We are getting to the point of the lockout where even the most optimistic James Shields truthers like myself are very worried that we will lose baseball games this season. One part of the negotiation that I’d like to focus on and hopefully solve here today is the increase to minimum salary. Let’s start with understanding why the minimum salary increase is important to the players.
Is the average MLB player a millionaire?
One thing I keep seeing is this notion of “Billionaires vs Millionaires” and I am not sure we’re quite defining Millionaire correctly. For those that never reach arbitration, I don’t think they qualify. For example, let’s say you play in the Major Leagues for 3 years earning $570k, $600k, $600k. Yes, you’ve earned in total over a million dollars. But you also probably spent 3 years in the minors. Let’s say they made $60k total over 3 years there ($10k, $20k, $30k), which is generous, and had a $10k signing draft bonus. We’ll also however throw in an extra year of the minors or independent league after their stint in the MLB at $30k. Assuming they try to continue to play.
In total, over 7 years, they’ve made $1.87M, so I guess technically a millionaire. Although, I don’t consider someone making ~$270k/yr a millionaire. Especially when their career is over after 7 years out of school. Let’s pretend that this player is very cautious with his money knowing his career could be short and saves 20% of his career earnings. This would be an impressive feat considering how much gets swallowed up by taxes, but let’s believe it will be done. The player would walk away from baseball with $374,000. That’s nothing to scoff at, but to paraphrase Henry Hill “$374k for a lifetime”.
Now, let’s look at what it comes out to with the new $775k salary. Career earnings $2.425M, 20% savings $485k. I think it’s clear why this is important to the players, when what I described above is a larger majority of the union than the guys making $20M/yr.
How do the owners pay for this?
Let’s first look at what this hike in salary would mean for the owners. The number I have heard batted around for pre-arb players is 60% of the league. That’d be about 16 players per team (rounding up) and instead of figuring out the specific salaries, we’ll assume everyone gets the highest raise possible of $570k to $775k. So per year, $3.28M in additional salary. A drop in the bucket for the Mets and like 10% of the Pirates payroll.
So where does this cash come from? Well, one thing that I have heard is on the table is allowing ads on the uniforms. At first, you’ll probably laugh and say “an ad on a uniform is gonna generate that kind of money?” But yes, yes it will. If we look at the NBA, a league with comparable tv ratings and half the games, you’ll see things like the Lakers getting $20M/year and the Timberwolves getting $3M/year or estimates of $225M/year across the league.
If we can assume that MLB teams could get $5M/year for a patch, it would take care of that $3.28M and leave $1.72M for something else. Maybe a pool of money for pre-arb bonuses? They could, for example bridge the gap a bit and offer a pre-arb bonus pool of $1.72M per team or $51.6M total. Maybe that could be a start?