MLB players are losing money…sort of

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Player salaries are heading in the wrong direction.

Would you like a raise every year? Of course you would! How much should you get? That’s a more complicated question.

You could accept a fixed dollar increase on face value. However, the cost of living climbs constantly, more or less, so a $1,000 raise today means much less than it did 30 years ago. In another 30 years, it might be almost negligible.

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We can give you a fixed percentage increase; let’s call it three percent. That causes problems, too. Three percent of $30,000 is $900, but three percent of $75,000 is $2,250. Should someone who already makes more money get that much larger of a raise? Furthermore, fixed percentages increase the gap between the bottom and the top, making it harder for the younger folks to ever get there.

Alright then, we’ll just give the younger kids larger raises than the oldsters. Hmm, that could cause serious morale problems among senior staff, and will certainly hurt employee retention. This is harder than we thought, and we haven’t even considered job performance!

Baseball Raises, or Lack Thereof

As it turns out, baseball players like raises too. Individual players come and go, and could see very large increases or decreases from year to year. Generally, they expect to see their salaries increase on average, as do most other industries. This is especially true since MLB’s total revenue is booming; they exceeded $10 billion for the first time a year ago.

Except… this year the players didn’t get a raise at all. As reported by AP, the average MLB player salary declined for the first time since 2004. The average salary increased from 2012-2017 by an average of $176,728.60, or a little more than five percent. In 2018, it dropped by $1,436. That might not sound like a lot, but multiply by the total number of MLB players and factor in the cost of living, and it becomes pretty significant. This is even more dramatic considering MLB’s escalating revenue.

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This should certainly be cause for alarm for the MLBPA. Their members earned less while the bosses raked in more than ever. There are a lot of factors influencing player salaries, many of which stem from the collective bargaining agreement, so this is partially their own doing. However, ownership appears to be crying poor when just the opposite is true.

Imagine if this was your own line of work, with your own normal person, non-major leaguer salary. If business was booming, would you accept a pay cut? Hopefully not, especially if you had a union protecting you. Ballplayers should ask serious questions of MLBPA leadership about how this was allowed to happen. Instead, they gave executive director Tony Clark an extension.

Top, Middle, and Bottom

Average salary is not the only measure of how players are faring. Other gauges include the major league minimum salary, which is a fixed number established in the collective bargaining agreement, and the qualifying offer. Established in 2012, the qualifying offer amount is the average of the 125 highest paid ballplayers from the previous year. Free agents such as Bryce Harper and Patrick Corbin received qualifying offers of $17.9 million this winter, which was the average of the top 125 salaries in 2018.

The MLBPA provides a public report annually on average salaries. Here’s how the qualifying offer, average salary, and minimum salary have progressed since 2012 (qualifying offer figures are for the winter following each season listed):

These should give a pretty clear indication of the top, middle, and bottom of MLB pay scales. Since 2012, the qualifying offer has increased by $4.6 million, the average salary by $882,207, and the minimum salary by $65,000.

It would appear as though the gap between the top and the bottom is growing quite a lot. The average salary and minimum salary look pretty much stagnant compared to the qualifying offer. This has dangerous consequences for the MLBPA.

Growing in the Wrong Places

The growth of the qualifying offer is caused by high end salaries rising. The stars are getting paid better, either via free agency or extensions. If the average isn’t increasing along with it, that means the middle tier players are making less. What used to be a $6 million player is now making $3 million, so that a $20 million dollar guy can earn $23 million.

Even worse, more players are likely making closer to minimum salaries. Rather than pay for arbitration eligible players or low tier free agents, teams are just willing to roll the dice with rookies. This sounds nice, but it’s actually highly detrimental for players as a whole. While more players get brief stays in the majors, it’s much harder for them to progress up the pay ladder. Perfectly cromulent major leaguers, such as Billy Hamilton and Justin Bour, get released during arbitration years.

The especially slow growth of the minimum salary is particularly egregious because it’s a fixed amount. The qualifying offer and average salary (somewhat) are subject to the whims of the market. Based on the working conditions set forth in the collective bargaining agreement, players sign for whatever compensation they can get. The minimum salary, however, was agreed to by the MLBPA. Negotiations aren’t easy, but it appears they neglected to secure strong enough increases for their lowest paid members.

Rate of Increase

There’s more than one way to think about salary changes, as described in the introduction above. Here’s how the qualifying offer, average salary, and minimum salary have increased by percentage:

It’s pretty easy to see which direction the increases are heading. 2018 was the first year on the chart in which all three salary measurements failed to grow by three percent. The growth rate of the minimum has been low for a while, but now the qualifying offer and average salary are slowing down as well.

It bears repeating that salary growth is lagging while league revenue is exploding. Player salaries aren’t the only expense that teams incur, but it stands to reason that most of the additional money is simply pocketed by ownership.

What changed that could’ve caused growth to slow down as revenues soar? It’s hard to pin down just one thing, but the MLBPA and MLB signed a new collective bargaining agreement effective for the 2017 season. Here’s what salary growth looks like in the new agreement:

Correlation does not always mean causation, but the qualifying offer and average salary increases are WAY lower in the new agreement. If the goal of the MLBPA was to secure higher salaries for its members, the early returns aren’t promising.

Only the minimum salary appears to be doing better, but keep in mind that 1) minimum salary increases were relatively poor in the previous agreement, and 2) they didn’t increase whatsoever in 2016, mitigating the 5.42 percent gain in 2017.

No matter how you slice it, this is all bad news for MLB players. If the owners are Scrooge, the MLBPA is Bob Cratchit, and the players are Tiny Tim. Unless Rob Manfred is visited by ghosts, the MLBPA needs to rethink how it negotiates.


Daniel R. Epstein is an elementary special education teacher and president of the Somerset County Education Association. In addition to BtBS, he writes at www.OffTheBenchBaseball.com. Tweets @depstein1983

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