The rookie minimum salary in Major League Baseball is a shade over $500,000. For the first three years of a baseball player’s major league career, they don’t really have any negotiating rights at all on their salary, and can’t shop their services to any other team in the league. After that, they are eligible for binding arbitration with the team for three or four more years, before they can reach free agency. While MLB contracts are fully guaranteed in most cases, that doesn’t mean most players will ever get to negotiate one. The average career span is 5.6 years, while it takes six to seven years to reach free agency. While we think of the huge contracts for ballplayers, when we think salary, the average salary is only about $4 million a year. One in five position players make it only one year. A large chunk of ballplayers neither play 5.6 years or make $4 million. MLB made $10.3 billion in 2018. Player salaries seem to be taking up about 50% of league’s profit. Of course, an increasing amount of that money is going towards signing young players abroad, and it also depends on if you count revenue from MLB Advanced Media and the MLB Network. If you do, players may be getting a 43% share of revenues. On the contrary, players are getting closer to 55% if you count minor league pay, benefits, and playoff bonuses.
Ok, I just threw a lot at you, so what does it mean? If players got 55% of that $10.3 billion, they got roughly $5.67 billion. Those poor owners got $4.63 billion then by comparison, before their MLB Advance Media money and their two-thirds cut of MLB Network. By my rough math, that’s another $2.9 billion, going by Scott Boras projections of the market. So owners are bringing home about $7.53 billion, in rough math. That’s about $1.9 billion more than the players. But who’s counting?
Of course, all of this misses a key point- there are roughly 1,200 players on 40 man rosters at any given time, and about 7,500 to 8,000 active, MLB affiliated players at a time, splitting up their $5.67 billion. Again, the average major leaguer is making $4 million a year- there are 30 owners/ownership groups splitting up $7.52 billion, making a cool $250 million (roughly), every year. Yes, they’re making the entirety of the “original” Texas A-Rod contract, annually, on the average for each club. Every four years, they’re pulling a billion in revenue. Most owners and majority partners are already billionaires or damn close. The average team is valued at $1.3 billion. That means an owner can get access to a lot more capital because owning a team. In other words, it’s nice to be a ballplayer, but it’s great town a team.
Most people don’t get that difference though- they view both players and owners as “rich.” $4 million a year average salary, over 5.6 years (absolutely no one hits both of these averages together) is $24.4 million, pre-tax, and that seems like a lot, to them. It might seem small next to $250 million a year for an average club share of the revenue, but what’s the difference in these two numbers, really? Well, I’ll leave that Twitter to explain.
A team’s average share of one year’s MLB revenue is over ten times as much as the average career’s worth of money at the current average salary. Just consider that. In two years, a team would make more on average revenue than the projected Bryce Harper contracts. The gap between the two sides is that dramatic. The capital is exponentially more valuable than the labor in baseball. In baseball, let alone the NFL. This is the sport that is supposedly better to it’s players than football. In fact, you would find similar results in the NBA, NHL, and NFL if you did the math I did above.
In other words, don’t defend the owners when MLB players complain about the slow free agency this year, or allege collusion among the teams to keep salaries down. “The product,” as the NFL refers to it’s players, is producing record profits in the billions, across all sports, but is splitting about half the money up among the whole league. I get it, it’s tempting to complain when you see a really average bench piece in the NBA get a three year, $40 million deal, but don’t- that’s what a relatively fair market says they deserve. They’re producing billions in economic activity for the league and cities they play in. Meanwhile the owners are getting their cities and states to finance their stadiums. While making huge profits.
Just a thought.