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Should Major League Baseball Players Get Paid This Much Money?

medium_money_baseballIn 2010 the average salary in Major League Baseball surpassed $3 million for the first time. The 912 players in the big leagues before rosters expanded in September of 2010 averaged $3,014,572. The average rose 0.6 percent from the previous year’s $2,996,106, the smallest increase since a 2.5 percent drop in 2004.

The union’s Opening Day average first reached $3 million in 2007, but the average drops during the season as veterans are released and replaced by younger players earning far less. The union’s average at the start of this season was $3,340,133.

The New York Yankees had the highest final average at $7,604,937, down slightly from $7,663,351 when they won the World Series in 2009. Philadelphia rose from eighth to second at $5,662,551. Boston ($4,821,016) remained third, and the Chicago White Sox ($4,580,868) climbed from 12th to fourth followed by the Chicago Cubs ($4,107,304), who dropped from second. Houston ($1,931,793) slid from 11th to 22nd. Pittsburgh was last for the second straight season at $1,140,598. Cleveland ($1,205,210) dropped from 23rd to 29th.

So why is this increase in pay for MLB players dominating sports salaries?

The bottom line is that there is no salary cap in baseball and teams spend like crazy for less than productive players. NFL and NBA have fewer games, and a salary cap so they spend a lot on fewer key players and then try to build “value” players around them, who make as close to league minimum as possible. They sell some of these players on the idea that if they win a championship with them they can hit the free agent market at a higher value and make up the difference.

Free agency did not exist in MLB prior to the end of the reserve clause in the 1970s, allowing owners before that time to wholly dictate the terms of player negotiations and resulting in significantly lower salaries. Babe Ruth, widely regarded as one of the greatest baseball players ever, earned an estimated $910,696 ($13,748,122 inflation-adjusted from 1931 dollars) over his entire playing career.

The average salary for MLB players is $2,866,544 and for NFL players is $1,250,000. But NFL and NBA players usually have shorter careers because of the abuse on their bodies.

So here is something interesting.

baseball-injury-300x200An NFL running back’s career is about 8 years and is usually one of the most valued players. An MLB pitcher can last 20 years if they are good. I am a proponent for a salary cap in baseball – I think we would see more people like Longoria earlier and I guess on the downside we would see people like Jamie Moyer retire.

The highest paid player in Major League Baseball (MLB) for the 2012 season is New York Yankees‘ third baseman Alex Rodriguez with an annual salary of $30,000,000, nearly $6 million higher than the second-highest paid player, Vernon Wells. MLB does not have a hard salary cap, instead employing a luxury tax which applies to teams whose total payroll exceeds certain set thresholds for a given season.

Let’s not forget that MLB players receive extra compensation if their teams make it to the playoffs. As baseball fans, we’d like to think that our favorite players are desperate to make the playoffs out of an undying competitive spirit that they’ve had since they were toddlers. But of course, that is not the case.

Fans sometimes forget that all players receive a playoff bonus, with the amount of the bonus determined by how far their team travels in the postseason. All the gate receipts from “required” playoff games (those that must be played even if one team sweeps)  are combined into one giant pot and divided proportionately among all playoff teams once the season is over. (Forbes.com provides a breakdown of the percentages.)

The farther a team makes it in the playoffs, the bigger their split of the money. (Even second-place clubs that didn’t make the playoffs get a cut.) Players then vote amongst themselves to decide who gets a share of their team’s winnings. For superstars with bigger contracts, the purse from the playoffs amounts to chump change. But for many baseball players, an extra $50,000 or so can be an awfully nice perk. An argument could be made that MLB players don’t really do that much on the field. For the most part if they’re not hitting, their just standing around in the infield and outfield right? Wrong!

If you only watch baseball on TV they don’t show you that every player on defense is required to move to a position on every play even if they are not in the play.

  • A center fielder  actually starts into a sprint or break on every pitch and there are about 150 of those a game.
  • A catcher runs out every ground ball with the runner (if no one is on base), the right fielder does the same, unless the ball is hit to the right side then he backs up the infielder – everyone goes to a position or backs up a position on every ball.

Also try running to center field and back to the dugout 18 times a game… They do work hard, and don’t forget the hardest thing to do in all sports is hit a 96 mph fastball. Is this worth the pay? I think it comes down to winning.

  • Does the player give your team a better chance to win?
  • How much is winning a Major League Baseball game worth?

Well to some teams it is worth a lot more than to others.  We find the average cost per win by dividing the total payroll of a team by the number of wins that team acquired over the season.

The Yankees spent the most money per win at $2.08 Million while the Oakland Athletics got their wins for dirt cheap at about $590,000 per win. The average MLB team spent about $1.22 Million per win in 2012.  So what do all of these figures tell us? Well, besides looking pretty, they don’t tell us a whole lot just yet. Because the scale is vastly different (a max of $198 Million dollars compared to a max of 162 wins just doesn’t give us two very comparable figures),   we must look instead to how well each team did compared to the league average.

Bryce+Harper+Washington+Nationals+v+Houston+k-AwvKyO0jelThe average number of wins in Major League Baseball for 2012 was 81.  Some teams obviously did better and some did worse.  The Nationals had the best record in the Majors which put their win total at 21% above the league average – pretty impressive.  The Astros had the league’s worst record at a paltry 32% below the league average.

Lastly we want to look at the amount of salary paid out above or below the league average. The Yankees spent an astonishing 102% more than the league average on salary which netted them 17% more wins than average.  Not exactly a 1-1 ratio but they play in a competitive division. The Padres spent 44% less money on salary in 2012 but only saw a difference of -6% wins off league average.  Hey, they aren’t spending money, but they aren’t losing as much as we’d expect either.

Ok, so its clear that spending a lot of money will get you wins, but not all the time. Generally, going cheap on payroll will mean a losing season but not every time either. More important than salary or superstars is a team’s ability to draft well, groom young players in the minors, and understand which players are worth the money and which aren’t.

That is easier said than done.

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10 Responses to Should Major League Baseball Players Get Paid This Much Money?

  1. Johnny B May 17, 2013 at 11:13 pm #

    I love baseball. Whatever they want to pay those guys is up to them. Thanks for the post Matthew, You brought the thunder with a stellar article.

  2. Andrew Wells May 18, 2013 at 6:19 am #

    I wish A-Rod would give some of that money back so my Yankees could find someone better and more deserving of the money.

  3. Kristin May 18, 2013 at 1:39 pm #

    This is an amazing article that makes my mind warp.

  4. Casey May 18, 2013 at 7:50 pm #

    Can the owners afford not to pay the players?

  5. Ian k May 19, 2013 at 7:08 am #

    Wow! What a strong post! I think the MLB is an amazing organization. Its only money.

  6. Derrick May 19, 2013 at 7:16 am #

    If the players didn’t get the money, it would just go to the owners.

  7. Karen May 19, 2013 at 11:08 am #

    I think its horrible that the world we live in has the pay scales of different professions so out of wack. Baseball players make more money than teachers? Whatever..very sad.

  8. David Eastman May 19, 2013 at 8:00 pm #

    i think they are way overpaid. Great article!!!!

  9. Ray May 25, 2013 at 11:44 am #

    @ Karen.. God bless you but why in the world should pay scales of different professions be close to each other? Also, some teachers are terrible but due to their unions, bad teachers are very hard to fire and make as much as caring teachers. In the end, how is it anyone else’s business what pro athletes and their managers can work out with their bosses, the team owners?

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