worse, in the minor leagues and earning basically nothing. Fairer pay for young players would bring a huge chunk of revenue back to the players’ side.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

If the revenue sharing was going to MiLB players to help them out, I’d be all about the proposal, but I don’t see the MLBPA doing anything like that.

Bill
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Bill
1 year 2 months ago

But, nobody is watching Minor League games, they have no TV contracts, why should these players make more money?

BurleighGrimes
Guest
1 year 2 months ago

Because the game is swimming in money and some minor leaguers don’t make a living wage?

C'mon
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C'mon
1 year 2 months ago

“Why should these players make more money?”

You’re a real arsehole, aren’t ya? They can be fired at any time without recourse, have to travel around the country wherever the team wants, and are earning less than a living wage. But sure, let’s ignore that and spew out idiotic maxims such as “the market dictates the correct salary.” Because maximizing our country’s GDP is what matters, not maximizing the quality of living for its inhabitants.

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

You’re a real arsehole, aren’t ya?

Solid argument.

KDL
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KDL
1 year 2 months ago

Solid reading.
(Hint: That wasn’t the argument. That was the conclusion. The argument follows.)

a eskpert
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a eskpert
1 year 2 months ago

The market has nothing to do with Minor League Salaries because of the enormous amount of collusion. I believe Yankees doing Yankees things will some way towards mitigating this.

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

The argument follows.)

No, there was no argument. You, like him, have produced nothing but conclusory rhetoric. Just to be clear, this –

They can be fired at any time without recourse, have to travel around the country wherever the team wants, and are earning less than a living wage.

– isn’t an argument. It’s not even a persuasive series of observations.

The first two are the default conditions of the at-will employment every player actively continuously foregoes all alternative (better-paying) employment to participate in. The third:

they are earning less than a living wage

is the very premise of the entire discussion and yet you characterize it here as an “argument”. “Why should they be paid more?” “Because they aren’t paid enough”.

This isn’t an argument. It’s circular, conclusory rhetoric.

troybruno
Member
Member
troybruno
1 year 2 months ago

not circular at all.

Question: why should MiLB players make more $?
Answer: because their compensation and working conditions are not acceptable by any reasonable US standard.

seems pretty clear-cut… i mean, unless you are also an asshole

K
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K
1 year 2 months ago

> not acceptable by any reasonable US standard.

100% circular. “Reasonable” is the weasel word here, if you need your hand held through this.

Whether the current standard is reasonable is the whole question. All any of you have said is “it’s wrong/unreasonable because it’s wrong/unreasonable – and you’re an asshole if you disagree”.

For a site whose readership is ostensibly committed to objectivity and reason, some of you sure are pretty fucking dense.

Monkey Halo
Guest
Monkey Halo
1 year 2 months ago

“Reasonable” in this case refers to “living wage” in the argument, which is indeed a provable concept.

troybruno
Member
Member
troybruno
1 year 2 months ago

oh brother… to be clear, this is what makes you an asshole:

“Whether the current standard is reasonable is the whole question.”

It is not a question. It is not reasonable. “Reasonable” is indeed defined by living wages and US standards of health. You would ABSOLUTELY not work under these conditions for these wages.

So you are an asshole. And I guess also a poor analyst.

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

“living wage” in the argument, which is indeed a provable concept.

Get to work then. The US standard is actually the minimum wage – which has been shown several times to be less than a “living wage”. So no, none of you know what you’re talking about.

You continue to babble about what is “reasonable” without ever trying to define it. You do this because you cannot. You argue yourselves in circles and yell at anyone who points it out.

“Reasonable” is indeed defined by living wages and US standards of health.

See this? This is pure bullshit. Where exactly do you think the minor leagues are? This *is* a US standard. So is the federal minimum wage – which is less than a living wage in many places.

You are completely full of shit. The only thing you’ve got is “you’re an asshole!”

You would ABSOLUTELY not work under these conditions for these wages.

More horse shit. I would and I *did* work for similarly distasteful conditions when I was younger had nothing.

Moreover, thousands of people actively choose to work in those conditions rather than taking easily available better-paying jobs.

It’s amazing how full of shit you people are. What is it, five times now you’ve all been prompted to make an argument? Every single time you fall back on the same easily-disproven nonsense.

Wiltshire
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Wiltshire
1 year 2 months ago

I see you’ve taken Logic 101 as well.

troybruno
Member
Member
troybruno
1 year 2 months ago

Two-Seam-Hakeem:

To be clear, there seems to be a chicken & egg thing happening – I also have yet to see any reasoning from you on why MiLB players DO NOT deserve more pay…

A few facts for you:

MiLB players get $1,100-$2,100 per month. And typically “work” 60-70 hours. This equates to $3.20-$6.10 per hour after taking into account federally mandated overtime hours.

Three comparisons:

This $3.10-$6.20 compares to a federal min wage of $7.25 and many state & local min wages that are higher (up to $15)

This $1,100-$2,100 per month compares to $1,000 per month which is the US federal poverty line.

This $3.10-$6.20 compares to a “living wage” of $9 in Dallas, $10 in Sacremento and similar rates elsewhere (source: MIT)

I don’t see how anyone can make the argument these levels of pay are sufficient, especially given the amount of money running through the baseball system. Keep in mind that Branch Rickey was the architect of the minor leagues and his model was one that was built on screwing the MiLB players.

To address some of your other arrogant, narrow-minded and simple points:

“This *is* a US standard” — it is not definitively not; MiLB players are not subject to federal or any other minimum wages. There are no checks on MiLB pay fairness (note that since 1976 inflation has increased at 4x the rate of MiLB pay)

“More horse shit. I would and I *did* work for similarly distasteful conditions when I was younger had nothing.” — I mean, look… I know that you walked uphill to school both ways in the rain. But I think we can do better, right?

“Moreover, thousands of people actively choose to work in those conditions rather than taking easily available better-paying jobs.” — History is littered with this type of justification from the elite. I’m glad that you can use it. It has to feel good.

Doug Gray
Guest
1 year 2 months ago

More than a few minor league teams DO have tv contracts.

Ben
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Ben
1 year 2 months ago

Not relevant, though, because the MiLB team doesn’t pay the players’ salaries. The MLB team does, and they don’t see a cent of any MiLB TV deals. That said, they wouldn’t pay the players more even if they did.

Doug Gray
Guest
1 year 2 months ago

You are correct, Ben. But I was pointing out that several teams actually do have tv contracts.

jzongo
Member
jzongo
1 year 2 months ago

Because the economic contribution of minor leaguers isn’t best measured by the direct revenue of Minor League teams but rather the indirect contribution they make towards MLB revenues. I think its safe to say that without MiLB the product of MLB would be diminished and revenues would be lower. Even if the lower product value in MLB only amounted to a 5% decrease in revenue, which seems conservative to me, MiLB would be indirectly creating $450 million in increased revenue for MLB. Even at only the 38% share of revenue players in MLB currently receive this would amount to an average salary of $28,500 for MiLB players (given roughly 6000 MiLB players).

vivalajeter
Guest
vivalajeter
1 year 2 months ago

“I think its safe to say that without MiLB the product of MLB would be diminished and revenues would be lower.”

This is more of a response to this type of argument, rather than to you specifically. MiLB salaries have been pretty shitty for a while now, yet teams continue to fill their rosters. Even if 100 – or a few hundred – organizational fill-ins decided to give up baseball and move on to another career, there would be plenty of people willing to fill in for them. So even if the MiLB salary issue didn’t get solved, I don’t think we’re in any jeopardy of not having an MiLB product.

I do agree that their salaries should be higher, but I don’t see why the owners would pay it just to be nice. Is there a benefit to paying a higher salary to someone who won’t make it to the big leagues? Most of the top prospects either received a signing bonus, or they’re going to be making at least a half million dollars per year in the near future (with the potential for significantly more money after that).

If the owners were willing to spend millions of dollars to pay minor league players a much more ‘fair’ salary, you might have a few people stick around longer and make an impact in the Majors instead of giving up before they make it, but would there really be any sort of noticeable impact to MLB?

Take Scott Rice for example. He was drafted in 1999, and didn’t make it to the majors until 2013. Most people would have given up by then. With increased salaries, more people would stick around. But while he’s a feel-good story, the bottom line would remain the same even if he had given up in 2009.

If the current pay structure was leading to a 5% decrease in revenue, the owners would be up for fixing it. But is there any study to show that the pay structure is really having that sort of impact?

jzongo
Member
jzongo
1 year 2 months ago

Agreed that the current system works great for MLB owners and their is no incentive to pay minor league players more. But the current system is a product of a lack of economic power amongst minor league players due to not having a union. If such a union did exist the economic power of MLB owners would be balanced by the economic power of the union and negotiations would lead to some recognition and compensation for the positive externalities MiLB has on the MLB product.

However, I can’t say I blame owners for not paying MiLB players more when there is a surplus of players available to them. Even if a MiLB players union did exist it would have trouble exercising it’s economic power because any strike would have to be quite long before it would start to affect the MLB product and lower revenues.

Ron
Guest
Ron
1 year 2 months ago

Even the players that don’t make the majors have an impact on the quality of MLB. If all the players came straight out of high school or college the quality of play in the majors would not be as good. The majority of minor league players are just there to train the few who make it. They just all think they are going to be ones who actually do make it.

So yes they deserve a living wage, as for nobody watching them look at minor league baseball attendance records, also some games are on TV and Milb.tv isn’t cheap but it must be profitable because it is still going.

Minor League baseball is making money, it is tougher to make money but even teams that have to play their players are making enough to exist. The Independent leagues that are run well are doing fine despite not having the choice markets.

Larry Bernandez
Guest
Larry Bernandez
1 year 2 months ago

Actually, plenty of people go to minor league games. They are, for the most part, just as exciting as Major league games. You get to see your organization’s youngsters play hard in an effort to advance. I used to go see the Lake County Captains when I lived out there, and had excellent times for a lower cost.

Mike
Guest
1 year 2 months ago

I was,going to,write something similar, but I suspect that it would hardly be a drop in the bucket. Teams are making a killing by suppressing the salaries of mid-20s players who are reaching their primes. Nearly all NFL & NBA players reach free agency much sooner.

Sean
Guest
Sean
1 year 2 months ago

Average length of careers:
NFL: 3.5 years
NBA: 4.8 years
MLB: 5.6 years

Average isn’t necessarily the perfect stat, but MLB players generally play longer so delaying free agency doesn’t necessarily make things worse.

kfjes
Guest
kfjes
1 year 2 months ago

I’m actually shocked it’s that long. Where did you get the figures from? I would have thought that all of the guys who play three games and then never see the majors again would pull the MLB average down to one year or so.

munchtime
Guest
munchtime
1 year 2 months ago

Think of how many players are on the 40-man roster that never play a game in MLB. They are still counted as MLB players. For the cup-of-coffee types you describe, they are generally still on the 40-man roster for more than a year.

Bhaakon
Guest
Bhaakon
1 year 2 months ago

There’s a cause-effect argument there, though. In each league the average career length seems to correlate pretty strongly with the length of team control (NFL and NBA can both have up to 4 years, MLB teams have 6 w/o service time shenanigans).

It could just be that professional teams in general value team controlled youth to the point that they over-utilize pre-FA players and dismiss post-FA players too quickly.

Brad Johnson
Member
Member
1 year 2 months ago

IMO, it’s time for the union to represent the interests of all professional baseball players. The union should fight for the falling share of revenue, but the money they claw back should be reallocated to minor league players. They could also strive to put more money into players who fall under the reserve clause rules.

The ARods, Stantons, and Cabreras of the world are already generously compensated.

tz
Guest
tz
1 year 2 months ago

My first thoughts as well. This will make for a stronger players’ union in the future as well.

If someone could bend the new commissioner’s ear about the long-term value of improving the conditions for minor-leaguers, this scenario could actually happen.

BurleighGrimes
Guest
1 year 2 months ago

I wish this would happen but the MLBPA has sold out minor leaguers time and time again.

Mike
Guest
Mike
1 year 2 months ago

Is there any indication that minor leaguers would be willing to give up weeks of months of development time in order to organize (i.e. risk a work stoppage)? Obviously I’m making a huge assumption here, but since the average minor-league career only lasts a few seasons, there’s very little to be gained in the long run from missing games during the present.

Jason B
Member
Jason B
1 year 2 months ago

It would only cost them in terms of development (which is obviously very important); they could go down to Home Depot and out-earn the $5-6/hour equivalent that they’re making in the minors, sadly.

troybruno
Member
Member
troybruno
1 year 2 months ago

First, minor leaguers wish they made $5/$6 per hour

Second, the vast majority of their “compensation” is in the form of “possible MLB salary” rather than actual MiLB salary. It’s option value. In that regard, they would never sacrifice the potential of pissing off their organization for a higher MiLB salary because it would dramatically lower their option value.

Jason B
Member
Jason B
1 year 2 months ago

No, it shouldn’t be on them to risk pissing off their employers or potential employers by organizing. It should be incumbent on the MLB brass and teams to recognize that they should be paid something akin to a living wage.

(I know, a guy can dream.)

troybruno
Member
Member
troybruno
1 year 2 months ago

100% agreed

AA's Tie
Guest
AA's Tie
1 year 2 months ago

It seems obvious that this is the move that would be best for the long term health of the game.

But if the MLBPA wants to remain a strong union in the present, its probably best for it to not suddenly have a 800% increase in membership (from representing guys on 30 teams to guys on 270 teams!)where all of these new guys coming in have basically no rights, because they sold them all off before they represented them.

Mike Green
Guest
Mike Green
1 year 2 months ago

Well said. I might qualify it marginally. The union should strive to represent all players under the control of the major league owners. It ain’t quite OBU a century on, but it’d be a start. First the ballparks, then the offices.

Mike
Guest
Mike
1 year 2 months ago

Free agency after five years instead of six would be a good first step.

Bill
Guest
Bill
1 year 2 months ago

But, while this might raise some player’s salaries, it would mean that poorer teams would be less competitive. As long as team revenues are unequal, either salaries will be depressed or poor teams will be not be competitive. The competitive balance in the league is currently achieved through depressing the salaries of young players. I agree with the consensus here that this is grossly unfair to these young players, but if we want a competitive league, the only way to change this is to drastically change how revenue flows throughout the league.

Mike
Guest
Mike
1 year 2 months ago

This is an argument for increased revenue sharing.

FuriousToaster
Guest
FuriousToaster
1 year 2 months ago

I don’t buy this arguement at all. The teams getting currently revenue sharing dollars don’t and aren’t even required to SPEND them… that’s the first problem that needs to be addressed. Use it or lose it.

M W
Guest
M W
1 year 2 months ago

They are technically required to use it, the Union previously filed a grievance against MIA for that very thing.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

I’m not sure why we should at all be concerned with revenue sharing with MLB players. First, MiLB players, especially prospects in the low minors, get shafted for their entire MiLB careers. These guys make less than minimum wage, and should be the ones to be looked after. MLB players make more in six years than the vast majority of us will in our life times. Why do they need more money? Owners buy teams to make them money, the players are well compensated for their work, and generally speaking love what they do. So where in a capitalist model does giving the players more money ‘just because’ make sense? I would get it if they were living at poverty levels, getting government assistance to survive, and never having the opportunity to truly thrive. But this isn’t Walmart we’re talking about, it’s baseball and professional athletes.

Besides, the increased profitability of MLB is already good for the players as we can easily measure yearly inflation in free agency and league minimums are constantly increasing. And as for Bryant? If the Cubs held him down long enough to prevent super two status, then I can see filing a complaint, by their third time through arbitration, most players are already getting near FA levels of cash, allow Bryant to go through a fourth year means that he’s making more sooner than he would have, and he’s going to make plenty of cash from it.

I’m sorry, I’m not going to shed tears for millionares because their losing out on millions more, and it’s beyond all reason that we as fans should care or be rooting for players to become even more expensive just because the league is currently rolling in the dough. If the league ever stops being as profitable it will be harder to negotiate wages and/or revenue sharing down to keep it flourishing.

Zack
Guest
Zack
1 year 2 months ago

This I agree with. It stinks that they are not apart of the Players Association. Some of that money should absolutely be going to minor leaguers.

BurleighGrimes
Guest
1 year 2 months ago

I agree *emotionally* with the question of “why do they need more money” re: the big leaguers, and definitely would be in favor of any measure that more adequately remunerated minor leaguers. The problem with letting “why do they need more money” define one’s thinking, tho, is that this question doesn’t get to the heart of the issue. There IS more money, many tens of millions more money, in the game today. If it isn’t going to the players, then it’s just going to the Jeffrey Lorias and Fred Wilpons of the world. I’m pretty well certain that *those* people don’t need any more money either. I’d rather more of that money find its way to the players rather than line the pockets of owners who don’t spend on the product on the field.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

The difference is that an owner puts in a massive amount of money when he buys a franchise, he expects a return from his investment, he most likely sees it as a large growth market that will continue to increase it’s profitability. Players invest time, like you and I do at our normal everyday jobs. They are better compensated than the vast majority of the world for doing a job that actively employs them for only 8-9 months a year. Logically speaking, if you have more money than 99.9% of the rest of the population has, there is little to no sense in having more except to say that you have it.

Jose Ramirez hasn’t spent one year in the majors yet (83 games total), and already has a nicer car than I do (it plays SS!), probably has a nicer house than me, which he probably owns, and knows that as long as he can stick on an MLB roster for the next six years, whether he’s good or not, he’ll be a millionare. I’m all for making sure that the players, without whom we’d have no game, get compensated well, they already are. And every winter, we see FA prices go up relative to the previous winters. So what if the owners or MLB itself is making more money? So are the players and they get to live in the lap of luxury for the rest of their lives if they’re good enough to justify it.

There are people out there doing infinitely more important jobs, ones with much more significant risk, and they get paid peanuts in comparison. So I logically, not emotionally, cannot find a reason to justify giving more money to players just because the league has become more profitable, they’ll see the trickle down effect (which in baseball is real) in free agency.

Also, just because there are a couple of terrible stewards with franchises in baseball doesn’t mean that the other 28 owners don’t deserve to see a significant return on their investments.

M W
Guest
M W
1 year 2 months ago

Voodoo economics! You are jealous of Ramirez but not Loria (who can sit back collect revenue sharing – not spend it – 10 years down the road sell his club for double what he bought it for).

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

Loria is one bad example. I’m not saying that ownership is always benevolent, but they put the money together to buy the team, the money that they make is a return on their investment. I’m also not jealous of Ramirez, simply pointing out the fact that he spent 83 games in the majors over 2 years and likely has more money in the bank than I do. He earned his money, but has earned additional bonuses because the league is doing well? Voodoo economics works in baseball because of the inflation in free agency. Players are getting more money than ever. Not to mention the reason why MLB minimum wage just shot up $7,000 from last year for ‘cost of living’ increases. I’m sorry, but when your minimum wage was already $500,000, cost of living shouldn’t even be a factor. And for players just breaking into the majors, like Ramirez, you’re guaranteed $500,000 for the first three years of MLB service, more if the team wants too (which it often does to keep the players happy). Then, you have the opportunity to go through arbitration to earn your worth relative to free agents and what other players going through the process earned based on your numbers. Not only that, but you even if you absolutely sucked after a great year, that money can’t go below 80% of your last year’s salary and it’s almost an automatic that you’ll receive a raise the last three years of team control.

By the end of your 6 year stint with your team, you should have well over a million dollars chilling in bank accounts. The teams and the league may not be as ‘generous’ by percentage, but players have never earned more. Like I said in my first post, this isn’t a bunch of Walmart employees demanding a living wage so that they can get off of food stamps, these are millionares wanting even more millions, and to what end? To say that they have more millions than the next guy?

a eskpert
Guest
a eskpert
1 year 2 months ago

Cost of living Shouldn’t be a factor? How would you like steady annual raises of -2% each year. Additionally, if you are going to try and argue from an economic standpoint rather than a moral one, that’s a rather bad point for you to assert.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

As a federal employee, I’ve been there we didn’t receive pay raises from 2011-2013, and when we did? 1% on already comparitively meagre wages, plus the furloughs. Also, as I said before, most players get a raise every year regardless because it helps build goodwill with the team. Remember when Trout was kept at the minimum wage and the fuss that it caused? Most everything that I read on that issue stated that it was abnormal for a team to do that. But at least I understand why you spell your name the way you do, because you’re obviously not ‘an expert’.

A eskpert
Guest
A eskpert
1 year 2 months ago

You just agreed with me. 1. Inflation was much lower than 2% in those years. 2. You were unsatisfied by it. 3. This is about inflation, not inequality.

Stuck in a Slump
Guest
Stuck in a Slump
1 year 2 months ago

This is about having more money per year than anyone actually needs. When you’re making 40-50k a year, inflation and a lack of pay raises matters. Additionally, the annual inflation rates in the US were 3.2%, 2.1%, 1.5%, and 1.6% from 2011-2014, so not sure where you’re pulling these numbers.

If I can survive (it got pretty tight going weeks without pay and not knowing when I’d go back to work or if I’d recoup lost wages) on 50k a year without raises for the increase in cost of living, then guys making 500k+ can certainly handle it without batting an eye.

My entire point is that baseball players make more than enough money, even at their minimum MLB pay. So really, you kind of made my point, because 1. I didn’t agree with you in the slightest and inflation was actually higher than 2% for 2 of the 3 years cited 2. I was unsatisfied because I was making 10% of what MLB minimums are AND not getting CoL raises and 3. If I can manage to do it, given my much leaner circumstances and worse fate with being furloughed, then why does someone making 10x as much as me need it? It’s just more money for their Scrooge McDuck money vault swimming pools.

a eskpert
Guest
a eskpert
1 year 2 months ago

I guessed low, but you guessed high http://www.tradingeconomics.com/united-states/core-inflation-rate. And it isn’t really about cost of living. It’s about making sure they get paid the same amount each year. A dollar isn’t a dollar a year later.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

Way to cite years that aren’t even in the discussion, bro.

a eskpert
Guest
a eskpert
1 year 2 months ago

Don’t tell me you don’t know how to either read my admission of underestimation or change the scale.

Hank G.
Member
Hank G.
1 year 2 months ago

MLB players make more in six years than the vast majority of us will in our life times. Why do they need more money?

Because they are the ones providing the product that brings in the money?

I don’t disagree that the players who have careers long enough to reach free agency are doing well, but the players with shorter MLB careers and the ones who never reach the majors are getting shafted. It’s not like the owners can plead poverty. What’s the rationale for not paying minor leaguers a living wage other than the fact that they can get away with it?

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

I’m all about doing something to help out the MiLB players, they are getting shafted, and I said as much in my original post. But honestly? A guy playing two years in the majors will make about what you (I’m assuming you’re not making some crazy large sums of money) and I do by the time we retire. And as we’ve seen in the past, if the top talent vanishes, people will still watch. It might not be as profitable, but baseball will go on.

red
Guest
red
1 year 2 months ago

It is the uniforms that bring in the money, not the players. If the top 50 players in baseball all died tomorrow, it wouldn’t affect how much we watch. There would simply be a new top 50.

But if you removed the top ten franchise names, the game would be much less interesting. No Yankees? No Cubs? No Red Sox? Boring.

Stuck in a Slump
Guest
Stuck in a Slump
1 year 2 months ago

This is at least partially true, Red. I don’t follow players (even though I love my fantasy baseball leagues), I follow teams. I only care about individual players when A. It affects the teams I’m rooting for, or B. It comes to my fantasy teams. I loved Jim Thome, I still do, but my interest in him went from active to passive when he left the Indians. I didn’t really care about Jason Giambi until he joined the Rockies, then I did a ton of homework into things like his PED admission and what kind of guy he was. I love those two teams, and even if they were to go the route of the Astros a few years ago and pretty much play all minor leaguers and AAAA types, I’d still root for them, I’d still watch them, I’d still read about them. I grew up with the Indians, I didn’t grow up with Brantley, Kipnis, or Santana. The Indians are who I care about, the players are all secondary.

M W
Guest
M W
1 year 2 months ago

If the Reds lost Votto and Cueto tomorrow, a lot less people would be watching.

stuck in a slump
Member
stuck in a slump
1 year 2 months ago

People would still watch though. That’s why the discussion keeps saying “Baseball would continue, it would be less profitable, but it would continue”

STS
Guest
STS
1 year 2 months ago

I find it hard to believe a business can be so profitable with a 40% payroll expense. I guess the massive amount of dollars makes this work. The other, which is the main reason it works, is the anti-trust law. The law allows the owners to depreciate the players salary! Unbelievable in todays world. This allows the owners to make millions tax free!

Ron
Guest
Ron
1 year 2 months ago

NFL and NBA don’t have antitrust exemption like the MLB and they do fine. Of course when it comes to unionized workers anything in regards to a CBA is generally exempt.

MLB Rainmaker
Member
Member
MLB Rainmaker
1 year 2 months ago

Um, this is false. All four major sports have some level of exemption from Anti-trust, just in different forms. MLB’s important exemption over other sports governs their ability to control franchisees, the exemptions related to players are the same amongst leagues.

Mike
Guest
Mike
1 year 2 months ago

Because the players are also the product. The resources required for sports are nearly entirely human; there are no raw materials, parts, ingredients, etc. that need to be acquired.

Bob Loblaw
Guest
1 year 2 months ago

The business is profitable with a 40% payroll because the payroll is, essentially, a capital expenditure upon which you see a return. It’s the same reason the depreciation of salaries concept is actually rather poignant and not all all insane or tax dodging; it’s a shifting of the tax burden to the future from the present.

munchtime
Guest
munchtime
1 year 2 months ago

40% of expenses devoted to payroll is pretty low for a service-based industry. Particularly when the largest single investment into the business (stadium) has taxpayer help.

troybruno
Member
Member
troybruno
1 year 2 months ago

Pure professional service industries where sales or profit generation is an incentive have higher %s and are very profitable. Look at law firms, advertising firms, investment banks, hedge funds, etc…. Much higher than 40%. I’m not sure that comparing MLB players to Goldman Sachs bankers is the best thing to do, but it is analogous nonetheless…

Jeff C
Guest
Jeff C
1 year 2 months ago

I’d be curious to see to MLB players salaries as a percent of league revenues compares to that of the other major sports. If they’re at the bottom then something is obviously wrong.

If the MLB numbers are in line with the others, then I’d be less inclined to state that this is a problem.

Cliff
Guest
Cliff
1 year 2 months ago

LOL, I guess you didn’t make it to the bottom of the post

Jeff C
Guest
Jeff C
1 year 2 months ago

I did, but I didn’t see the league specific numbers for the NBA or NFL. Am I missing something?

Grammer Police
Guest
Grammer Police
1 year 2 months ago

Apparently.

troybruno
Member
Member
troybruno
1 year 2 months ago

this is amazing.

mtsw
Guest
mtsw
1 year 2 months ago

The NBA has the players’ share of salaries mandated in the CBA as 49% of league revenue (player salaries are adjusted upwards or downwards retroactively if the nominal salaries come up above or below that number).

However, because of this split, there’s a perverse incentive for teams to hide their revenues away from the “basketball related” side. As many basketball franchises are subsidiaries of larger entities that own or control the arenas, there’s plenty of opportunities for teams to move money around in ways that hide them (which also allows the league to claim, absurdly, that most of its franchises lose money).

The economics of sports are so opaque that its difficult to come to firm conclusions in ANY of the sports as to how much actual revenue is going to players. Player salaries are the only aspect of their business that is actually transparent to the public.

RMR
Guest
1 year 2 months ago

Is “League Revenue” an aggregation of the individual revenues generated by the 30 teams or does it also count centralized revenue captured by MLB through channels such as MLBAM? Assuming the latter for the sake of discussion, how would individual teams/owners access that pool of money to spend on players?

It’s been the case for quite some time that owners really make their money on appreciation of their asset rather than cash profit. But if owners don’t actually have access to the full revenue the league produces, I can see this being an especially thorny issue.

pft
Guest
pft
1 year 2 months ago

If you total up Forbes team revenues it adds up to 7.6 billion, compared to 9 billion for the league as a whole. Some of that is because Forbe deducts stadium financing fromteam revenue. The rest is probably undistributed MLBAM revenues. I think its a safe bet that 90% of league revenues are in the hands of the teams. The league is a collective of 30 owners, they have a say in what they get distributed. What isn’t is on the books as their asset. Also, they can borrow from MLB at low interest.

Stan
Guest
Stan
1 year 2 months ago

As you say getting a bigger piece of the pie will be hard. Imo the players union should be focused on expansion going forward and creating more job opportunities for their members. If baseball is so much more profitable the surely there would be more viable options now compared to 15 years ago. Increasing pay for minor leaguers is another good area to focus on. Lastly haven’t many writers on this site and others said that the increase in TV revenues, the chief reason for the disparity, is essentially a bubble that is not sustainable? If that is in fact true, wouldn’t the disparity eventually correct itself when the bubble bursts?

M W
Guest
M W
1 year 2 months ago

Absolutely, agreed – the best thing the union can call for is actually more jobs…add 2 more teams.

troybruno
Member
Member
troybruno
1 year 2 months ago

I hate the “local TV revenues are a bubble” argument. It’s just a knee-jerk reaction to higher values and ignores what is happening in the media industry – content is taking an ever-greater share of the industry’s economics (have you noticed that every company in the supply chain is getting into content) as disintermediation continues. Further, advertising rates at LIVE content has outstripped other forms.

Baseball is uniquely situated here because it (a) has 2x the games of the NBA and 10x the NFL and (b) has most of these games existing outside national TV coverage.

Like it or not, monetization of baseball-viewing revenues could continue to go UP!

pft
Guest
pft
1 year 2 months ago

Dude, minor leaguers are not their members unless on the 40 man. MLB has complete say on who gets to be a member, and how many active players there are.

Bob Loblaw
Guest
1 year 2 months ago

Mature business + massive revenue growth = salaries declining as a percentage of revenue. Salaries simply aren’t variable costs; they’re generally hybrid in nature in most businesses and grow with revenues but, especially in a mature business experiencing abnormally high growth, don’t grow at nearly the rate that revenues do.

Also, revenue as a base of measurement for economic disparity? Nah, trick. I realize you don’t have access to the kind of financial data you need to make the comparison with profitability, but your argument here is that teams have become more profitable and aren’t sharing those profits with players at the same clip they were before, yet you’re using revenue to describe that relationship.

mtsw
Guest
mtsw
1 year 2 months ago

Other than player salaries, which expenses would you expect to rise as revenues rise? It’s not like stadium leases are being renegotiated or the grounds crew are getting big raises. You would expect that for a sports franchise, additional revenue is almost all profit since the costs of running a franchise are largely fixed other than spending on talent.

troybruno
Member
Member
troybruno
1 year 2 months ago

“yet you’re using revenue to describe that relationship.”

Well, in fairness you’re using NOTHING to describe that relationship.

And per mtsw’s post, there are no other costs which are inflating at these rates: interest rates on debt are at lows, inflation has been under long-term trends, etc…

M W
Guest
M W
1 year 2 months ago

It’s not a matter of profit, but of team franchise value. Owners can say (not back it up) all they want that they aren’t taking money out of the club every year. But if the value of their club doubles in 5-10 years (and then they sell it and get their profit) isn’t that the same thing?

Bob Loblaw
Guest
1 year 2 months ago

“Value” is an incredibly variable and subjective concept. Actual “value” can really only be measured when a team changes hands; when you see a Forbes or similar article on the valuation of sports franchises, you’re not talking about an estimate of value, you’re talking about a journalist’s opinion of value, and that doesn’t mean opinion of value in the sense that someone in the valuation industry would mean it. It’s a guess in a Forbes article.

It gets even sketchier when you consider the issues surrounding environment of valuation of sports franchises. Value in that sense is rarely a fair market value or an investment level of value but is rather measured as value to the holder. There are so many non-financial elements in the value of a sports franchise that it’s nearly impossible come up with a FMV of a franchise. I can tell you , with enough information, what the value of the company is based upon its cash flows; the best I can do to determine the value of a company based upon the glory and fame and novelty of owning a sports is to guess. It’s impossible to measure, and even if it were, it would be different for each and every buyer in the market.

At the end of the day, the most accurate measure you have for the value of an enterprise, even in the business of sports, is the value of the cash flows, i.e. profitability. Revenue does not create value, and it very much doesn’t measure the non-financial value of a sport franchise.

M W
Guest
M W
1 year 2 months ago

Did you really just say revenues don’t create value? You should tune into the shark tank more often. We are talking about monopolies here, with the extremely unlikely scenario of nuclear war or the zombie apocalypse, their value will never decrease.

Jason B
Member
Jason B
1 year 2 months ago

The value of these franchises are somewhat related to, but not directly linked to, revenues. Obviously as TV revenues boom that income stream augments franchises’ values. But even absent the huge growth in broadcast revenues, these franchises values keep moving up unfettered because they are such a rare commodity; there are only thirty, period, ever.

If someone absolutely wants to own a franchise at any cost and they have a $50B net worth, then then what’s the difference between paying $500M and $1B? Ultimately not much, especially when you know someone else will pay $2B for it in 20-30 years when you’re ready to move on. It’s why the Dodgers’ deal absolutely blew away the Forbes estimate of franchise value (as these deals routinely do). When you absolutely must have to have something and one only becomes available every 2-3 years, if that, then you pay whatever you have to pay to get your hands on one.

As you rightly said, the non-financial value of an ultra-rare, ultra-luxury purchase is very significant.

STS
Guest
STS
1 year 2 months ago

RMR,

The owners have always made a cash profit! Their income statements may show a loss but if you look at the cash flow you will see the players salary depreciation is quite large. This bogus expense is pure profit. It is a big driver in the valuation of the franchise.

Bob Loblaw
Guest
1 year 2 months ago

How is it a bogus expense? It’s an expense they’ve incurred in operating their business, no? It’s no different than the way your employer expenses your salary/wages, except that instead of expense all of your $30k salary this year, they expense it over a set period of time. Which, mind you, actually results in a higher income tax burden today which, in the context of the concept of the time value of money, is not preferable compared to the alternative which is to expense the salary today and have a lower income tax burden today, giving you additional funds with which to earn a return on between now and when the two different taxation structures would even out over a long enough timeframe.

Jason B
Member
Jason B
1 year 2 months ago

Expensing a full $30K in salary in year one, rather than depreciating it over five years, most certainly does not create a higher income tax burden today.

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

That’s what he said.

Phil
Guest
Phil
1 year 2 months ago

And here come the stupid “millionaires should just be happy” comments, because of course since your comparatively non-skilled self only makes $40k per year, those few who are among the most skilled in the world at a very lucrative profession should just shut up and not profit as much as possible in the few years they can. Just like if you were to win $150 million in the lotter and then found out the government collected 60% tax and not 50% tax (illustrative only) you would just say “that’s cool guys, I have enough money anyway”).

I would love to see the MiLB players (those not on the 40-man MLB roster) be unionized and represented in the CBA so they could hopefully finally stop being preyed upon by making sub-McDonald’s wages in the hopes of making the big leagues.

pitnick
Guest
pitnick
1 year 2 months ago

I’m surprised you think they’re being preyed on, given you seem to think salary is directly correlated with skillset. Shouldn’t they simply get better?

a eskpert
Guest
a eskpert
1 year 2 months ago

They are being preyed upon. Correlation is a measure of linear association. Salary isn’t well correlated with the skillset because there is a giant discontinuity (i.e. non-linearity) between major league and minor league salaries, while the same discontinuity doesn’t exist in skill sets. So, a career minor leaguer might have 1/2 the baseball playing skills of a big league starter, but being able to hit 200/250/300 at first base will never get him there.

Ron
Guest
Ron
1 year 2 months ago

The reason we should care is because this is what starts the problems that end up turning into work stoppages. Did any of you follow the issues behind the NFL and NBA in 2011?

The problem is that the TV money may be a one time thing and something that could go bust, and once salaries rise they tend to not go down. Other issues are more addressable. The questions really seem to be where do the players want the money to go, young players or veterans?

Early extensions while less money are valuable to players in other ways. They take less money in exchange for less risk. Not all young player extensions are a bargain. Still teams are being successful overall with these. To raise salaries players probably just need better agents and to become more efficient on their side. A change in the structure may not be needed.

What isn’t addressed and could be the big sticking point is the qualifying offer situation. Over the last two years this has helped decrease salaries among the good but not stars. The increase in identifying young talent through scouting and analytics makes draft picks more valuable. The possible key to raising veteran salaries might actually be a counter intuitive move, to find some way to increase the cost of draft picks. If draft picks are going to be tied to free agency then draft picks need to less efficient.

There are many ways for this to get sorted out, hopefully none of them lead to a work stoppage, which would also at least briefly bring down the total revenue.

red
Guest
red
1 year 2 months ago

I can see following player salaries when you want to judge how well your team is spending its resources. But why fret over whether players or owners should get more or less in the aggregate? This is no longer talking baseball. It’s politics.

jiveballer
Guest
jiveballer
1 year 2 months ago

I think it would help to tie the Luxury Tax threshold to overall league revenue. Since 2003 the threshold / revenue percentage has decreased from 3% to 2.25% in 2013 (despite the threshold value increasing from $117M to $178M during that time).

If the Luxury Tax threshold was kept at 3% then the 2014 value (based on $8B 2013 revenue) would have been about $240M. That would free up a lot of FA money for the major markets. Of course, the cost would be a potential loss of parity but the MLBPA doesn’t really care about that.

Ron
Guest
Ron
1 year 2 months ago

As salaries have risen and free agency has developed parity has increased. With increased teams in the playoffs we will see even more parity. Competitive balance in baseball is probably the best of the three sports mentioned.

M W
Guest
M W
1 year 2 months ago

The next CBA will certainly see the luxury threshold rise…and likely significantly.

Phillies113
Member
Member
1 year 2 months ago

Question: A lot of people are commenting that the MLBPA should represent players in MiLB, as they are wildly underpaid and have a much lousier time of it than those who make a major league roster. Would it be possible for the minor league players to themselves unionize, creating an MiLBPA that would negotiate on behalf of the minor leaguers? I’m more curious than anything else; I have no idea of the bureaucracy, logistics, or costs involved with establishing a union. But would this be possible?

Ron
Guest
Ron
1 year 2 months ago

Minor League hockey has a union separate from the NHL union. As a possibility it is there, I don’t know the practicality. There are reasons why the MLB Players Association would oppose this.

siggian
Guest
siggian
1 year 2 months ago

Possible? Yes. but extremely unlikely.

Remember that there are two types of players in the minor leagues: the prospects who got a significant signing bonus and those who didn’t. You would need to convince a significant number of the former to risk a future in which they get even more significantly paid to go on strike to help the players who didn’t get a significant bonus. The player’s who didn’t get a significant bonus are essentially replaceable

Ben
Guest
Ben
1 year 2 months ago
edgar4evar
Guest
edgar4evar
1 year 2 months ago

The new CBA shouldn’t be created under the assumption that big TV revenue is here to stay. These huge broadcast contracts are driven by the need for cable companies to retain customers. One of the few things on television that is keeping people from cutting the chord is live sports. Cable providers are desperate to keep people signed up for expensive cable bundles so they’re willing to put up big cash for sports broadcast rights. There are a lot of things that could bring this cash cow to its demise including regulatory changes driven by general hatred for cable companies or simple market forces prohibiting cable’s monopolistic pricing practices.

Any deal the MLBPA and the league strike should take into account this potential for TV revenues to return to a lower level, and not necessarily to be made up by internet revenues.

M W
Guest
M W
1 year 2 months ago

It’s not a bubble if everyone has signed a new contract before it bursts. The fact is there are 7 billion people in the world – almost all of them watch some kind of entertainment – there will always be a way to charge them for it.

kumar jagtap
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kumar jagtap
1 year 2 months ago

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brentdaily
Member
Member
brentdaily
1 year 2 months ago

While a relative drop in the bucket that won’t account for the full percentage of rev decline, owners do seem to be increasing expenses elsewhere – front office salaries and coaching salaries on the high end (e.g Friedman, Maddon), DR complexes/international scouting/bonuses, and analytics head count and super computers.

Raising player minimum salaries, where supply is alsohighest, seems like the most efficient way for the MLBPA increase all salaries. The earlier financial security is given the less likely players will be to soon team friendly deals.

Will
Guest
1 year 2 months ago

Focusing on percentage of revenue would be a big mistake for the MLBPA because it unravels the argument the union has used for decades…one that has proven to be in their best regardless of the prevailing economic climate: the market should determine salaries, not artificial mechanisms. Otherwise, players will have to accept a salary cap, which could work against them if revenue stagnates, or owners get better at hiding revenue with creative accounting.

Also, using total revenue is misleading because it includes items like debt service, which MLB allows to be deducted from revenue sharing calculations. Cot’s contracts payroll figures may also be off a bit because I don’t think they include benefits, which add over $300mn to the compensation pool.

Finally, it’s worth noting that NFL players’ share of revenue is often distorted because of how contracts are structured.

Owen
Guest
Owen
1 year 2 months ago

Wouldn’t something like the increase of average salary, average free agent salary, and league minimum compared to inflation be better? Even if you assume all added revenue = additional profit for the teams, the past decade or so has certainly been an anomaly as far as revenue growth in MLB. I doubt any owners believe revenues will continue to rise at the same rate going forward so they are probably correctly declining to increase payrolls at the same (I’m guessing) historic rates the revenue has been increasing.

Owen
Guest
Owen
1 year 2 months ago

Also, from the player’s end, with the greatest percentage of players making the league minimum, raising that alone would increase their pie of the pie without even considering that the higher early wages would probably dissuade some young players from signing team friendly (or at least AS team friendly) extensions due to more of a sense of financial security earlier on in a career. To some small extent getting a guaranteed livable wage/higher salaries in the minors would also allow the players who graduate to the majors to be less in need of guaranteed money as soon as possible.

M W
Guest
M W
1 year 2 months ago

It’s all tv money – they are pocketing it. Those are locked in profits.

nivra
Guest
nivra
1 year 2 months ago

I haven’t thought enough about this to offer any solutions. I’m just here to point out that this article suffered massively from “burying the lede.”

FirstTimeLongTimeBlahBlahBlah
Guest
FirstTimeLongTimeBlahBlahBlah
1 year 2 months ago

Tremendous article and I am really interested in seeing the discourse it provokes.

What I am interested in is seeing how salaries rise and fall in the Premier League and top soccer leagues around the world where (forgive me if I grossly oversimplify, not much of a fan) the business environment doesn’t artificially trample salaries of young players, and there is no revenue sharing.

Do player salaries rise and fall more proportionally to revenue in that system?

Endive
Guest
Endive
1 year 2 months ago

“I am really interested in seeing the discourse it provokes”

Are you though? 50 comments deep and there’s so much armchair social science it feels like the Washington Post comment section. This non-statistician prefers the community when it’s chatting (rather basically, I’m sure) about baseball stats; not when people are expressing entry-level political beliefs.

mtsw
Guest
mtsw
1 year 2 months ago

Given the large percentage of people in MLB front offices who were minor leaguers, and the universal percentage of MLB union members who were, its baffling to me they don’t insist on MiLB players getting a living wage, just out of empathy for the shitty situation many minor leaguers find themselves in.

I wonder how much of it is a situation similar to doctors/residents, where doctors-in-training are forced to endure a few years of low pay and long hours, despite pretty much everyone agreeing that this produces bad outcomes for patients. Once people are in a position to change the system, they’re unwilling to change the system for the better because they had to “pay their dues” and they don’t feel its fair for the next generation to skip it.

Marco
Guest
Marco
1 year 2 months ago

“its baffling to me they don’t insist on MiLB players getting a living wage, just out of empathy for the shitty situation many minor leaguers find themselves in” — now there’s a way to pointlessly make yourself unemployable if I’ve ever heard of one

M W
Guest
M W
1 year 2 months ago

It’s the owners who change the system, the rest of them just work there.

Sean Lahman
Guest
Sean Lahman
1 year 2 months ago

Pretty good analysis here. The union can’t ask to link salaries to revenue without agreeing to a salary cap: there can’t be a guarantee at the bottom if there isn’t one at the top. It makes sense, but nobody ever accused baseball’s labor deals of being driven by common sense.

William
Guest
1 year 2 months ago

I don’t think the numbers you used present an accurate picture because the revenue isn’t a net number and the payroll figures seem to exclude benefits. Using Forbes $7.86 billion in net revenue, which excludes certain debt service, the $3.63 billion payroll figure reported by MLB for 2014 and the $323 million in player benefits and you get an approximately 50/50 share.

I’d also be wary of using payroll data from USA Today because it may not properly account for the guaranteed portion of contracts in the NFL.

M W
Guest
M W
1 year 2 months ago

Technically there is a floor – $507,500 x 25 (+ Disabled List) = $12,678,500+

Wags (@wags721)
Guest
Wags (@wags721)
1 year 2 months ago

The MLBPA will probably fight for the Mike Trouts and Clayton Kershaws of the league to be making $50 million/year instead of $30 million/year and ignore the minimum salary and minor league players.

It’s so backwards when you have someone like Josh Hamilton winning the MVP in 2010, making $3.25 million and now that he’s practically worthless, he’s owed $90 million over the next 3 seasons (suspensions not included). Baseball owners need somewhere to spend all the money they have without wasting it on the 34 year old Josh Hamiltons in the league.

Sean
Guest
Sean
1 year 2 months ago

I apologize for not reading the many many earlier comments — I did see the idea of raising the league minimum was brought up, and I agree with that — what would be nice is if they had to pay minor league players more.

It’s really eye-opening when you understand the sacrifices some of these players make. Yes, it’s easy to say “poor baby, if you want it bad enough, make the show and you’ll have all the money you need”. But some of these guys won’t make the show. And some of them are serving useful purposes for their teams as “org players”, and if revenues are really that high, it seems nice to let them make a decent living of it, particularly when their time in the sport is limited compared to a typical career.

Adam Stein
Guest
Adam Stein
1 year 2 months ago

I don’t understand what the problem here is. As a business owner, I come up with an idea that I think will grow the business. I hire a couple of guys to implement it, paying them 20% above market rate to get the best people. It turns out that it increases my annual revenue by 10% but only increased payroll by 2%. Are you saying that the right thing to do is give all of my workers 8% raise because the business is doing better? Why does that make sense?

The MLB owners and really MLB, the collective entity, have tapped into new sources of revenue mostly due to how technology has changed viewing habits of consumers (DVRs, widespread high speed internet, and the ability to broadcast/receive high quality video on mobile devices). Obviously they could share some of that wealth with players and all of the front office people too. But why should they?

I think since almost all of us are labor, it’s easy to fall into an emotional trap of pay the hard workers more.

The only argument I see for distributing more to players is fear of a labor dispute. But with an average salary of $3M and making 3x what they did 20 years ago, do the players really not feel they’re getting a fair share? Why is 55% of revenue a more correct number than 40%?

Stan
Guest
Stan
1 year 2 months ago

It’s a far different scenario in the entertainment business. Without the premium talent that is baseball what do the owners have?

Endive
Guest
Endive
1 year 2 months ago

You also appear to miss the point of the article. It was not “fall[ing] into an emotional trap.” It was observing what MLBPA’s biggest battle might be in this CBA discussion.

Endive
Guest
Endive
1 year 2 months ago

Although I’d add that you appear to equally “fall into an emotional trap” of rewarding capital — which makes sense, as you open with the point that you are “a business owner.”

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

The source of most of it is a prevailing belief that “market rate” is objectively wrong as a baseline. Most of the people in this thread argue with an implied premise that there is an objectively correct price of labor across the board, that they know (but never say) what it is, and that it’s very different from whatever wage is the current subject.

It’s very easy to make these arguments and decisions with other people’s money.

Wiltshire
Guest
Wiltshire
1 year 2 months ago

I read your comment a number of times, and still can’t figure out what you’re endeavoring to communicate. But the Econ 101 references to “market rate” made me chuckle; this is a government-granted monopsony we’re talking about.

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

Do you point this out when people talk about the hot stove of the free agent market? If you do, you’re the most annoying person alive. If you don’t, it’s clear you’re just being deliberately dense right now.

The fact that the market is limited or controlled doesn’t change in any way the fact that it is a market.

In your haste to use the word monopsony, you imagined said “free market” – which would have at least partially justified your embarrassingly reactionary leap to an “Econ 101” remark in fumbled attempt to condescend. I didn’t, though, which leaves you endeavoring to communicate with your own obnoxious shadow.

Wiltshire
Guest
Wiltshire
1 year 2 months ago

Look, you rearctionary twat: it is you and your contrarian ilk who have flooded this thread with condescending nonsense, as though anyone who doesn’t blindly adhere to the prices offered by a market inherently inefficient is giving too much credence to their wrongheaded need for subjective justice while only you have the brains and basic level of education to make the hard decisions that are objectively right. Put down the Thomas Sowell once you work your way up to Econ 102; you may find that the social sciences are a bit richer and less self-absorbed than you think.

royalguy
Guest
royalguy
1 year 2 months ago

They need to increase the major leagues share of minor league players contracts. If you place a minimum wage on the MLB team’s side of the MiLB players contract you would increase the player share of the revenue. Minor league players need it a lot more than MLB minimum makers. There are also a significant amount of them so it wouldn’t be a drop in the bucket like 540K-1M for MLB guys.

MikeS
Guest
MikeS
1 year 2 months ago

Outside of the issues of fairness of compensation between owners and ballplayers and among ball players (major and minor league), the overall increase in revenue might be handled by lowering the cost of the product to the consumer. In the 1980s could afford to take two adults and four children to the ball park enjoy the game and have some hotdogs and cokes maybe four or five times a summer. Now that kind of family fun might be fairly expensive once a year event for a family of six. As always, the consumer pays.

Ron
Guest
Ron
1 year 2 months ago

Yeah right. Actually it has been shown that contracts to players have nothing to do with ticket prices. Ticket prices are determined by what people will pay for them. That will not change, teams will charge as much as fans are willing to pay.

NJ
Guest
NJ
1 year 2 months ago

True, but the opposite should also be true-let the players’ salaries be determined by how much owners are willing to pay.

M W
Guest
M W
1 year 2 months ago

Negative, one is a free market supply and demand issue, the other deals with none free market monopolies -it leads to collusion, because as an employee (player) you can’t seek work elsewhere. As a fan I can choose to spend my budgeted entertainment dollars elsewhere, like college baseball, titty bar, cocaine, etc.

NJ
Guest
NJ
1 year 2 months ago

I believe that is incorrect.

NJ
Guest
NJ
1 year 2 months ago

Sorry-I believe that is incorrect. The players can work elsewhere, just not for the MLB. And you are pretty much stuck to watching MLB if you want baseball. What you wrote is paramount to saying ” I can have a monopoly on bread since you can always eat cake”. And anyway I am not saying the owners should get together and decide what someone is worth, but the market usually settles on players’ salaries, just like the market will determine how much an owner can gouge out of the fans.

M W
Guest
M W
1 year 2 months ago

What? No… mlb is a monopoly. If I say you can’t eat bread, it in no way means eat cake – it means eat tortillas or english muffins or pita. The market does not determine their pay in any way, shape or form – they are under official servitude for 6 full years (not including 6 plus out of the draft – which they can only negotiate with the club that drafted them).

I’m watching college baseball as I type.

MLB Rainmaker
Member
Member
MLB Rainmaker
1 year 2 months ago

This article is woefully misinformed relative to the economics of labor in sports. Worse yet, there are full academic papers on the topic that lay this out….if you just would have bothered to do the research!!!

The important factors in determining labor value in a sport go far beyond payroll as a percentage of revenue, you have to consider voidability of contract, salary caps, average player career, long-term healthcare costs, and pension plan. In every single category, MLB has BY FAR the best player compensation. Contracts are guaranteed from the date of signing, no salary cap, lowest rate of chronic injury among sports and the by far the most generous pension plan. If you play 1 day in the majors, you earn healthcare for life, if you play 43 days, you qualify for $34K annually for the rest of your life, growing to $100K annually for 10-year vets.

Ron
Guest
Ron
1 year 2 months ago

It doesn’t matter if it is the best. What this is discussing is if this is going to be a problem. Are the players going to want a bigger piece of the pie? Probably. Are the owners going to want to give it to them? Probably not.

No matter what side of the issue you are on this is going to be a problem. A declining percentage of the revenue seems like a slide backwards to the players. This is true even if players are earning more money. This could be a source of conflict, that is all this is saying.

Adam Stein
Guest
Adam Stein
1 year 2 months ago

“What this is discussing is if this is going to be a problem. Are the players going to want a bigger piece of the pie? Probably. Are the owners going to want to give it to them? Probably not.”
Thanks. I get the point now. It’s that there’s a big pie to fight over now.

MG
Guest
MG
1 year 2 months ago

This is classic obfuscation text by someone who clearly represents the owner’s interests.

The issue when you boil it down to its essence is what % of annual revenues owners keep and what % of annual revenues players keep annually.

Me
Guest
Me
1 year 2 months ago

9bn / 30 teams is 300mm per team. At 50% of revenues for salary you get 150mm. This is alarmingly close to the revenue sharing maximum. That 189mm is simply too low or the marginal benefit of exceeding it is too low.

Mike
Guest
Mike
1 year 2 months ago

Ironically, I do believe that a salary cap/floor would be the most effective method to reverse the current trend. The MLBPA did pretty well for itself in the 90’s and early 00’s when the top 5 salary teams would continually drive the free agent market. That is no longer the case. A salary floor would definitely help, but the only way the owners would agree to one would be including a salary cap. Another way to address the issue is to decrease service time requirements to be eligible for free agency. 6 years is a long time. I honestly believe it shouldn’t be longer than 4. Getting the owners to agree to that would probably require some pretty heavy concession from the MLBPA however.

jg
Guest
jg
1 year 2 months ago

Last week, for instance, Scott Boras wrote a column arguing that the MLBPA should file a grievance if Bryant is demoted.

Fixed ;)

The article was Scott Boras’s first shot across the bow of the MLB owners.
Peter Gammons Tweeted out that Scott Boras was thinking about suing (which was the next step up)

John Northey
Guest
John Northey
1 year 2 months ago

For a salary floor just increase the minimum salary. If it is $1 mil a player then the floor is $25 mil per team. That would help out the players who need it the most (journeymen, rookies) while the big guns still make giant dollars via Free agency. The other method to change things is to have free agency start after 5 seasons instead of 6.

Max G
Guest
Max G
1 year 2 months ago

Just in an effort to add more comparative data, here is some NHL info:

> Statista reports NHL revenues = $3.7 billion

Accodring to NHL, for 2014-15:
> Salary floor = $51 million
> Salary cap = $69 million

With 30 teams, the minimum (floor) = ~41.4% of NHL revenue

The minimum NHL wage is currently $550,000, goes up to $575,000 next year, and continues to increase until end of current CBA in 2022 at $750,000. Despite these steady increases, the max salary cap has increased by substantially greater percentages than the minimum wage, each year since 2005.

According to the NHL CBA, maximum player salary must not exceed 20% of the salary cap. So that curbs spending from spiraling out of control on the superstars, and also contributes to creatively structured long-term contracts.

How any of this relates to baseball’s situation, I do not know, since I don’t fully understand the impact of these data, but I thought this information might be of value to anyone that wants to throw hockey’s hat into the intersports comparative analysis ring.

pitnick
Guest
pitnick
1 year 2 months ago

How much of the increase in baseball’s revenue over the last decade is due to better play? Isn’t that a relevant question? Is a greater portion of the money going to front office types, or the Advanced Media people?

Timmy
Guest
Timmy
1 year 2 months ago

Why not allow players to be arbitration eligible ever year they’re under team control at the major league level?

NJ
Guest
NJ
1 year 2 months ago

I think there are two variables in play here. 1) Players are signing away free agent years for guaranteed salaries-this lowers the risk factor for individual players but also lowers the total salaries for the group and 2) The decline in PED’s- as more experience players usually will get paid more for the same numbers produced by younger players (either because of more proven track record or natural increase in salaries) the quicker jump to the past the prime part of the curve has created fewer high paying prime years.

Corey
Guest
Corey
1 year 2 months ago

I realize this isn’t remotely the point of the article, but in terms of economic fairness, I would would much rather see MLB commit to a living wage for venders, ushers, janitors, secretaries, ticket people, etc than making sure that a bunch of millionaires get a higher share of revenues.

shadraaq
Member
shadraaq
1 year 2 months ago

On that note, it sure would be nice to see NHLPA player reps involved in local labor councils across the country. There are hundreds of thousands of union housekeepers, carpenters, wait staff, nurses, teachers, etc. that could use the political and financial support the players could contribute.

Capt. Clutch
Member
Capt. Clutch
1 year 2 months ago

This is really excellent work.

tradeharrychiti
Member
tradeharrychiti
1 year 2 months ago

It’s not just players. There are tons of employees throughout the industry that are categorized as interns, and then paid minimum wage or below (I was one of them). These aren’t low-skill jobs either. Plenty of analytic and talent-evaluation jobs are filled this way.

These employees work full seasons with teams, and then take an internship the next season with another team.

One of my former colleagues works as an internal scout for a team on a multi-year internship contract.

There’s way too much greed at the upper-levels of this industry (most GM’s aren’t even properly compensated).

theboogieman
Guest
theboogieman
1 year 2 months ago

Instead of trying to figure out how to give the players more money, just reduce revenue. What if the owners reduced the amount of revenue by lowering ticket and concession prices? I know, I know…. pipe dream.

Garrett
Guest
Garrett
1 year 2 months ago

These articles are hard for me to follow. Without knowing with a team’s profit or loss is revenues are pretty meaningless. Plenty of extremely profitable companies operate with relatively low revenues. Opposite is true as well. Lots and lots of billion dollar companies (in terms of revenue) struggle to scratch two nickels together when it comes to profit.

Assuming that teams are extremely profitable … many of the proposals listed above are one-sided. It’s the big bad millionaire owners fighting against the big bad millionaire baseball players. IMO, the only real path to parity are some significant concessions for ALL parties. Concessions that are designed to help the growth of baseball and not favor one side over the other.

My sweeping proposals:

— Start with a floor. Make it $100M (concession by owners)
— Increase revenue sharing if necessary for teams to meet $100M floor
— Remove the cap (concession by owners)
— Install non-guaranteed contracts (concession by players)
— Set ML minimum salary at $1M annually (concession by owners)
— Set MiL minimum salary to reasonable wages (concession by owners)
— Create an international draft (concession for undrafted players)
— Drastically boost draft pools and require minimum spending (concession for owners)

These proposals would generally boost spending, provide better conditions for minor league and fringe ML players, and offer room for owners to adjust payroll in lean times by having non-guaranteed contracts.

pft
Guest
pft
1 year 2 months ago

MLBPA does not represent minor league players not on 40 man or undrafted players. Non guaranteed contracts and increased revenue sharing is a huge lose for players. The floor increases payroll about 200 million per year (if that), the concessions by MLBPA give up much more than this, perhaps 1 billion or more in guaranteed dollars (FA deals are close to 2 billion a year and average 2-3 years).

Only way the MLBPA should consider non-guaranteed contracts is with a drastic reduction in service time. Start by cutting that in 1/2 to 3 years with a much greater minimum (3 million)

troybruno
Member
Member
troybruno
1 year 2 months ago

I think this whole thing comes down to 2 philosphical arguemnts and based on where you fall out, you are gonna always be arguing with the other side….

1. Who “owns” baseball – the players who play the game (and therefore deserve a commensurate cut of the economics) or the owners (and therefore are free to run it as a capitalist business where margins can expand)

2. Are MiLB players effectively interns (and thereby receiving below-market wages today in the hope for millions later) or employees (and thereby massively underpaid)

Jason B
Member
Jason B
1 year 2 months ago

1. Owners

2. Employees

We may not like the consequences of one or the other of those answers, but they’re undeniably the “correct” answers.

pft
Guest
pft
1 year 2 months ago

Yes, yes, yes. This is an issue I have been harping on for a couple of years. The MLBPA has grown weak and complacent, and given up a lot of ground which may not be felt in good times, but will be paid for by future generation of players when MLB’s revenue growth hits a bump in the row.

The decline actually started after Manny and Arod and Jeter signed their bg deals in 2000/2001. In todays dollars (payroll adjusted) these were 350-450 million dollar deals. Shortly after, in 2003 MLBPA accused MLB of collusion after noting some irregularities in the FA market and MLB settled this for about 60 million without admitting wrong doing (if my memory is correct).

Some of us believe collusion is still at play, but that MLB after having been caught for so many times is being smart about it.

In any event, there are other possible reasons for the gap that need to be addressed, and ways to increase the share.

1. Opt out system. There should be no tax on a free agent. Give a compensation pick to team losing a FA, but eliminate the penalty pick where a team that signs a FA loses a pick.

2. Luxury Tax. The LT threshold has plateaued the last 5 years, not even coming close to revenue growth or payroll inflation. This needs to be at least 250 million.

3. Revenue Sharing. Revenue sharing should be reduced to teams who keep payroll at below 50% of their local revenues.

4. Service time. Should be aged based. Players after age 28 with at least 1 year of service time (even 1 AB) are free agents. Players who attain 1500 PA, 500 IP or (150 appearances for pitchers) in their career are eligible for arbitration.

5. MLBAM. MLBPA should get an equity stake in any spin off.

6. Expanded Rosters. Rosters should expand to 28.

7. Miniumum salary. Should increase to 1 million, with salaries for 40 man roster minor league players increasing to 100/250/500 from 5//80/130 (1st/2nd/3rd year).

8. Spring Training for 40 man roster players should be shortened to 30 days

9. JDA. Eliminate suspensions for 1st offense. Go to fine based system. Fines go to a joint fund (MLB/MLBPA ) to spend according to whatever they agree on. Teams have to accept responsibility for their players actions and not look at suspensions as ways to reduce payroll by targeting more expensive players.

Hard to get all of this, and MLBPA weak as it is probably gets none of it. But a threatened work stoppage should get their attention

Michael
Guest
Michael
1 year 2 months ago

The problem is that all the competitive balance strategies have resulted in incentivizing lower spending and poorer performance by teams who choose to go that route. It’s quite possible to run a profitable team and put an absolute stinker of a team on the field–and not care about the product because a) you all this money coming in from other people’s teams, and b) tanking leads to high draft-picks, which leads to talent on reasonable bonuses and low controlled salaries. Even high revenue markets can play the game if they are so inclined–look at what the Red Sox did last year, selling off its high priced vets and losing a ton of games, getting younger talent and the absurdity of a protected high draft pick. Maybe part of the solution is to take the luxury tax and a portion of the revenue sharing and apply it to a pro-rata portion of payrolls. What you don’t use, you forfeit.

Lanidrac
Guest
Lanidrac
1 year 2 months ago

While it’s not too surprising to see the revenue sharing money not funneled back into player salaries, as some of the lower revenue teams use the money as the difference between losing money and finally making a profit, not reinvesting the money from the TV deals into the product on the field is just irresponsible. Unless the team is in full rebuilding mode, they should be doing whatever they reasonably can to win! As much as Tigers’ owner Ilitch gets ragged on for wildly spending money in his quest for a championship before he dies, it sounds like the sport could use more highly competitive owners like him, just not as desperate as he is.

Matt
Guest
Matt
1 year 2 months ago

Here’s a question: why are owners needed at all? Think of a player (plus other baseball-related employees) owned league free of parasitic financiers.

Matt
Guest
Matt
1 year 2 months ago

+1

Just browsing the comments it’s mind-bottling how many morons on here are actually siding with owners.

pft
Guest
pft
1 year 2 months ago

There was a players league not too long ago. In the 1970’s or 80’s. Played in the winter I think, but did not last long. I think it only had 4 or 8 teams in Florida. Google has sent it down the memory hole though

There was also one in 1890

Two-Seam-Hakeem
Member
Two-Seam-Hakeem
1 year 2 months ago

Very easy to say now that the owners have created this immensely successful league and made it everything it is today.

Another Matt
Guest
Another Matt
1 year 2 months ago

And those savvy capitalists should know that dead weight is the first to go; they may have worked themselves out of a job by providing the world with such great value.

Spenser
Member
Spenser
1 year 2 months ago

I don’t understand why this is a problem to begin with. I’m not an economist, but maybe players were getting paid too much to begin with and player salaries are actually trending towards a good balance. What are the consequences for players getting less of the overall income? Pretty sure this drop isn’t enough to keep people from wanting to play in the MLB.

Dr. Obvious
Guest
Dr. Obvious
1 year 2 months ago

Guess the greedy union (who only cares about lining their pockets) need to start considering the lower tier players instead of gouging for the top level guys.

Service years should be 75 days. Then there is no fear from teams to call up September guys and no team will hold back a player from coming up

Plus – why don’t the greedy union give back a little in exchange for better wages to the minor leaguers?

rcbuss
Guest
rcbuss
1 year 2 months ago

How about an updated graph with the NHL data added? Thanks.

Jesse
Guest
Jesse
1 year 2 months ago

The time lag between the last cba and the rapid acceleration of revenues since then is probably the main culprit here. obviously since the dodgers sold for two billion and tv money has gone bonkers, the players and their agents are going to want to get more aggressive in the next round.

Another factor of the general increase in shared money is that teams are locking guys down sooner with guaranteed deals that are hard to turn down. Could we quantify a decline in stars hitting free agency? As the imbalance between player and owner leverage has grown, teams are seemingly able to get more surplus by offering substantial preFA money. I wonder if these insurance policies will shift some of the balance back towards the players.

Rothbard
Guest
Rothbard
1 year 1 month ago

Regardless of the total percentage players get, they should be paid on merit. Wouldn’t it be awesome if we had some metric based on league average, that after saying X% is for players,it would be distributed based on perfomance instead of service time or what the player did 2-3 years ago?

nadeem
Guest
11 months 3 days ago

I’m not an economist, but maybe players were getting paid too much to begin with and player salaries are actually trending towards a good balance. What are the consequences for players getting less of the overall income? Pretty sure this drop isn’t enough to keep people from wanting to play in the MLB.
thanks

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