In its most recent proposal, the Major League Baseball Players Association asked that 80% of players with at least two years of MLB service be considered arbitration eligible. This is up from 22%, which has been the cutoff since 2013 when it was increased from 17%. In the ongoing CBA negotiations, MLB has shown no interest in any change to the 22% figure. The MLBPA started these CBA talks at a position of making all 2+ players eligible for arbitration, which had been the case from the inception of salary arbitration in 1973 up until 1985.
I thought it might be interesting to attempt to quantify the MLBPA’s request. First, we should get an idea of how many additional players would be thrown into the arbitration system each year. As I mentioned on Twitter last week, the 80% request, if in effect this offseason, would mean changing the current Super Two cutoff from 2.116 (two years and 116 days of MLB service) to 2.028. Keep in mind that the Super Two cutoff is always a moving target.
By my count, under the 2.116 cutoff, 26 players currently qualify as Super Two this offseason, led by Vladimir Guerrero Jr., Austin Riley, and Bryan Reynolds.
Under a cutoff reduced to 2.028, 79 additional players would qualify as arbitration eligible. I’ve listed them below along with projected arbitration salaries from Matt Swartz. Note that our arbitration projection model sometimes spits out a number below the league minimum, in which case we set the projection equal to the minimum. For this exercise, we’ll use a minimum salary of $700K.
- Yordan Alvarez, Astros – $4.6MM
- Bo Bichette, Blue Jays – $4.6MM
- Will Smith, Dodgers – $3.8MM
- Kyle Tucker, Astros – $3.6MM
- Cedric Mullins, Orioles – $3.4MM
- Tommy Edman, Cardinals – $3.3MM
- Ty France, Mariners – $3.1MM
- Dylan Cease, White Sox – $3MM
- Tyler Rogers, Giants – $3MM
- Logan Webb, Giants – $2.9MM
- Zach Plesac, Guardians – $2.7MM
- Aaron Civale, Guardians – $2.6MM
- Jordan Romano, Blue Jays – $2.5MM
- Austin Hays, Orioles – $2.4MM
- Zac Gallen, Diamondbacks – $2.3MM
- Trent Grisham, Padres – $2.3MM
- Jose Urquidy, Astros – $2.2MM
- Sean Murphy, Athletics – $2.1MM
- Myles Straw, Guardians – $2MM
- Austin Gomber, Rockies – $2MM
- Nick Solak, Rangers – $2MM
- Gregory Soto, Tigers – $1.9MM
- Ranger Suarez, Phillies – $1.8MM
- Brendan Rodgers, Rockies – $1.8MM
- Alec Mills, Cubs – $1.7MM
- Nestor Cortes, Yankees – $1.7MM
- Touki Toussaint, Braves – $1.7MM
- Dustin May, Dodgers – $1.7MM
- LaMonte Wade, Giants – $1.7MM
- Austin Nola, Padres – $1.6MM
- Devin Williams, Brewers – $1.6MM
- Jaime Barria, Angels – $1.6MM
- Josh Staumont, Royals – $1.5MM
- Genesis Cabrera, Cardinals – $1.5MM
- Keston Hiura, Brewers – $1.5MM
- Griffin Canning, Angels – $1.4MM
- DJ Stewart, Orioles – $1.4MM
- Tyler Alexander, Tigers – $1.4MM
- Michael Kopech, White Sox – $1.4MM
- Cole Sulser, Orioles – $1.4MM
- Matt Beaty, Dodgers – $1.3MM
- Kolby Allard, Rangers – $1.3MM
- Pete Fairbanks, Rays – $1.3MM
- Oscar Mercado, Guardians – $1.3MM
- Steven Duggar, Giants – $1.2MM
- JT Chargois, Rays – $1.2MM
- Michael Chavis, Pirates – $1.2MM
- Jose Trevino, Rangers – $1.2MM
- Brad Wieck, Cubs – $1.1MM
- Zack Littell, Giants – $1.1MM
- Josh VanMeter, Diamondbacks – $1.1MM
- Mike Brosseau, Brewers – $1.1MM
- Rowan Wick, Cubs – $1MM
- Darwinzon Hernandez, Red Sox – $1MM
- Sam Coonrod, Phillies – $1MM
- Luis Rengifo, Angels – $1MM
- Justus Sheffield, Mariners – $1MM
- Dillon Tate, Orioles – $1MM
- Jose Ruiz, White Sox – $1MM
- Ryan Helsley, Cardinals – $900K
- Erik Swanson, Mariners – $900K
- Jacob Webb, Braves – $900K
- Anthony Alford, Pirates – $900K
- Duane Underwood, Pirates – $900K
- Edwin Rios, Dodgers – $900K
- Greg Allen, Pirates – $900K
- Sam Howard, Pirates – $800K
- Dennis Santana, Rangers – $800K
- Colin Poche, Rays – $700K
- Nick Margevicius, Mariners – $700K
- Austin Davis, Red Sox – $700K
- Hoby Milner, Brewers – $700K
- Cody Stashak, Twins – $700K
- Yoan Lopez, Phillies – $700K
- Hunter Harvey, Giants – $700K
- Jonathan Hernandez, Rangers – $700K
- Tyler Beede, Giants – $700K
- Javy Guerra, Padres – $700K
- Julian Fernandez, Rockies – $700K
To calculate how much additional money MLB teams would be paying under this system in 2022, I found the difference between the projected arbitration salary, and a hypothetical $700K minimum. So, for example, Yordan Alvarez and Bo Bichette would gain the most, an additional $3.9MM each in ’22. Note that it’s possible a few star players might make more than the league minimum even as a pre-arbitration player, like when Mookie Betts was renewed for $950K in 2017, but we aren’t modeling that in.
So, for these 79 additional Super Two players under the MLBPA’s proposal, we estimate that teams would pay an additional $72.4MM in 2022.
By itself, MLB might be willing to stomach something of that nature. They’ve shown a willingness to put $15MM into a pre-arbitration bonus pool, and I assume they could be pushed up higher if the players drop their request to change Super Two eligibility.
But there’s the rub: MLB doesn’t want any additional players thrown into the arbitration system. Doing so, particularly for star players, would increase that player’s total arbitration earnings by a significant amount, and also help push up the pay scale.
To illustrate this, we asked Matt Swartz to model out a couple of players who have been through the arbitration system already.
The first is Francisco Lindor. Lindor went through arbitration three times, earning salaries of $10.55MM in 2019, $17.5MM in 2020, and $22.3MM in 2021, for a total of $50.35MM. Under the MLBPA’s proposal, Lindor would have been arbitration eligible four times. This means he would have earned a lot more than the $623,200 he did in 2018 – 10.7 times as much, in our estimation. Here’s how our model saw a Lindor who went to arbitration four times, keeping his actual statistics the same:
- 2018: $623,200 -> $6.7MM
- 2019: $10.55MM -> $14.9MM
- 2020: $17.5MM -> $20.7MM
- 2021: $22.3MM -> $23.4MM
- Total: $50,973,200 -> $65.7MM
- Difference: $14,726,800
Our other example is Josh Bell. He’s also set to go through arbitration three times, earning $4.8MM in 2020, $6.35MM in 2021, and a projected $10MM in 2022 for a total of $21.15MM. Here’s how that might have played out had he gone through arbitration four times:
- 2019: $587K -> $2.8MM
- 2020: $4.8MM -> $8.1MM
- 2021: $6.35MM -> $9.6MM
- 2022: 10MM (projected) -> $13.2MM
- Total: $21,737,000 -> $33.7MM
- Difference: $11,963,000
The Pirates traded Bell in December 2020, knowing he was set to get a bump from $4.8MM to $6.35MM. MLB might argue that the Pirates would have traded Bell a year earlier if he was slated to jump from $2.8MM to $8.1MM. They might say that not only would expanding Super Two be bad for their pocketbooks, it’d be bad for “competitive balance.” I imagine the MLBPA would argue that the Pirates could have afforded Bell in either scenario.
There’s also the chance that shifting the arbitration pay scale a year earlier for a good number of players would simply result in them getting non-tendered a year earlier and hitting the free agent market. If you look at the list of 79 players above, you can be assured that many of them will not make it all the way through arbitration even if they earn the league minimum in 2022.
Looking at a player like Bell, if he was coming off a poor 2020 season and was set to earn $9.6MM instead of $6.35MM, he might have simply been non-tendered. As we’ve seen with an example like Kyle Schwarber, this is not necessarily a bad scenario for the player, since Schwarber earned more in free agency than he was projected to get in arbitration, and he’s set to parlay a strong bounceback year into a good multiyear contract.
If you wanted to model out the MLBPA’s 80% request further, you’d have to retroactively apply it to all the players who would’ve been affected and see how much money moves toward the players in that scenario. But it’d be impossible to guess who would’ve been non-tendered when, so it’s not an exact science. At any rate, we may learn this week whether MLB truly has any willingness to move off the 22% Super Two cutoff, even if it’s not to 80%.
I wish I could make 700k and be bad at my job. I never heard of Hoby Milner before today and looking at his numbers I see why. Good God how do have an era of almost 5 and still have a roster spot? Fans must see this guy come in and go “well we are screwed”
Well, try being a part of a $10 billion dollar business then?
So anyone who works in the Auto industry or Medical industry should be able to make that complaint? Not that they are the only industries larger than MLB.
Ok stymeed, what do the top people in the auto industry make? The top person is worth $233.6 billion and made enough that he will pay $11 billion in taxes for one year. The top 500 or so in the auto manufacturing industry make $1 million per year or more. Ford alone had 56 people that made that much or more. GM 71. That is just in the manufacturers, not the parts or repair or other related portions of the auto industry. No one is paying to come see them either. The top people in the medical industry? There are 10 that are billionaires. A few dozen that are worth over $300 million. The top paid, Mike Pykosz of Oak Street Health, made $568 million in 2021 and 23 people in that company madde more than $1 million including the CFO and CMO who made more than $200 million. Bezdek and Hisrsch of GoodRX made $497 million in 2021. My orthopedic surgeon made $1.2 million last year, my wife does his books, and he is just one of hundreds, if not thousands, just like him across the country. He is also not in the highest paid field in the medical industry. Ballplayers are entertainers. What did the top actors make in 2021. IF you said $87 million you would be right. You blew your own argument by using those industries, but others are no different.
“bad at his job”. He’s still unquestionably elite and borderline phenomenal compared to what you would do in the MLB
Haha really? Logic is not your strong point, is it?
Unless your think OP is a professional baseball player also, that is irrelevant
Sorry too big. Let me try again. Unless your think OP get money to am play the baseballs too, no am for same thing, Thunk.
I’ll hold off on mocking your professional burger flipping skills, however.
Let us know when you’re good enough at your job for millions of people to pay to watch you do it.
Meanwhile all of the minor leaguers are eating Top Ramen and hot bunking 6 in a house. The community is being extorted to the tune of $1 billion for a new stadium every 20 years and my cable bill keeps going up.
Minor league baseball is a dead end job.
Maybe this will make it more clear. Did you ever see the movie Bull Durham? How many of those guys would have been better off never playing minor league baseball. All but one, and he was a bonus baby who wasn’t worried about a paycheck.
No one in their right mind is playing minor league baseball for a paycheck, and if they are, they need to find a new job.
They need.to get out while they are young.
Waaaaaa waaaaaaa poor millenial/gen z minor leaguer babies! Jeez, grow a pair, suck it up, work hard, do your job and maybe, just maybe, you will be promoted to make the big money. But quit the whining already about poor minor league players.
Really? How much is your yearly/hourly wage? You do know they make less than minimum wage spread across 12 months? Just do a little research before posting ignorance.
You tell ’em, Redstitch. Darn babies always whining and trying to improve their wages and working conditions!
They should just grovel at their bosses feet and thank them for any crumbs they drop on the floor like you.
Yep. And I would have never thrown away my 20s on a dead end job.
If these players don’t have a career in baseball, they need to get out. If they do have a career, they probably got a large bonus.
There should be less minor league teams. Trapping these kids in a dead end job is the real crime. Doubling their salary doesn’t help them make the correct life choices.
I have met many ex minor players. They are pouring me a drink while I play video poker. Thank God I wasn’t good enough to be drafted or I would have wound up just like them.
What’s cruel is giving them a reason to stay in baseball. But you would rather feel good than do good.
@ kellan
You know they aren’t paid that rate for 12 mo. of work? Do a little research! Just like teachers, they can work a second job in the off season.
Kellin, I hear your insult and I say to you, I am fully aware of what it is to be an aspiring major leaguer in the minor leagues as I was one. Understand that there is a trade off here. You invest time and effort in your training (and that is what MiLB is) and make a determination that it is worth the long term investment in your future, or you get out. It is NOT a long-term career to be in the minors. It is training. And, yes, it is a gamble. That simple. For me, I determined, especially after an injury, that it was not worth it. So I got out after 2 1/2 years. But my point is today’s young people (18 to 34) can’t wait and can’t accept delayed gratification. They expect immediate promotions and payouts. That is not how the real world works in anything. And it is an unfortunate reoccurring social construct of today.
Well said..
So – speaking of insults, you just indiscriminately insulted everybody in the “18 to 34” cohort. Making sweeping judgements about any large age-delineated segment of the population is just lazy and mindlessly reductive in the first place.
But apparently that was all just in service to your desire to get on your high-horse more broadly – and grace us all with your own silly generalizations regarding today’s “social construct”. The only “construct” here, is your own – and sorry, but your cliched pontifications about “the real world” are shallow.
If your job paid 700 thousand to 40 million and there were less than 700 spots, You’d be competing against the best in the world and you’d very likely be unemployed.
There are 780 active players on MLB rosters.
It was 25 x 3o is 750. Ok 750. My point was completely invalidated.
There isn’t 780 until the basic agreement is changed. The CBA was 25. It’s very likely 26 will be made permanent.
There were 26 man rosters last season. Agreed to by both parties. 26×30=780
It was just temporary. But anyway. Your point valid.
It’s funny because while he might be considered ‘bad’ at his job he’s far more successful than whatever you do, and you probably think you’re great at it….
No one in MLB is truly “bad” at their job, it’s simply a talent level. Pitchers with ERA’s over 5 are far more common than you would think. Every team needs mop-up men, long relievers and spot starters, and even the least talented pitcher is able to get MLB hitters out. As for minor leaguers, MLB should reduce the number of teams, eliminate the weakest players, and pay them a living wage.
MLB already did that. They eliminated 43 minor league teams and over 1200 players. Paying all the minor leaguers a living wage would cost MLB about the same as a decent, but not great reliever.
I live about 200 miles from the nearest MLB stadium, but only 30 from the nearest AA stadium. It’s bad enough that MLB slashed MiLB teams already, without calling for another set of cuts.
Greedy owners need to pay the players that earn the clubs’ money, including the minor leagues.
Said it before and say it again.. Same teams, same owners griping about increasing payouts of anything increases. That group isn’t going to agree to giving the MLBPA anything extra, unless what they perceive as “the haves” pay for it in the entirety and we see on this page, fans saying there should be expansion?? For more of the same?
What is needed is stopping the siliness of these negotiations (both sides) and reallity put into play. owners who more or less run the sport do the negotiating and the players ask for realistic goals. not fantasyland.
The owners are trying to do what many businesses do…get maximum productivity for minimum dollars. The players really can’t agree to a system that binds them to take a salary that lets the lowest revenue teams define the player’s effective ceiling. Nor should they stand back silently when teams deliberately choose the path of subsidized non-competitiveness so as to make more.
$80 million more for arb2, and given it’s exponential its going to be bigger later arb numbers for this group because they made it early. its a huge monetary increase on top on top of the players asking for another ~$100 million for pre-arb players. that’s not even close to reasonable.
I don’t think a lot of people here get that at all. Regular fans don’t. Every year when teams are haggling with young stars over 400k in their first arb fans ignorantly complain because they’re too stupid to know how the system works.
Sure it’s unreasonable. But that’s negotiations. I ask for a lot, you reply with a little more than you did before. They probably end up somewhere around 50% instead of the 80%. More Super Twos but not as many as the initial ask.
Its more than reasonable. $72.4 million is the actual figure. Add the $115 million pool for pre-arbitration eligible players and you have $187.4 million. The gap between the players and the owners each earning about 50% of revenue like the players do in every other major sport in the US is over $2 billion.
Great insights. It seems like a trade-off is available between arbitration and the bonus pool, but to get there they would have to agree on the dollar values. It’s fair to assume both sides use models to estimate the value of their proposals but the models they use probably spit out different numbers, so the value/costs become part of the dispute instead of a path to an agreement.
kinda interestingly similar to the old wage increase and employment tradeoff that all econ students learn about. Increased arbitration could lead to more players not being tendered a contract
It surely would, but those players would then become free agents and their salaries set by what passes for a market in baseball. What they get as free agents is likely going to be more than they would have received under the existing arbitration system.
They need to close the pay gap on both ends, if they can.
The mere fact that the median salary dropped by over 30 percent during the last CBA shows a huge migration from arbitration eligible and free agent players to minimum salaried players. This is the result of a growing pay gap that rewards the very best players at the top, but leaves those in the middle out.
Increasing the minimum salary and reducing the size of the pre- arb class by moving the cutoff back would help a lot to narrow the pay gap.
The more players eligible for arbitration and free agency, the more they will be paid based on performance vs service time. It’s a hybrid mix during arbitration years, but there is no performance component in pre arb players.
I know talking basic business is waisted here, but as salary is a percentage of revenue, if you pay a Correa $30mm per year, that means there’s that much less to be spent on his fellow teammates. Its got to come from somewhere. So if you raise the pay of those at the bottom as well, that’s gonna cut into number of mid priced players as well. High priced star players are always gonna have jobs. Rookies will always find jobs. The ones in the middle will always get squeezed. Payroll is a planned number. Its not moving unless the revenue changes.
I believe you are right, but MLB has made it quite plain that they will resist any CBA change that puts upward pressure on salaries even if its more immediate impact is helping baseball’s “middle class.”
For me, this was an excellent way to fully understand the economics ofchanging the arbitration rules. I’ve been thinking arbitration should begin after two years (no percentage of years or days added).
But this retrospective gives me a much clearer view of why MLB is against changing the current rules.
While I understand that—as Tim posits—the cost of some of these players (under a new system) would probably mean they were non-tendered, I can see a number of player with whom I’m familiar getting more than I think they’re currently worth—but I know the team would have a hard time dropping them. So I think—regarding this particular issue—I can understand why MLB takes its current stance.
This certainly provides informative context with actual numbers. It also demonstrates how reckless teams are with the “competitive balance” excuse that teams would use, as Tim rightfully notes in the article. The Pirates didn’t even spend their revenue sharing, so I’m pretty sure they can afford to give a raise with money that isn’t even theirs.
Teams claiming competitive balance is the equivalent of players asking how they are going to feed their families on these salaries. It’s a smokescreen to further an agenda and nothing more.
My guess is they asked for that increase expecting to be met in the middle. 50% seems reasonable.
Why is more than doubling the number “reasonable”? In my business, if a major component to my expenses just doubled I would in no way believe that to be reasonable.
The Super-2 class is maybe 5% of overall MLB player payroll expenses. Its not a major component.
Everything gets bumped up. Why is that difficult to understand?
Teams are employing more and more minimum salary workers in place of the higher earners. In response, players want to raise that minimum salary. Why is that difficult to understand?
GB. That’s a non sequitur. You do understand this will drive up everyone’s salary right? Of course you do, you’re not stupid.
You may feel they deserve it, which they probably do, but if you were to argue that this only affects a small number of players, then you are wrong.
You know this guy is wrong. Why you are arguing he’s right is very difficult to understand. Why everyone’s salary will go up is very easy to understand.
.
Halo, sorry for being a bit of a smart @$$. I didn’t have the opportunity at the time to flesh out my thought, so I should have waited.
We all can see teams are reducing payrolls by increasing the percentage of (relatively) low-paid players. The average MLB player salary has decreased since 2017. That’s indisputable.
The question is, what – if anything – should be done about this? The players want those who are contributing more to be paid more, through various means – a higher minimum, a bonus pool, greater arbitration eligibility. In return, one of the things they’ve proposed a 12-team playoff, valued at roughly $100M per year for owners.
There’s common ground in there somewhere. It’s not going to be the owners surrendering that entire $100M to the players, nor should it be. However, there needs to be acknowledgement that players’ percentage of revenue has dropped significantly in the last 15-20 years, and players are going to push for that to change direction.
And, of course, the owners don’t want that, so they’re pushing for further limitations on payroll spending. My guess is they’re targeting to keep things pretty much where they are now in terms of revenue split, which has been, and would continue to be, a big win for them.
We both believe these younger players should make more money. I really don’t have an issue with “temporary” players making the minimum of 600 thousand. But if you are on a big league roster for most of the year, you need to get paid. You need to reach arbitration earlier. And I love that big league teams are now limited to the number of times a player can be sent down.
There is plenty of common ground.
I think they’ll reach that common ground in the next week. And I don’t consider myself an optimist.
I tend to also believe that they’ll reach an agreement, if only because I think that some of the more offensive proposals are tactical rather than the parties being really insistent on their terms.
Both sides know which of their proposals are non starters.
– The CBT penalties and paltry increases of one percent per season
– Cutting revenue sharing by $30 million
– A 2.0 year arbitration cutoff- or even 2 plus 80%
– minimum salaries that are fixed, or don’t increase at all for five years
Those are the biggest obstacles, and even the arb cutoff might have a bit of flexibility depending what else is in the deal.
If the owners are stuck on increasing CBT penalties or players are hell bent on much higher super 2 cutoff, we’re in for a long layoff.
Why should the owners give one penny more or one more inch??? Players are already vastly overpaid. If I were the owners, I’d lock them out indefinitely, kill the union off and completely rebuild the League’s economics. The players will come back with their tails between their legs and beg for a job at a reasonable salary.
Under the National Labor Relations Act, you can’t hire permanent replacements even during a negotiations impasse. MLB would need to show legitimate and substantial business justification to have permanent replacements. Which would require them to open their books in court. I doubt they want to do that. Also, it could open them up to a reassessment of their anti-trust exemption, and they would be loath to lose that.
How many of the players listed between $800K – $2.5 million would NOT be non-tendered and be replaced by a minimum wage prospect?
Given the substantial financial outlay teams will be paying for guys like Lindor and Bell, it only stands to reason teams will be looking to offset this by pulling the plug on replacement level performers a year earlier than they do under the terms of the last CBA.
or passing the cost increase onto the fans
How many times do people have to be told, team payroll has nothing to do with the prices a fan has to pay? Ticket prices, merch prices, concession prices are entirely the result of supply and demand, settling on the highest price people will pay to return the highest profit. It’s basic economics, it has nothing to do with offsetting other costs.
You can’t educate the simpletons. They repeat the same wrong things over and over again.
I doubt the owners are going to just accept lower profits. I suspect they will find ways to charge fans more such as for concessions, parking and merchandise.
He’s doubling down on it even. Ey yi yi..
topchuckie,
Some people apparently will never understand the supply and demand concept. Ignoring it makes it easier to complain about families supposedly being priced out of attending games because players are paid so much.
I understand the theory of supply and demand very well. It is not always in effect. I don’t see how anyone here can tell us what owners will do with prices. If you have some kind of inside information, please give me a general idea how you got it. Have you ever seen all the empty expensive seats between first base and third base at Yankee Stadium? It is because the prices are so high that very few people want to buy them. They are obviously NOT pricing by supply and demand.
I mean.. those seats are usually held by rich season ticket holders who don’t alway go to the games….
@topchuckle
How do half empty stadiums fit with your theory? If prices are based on demand, wouldn’t stadiums be closer to full? Do you believe that half full stadiums is the level that provides the most profit?
Vlad: Those seats have been so empty that the YES Network would avoid showing them in their shots of the field. If true, that would be a lot of lazy rich people.
Not really. Tickets are priced with sophisticated demand models, the same way prices are set dynamically on Amazon. They don’t keep lowering prices until the seats are full (an improbability in many markets anyway) they price them to optimize profits.
The seats behind home plate are often empty at Twins home games. It’s the elite club seats. And there’s still a waiting list (about five years I’ve been told) to get a seat there.
No doubt someone owns those season tickets and is too rich or lazy to list them on stubhub when they don’t come to the game. Some of the best seats at Dodgers Stadium are the same way.
That is exactly what the owners will have to do if they want to have a 2022 season. Since the last CBA was signed MLB revenue rose 30%, it would have been much higher if not for 2020, and player median salaries has gone down 20%. In 2021 players made about 38% of MLB revenue. In the other major sports in the US the lowest percentage was 48.8% in the NFL. MLB owners are going to have to agree to give the players a higher percentage of revenue, which would lower their profit margins if there is going to be MLB baseball in 2022
MLB employs some of the brightest marketing gurus in the world. They set prices to maximize profits, catering to various levels of demand for various games and concession items. If they raise ticket prices, it’s because they think that people are willing to pay those prices.
But it’s not like paying salaries is completely independent of prices. When the Tigers signed Miguel Cabrera, demand for tickets soared. Eventually, that demand will result in higher ticket prices for fans.
Fans love a winner and if they think that paying a player is going to put a winner on the field, demand goes up and ticket prices with them. But it’s far from a direct connection.
One HUGE problem in MLB is that teams only keep 52% of their gate receipts as 48% goes into revenue sharing. So even the marginal value that they get from higher player salaries converting to wins drives attendance up, they only keep half of that increase. Gate receipts are the one source of revenue that pays immediate dividends when a team wins. TV contracts are all long term deals.
“ 48% goes into revenue sharing. ”
Exactly, one of many problems with revenue sharing and why it creates lackluster team performance rather than competition.
The problem with revenue sharing isn’t that it’s too much, but too little. All regular season revenue should be shared equally, and teams only able earn more through postseason revenue or gain competitive advantage from high draft picks as a reward for succeeding.
BlueSkies: So this is jacking up prices where they can. This what I expect owners to do to make up for higher player salaries.
Not only is this failed economic reasoning your response has nothing to do with my point.
BlueSkies: I was responding to your post about how ticket prices are established which made a lot of sense. So, are you saying the owners will in no way attempt to pass increased costs onto fans? Businesses pass increased costs onto consumers quite often. For example, the cost of houses recently went way up when the cost of lumber went way up.
In no way are they able to pass off higher costs to fans. The prices they charge are the prices the fans are willing to pay. They will never charge us less than we are willing pay, nor can they charge us more. Basic economics.
BlueSkies: Yes. Very true. No one forces anyone to buy anything at a given price. It occurred to me that I neglected to say in this whole conversation that I largely expect fans to pay whatever higher prices come our way (tickets, concessions, parking, merchandise, etc.). We have over the years and I know I will. So, I guess people thought I was saying that owners can force us to pay higher prices. That is not true. Thanks for bearing with me.
As the minimum salary goes up and the number of arbitration eligible players goes up shrinking the size of the pre arb class, fewer and fewer players would be non tendered.
I am not entirely convinced telling them does anything..
Look at the list. How many were non-tendered or are even in danger of it.
You get a bigger arbitration payday if you do great. You get a substantial raise if okay. But if you become too expensive you become a free agent and anyone can sign you for less except the team that develooped you.
Which brings the question, big payday for service time, or for production.
Or, even if you went with set salaries of say, $700,000, $900,000, $1.2 million for your first three years in an organization, some teams would balt at paying a part-time guy the higehr salary…while they are still developing and haven’t become a potential fulltime player…yet.
And, as shown, iif you arbitrate earlier, than the cost just keeps going up-and-up-and-up dependng on play.
Major league ballclubs are now torn between figuring out how to sign a young player with promise thru 5-7 years of contracts, not to overpay if the player does not develop, and the player not to sacrifice if they become a superstar sooner rather than never.
Maybe baseball has to go to a system where every year every player with major league experience becomes a free agent, but is only allowed to sign a one year contract. But there is a cap on what teams can spend for the full 40-man roster. And, also, the lowend has a level they can’t go below. How would that work, in the scheme of things?
There isn’t going to be a cap because the players have bargained for years against a cap. Get that through your thick skull. Stop suggesting it, it’s a stupid idea.
That would work horribly, for teams and players.
If a player doesn’t develop. teams simply send him down or non-tender him. There will never be a salary cap until owners open their books, agree to guarantee players 50% of revenue, share revenue 100% with other teams, and the government granted anti-trust exemption is lifted. ALL of those points are in place in the all other major sports in the US.
The NBA has a “soft cap” that at this point is softer than MLB’s CBT threshold.
They have eleven exceptions from the Bird rule, non Bird rule, Early Bird rule, rookie exception, minimum salary exception mid level exception, etc, etc. Eleven of them, mostly aimed at keeping players already on the roster or adding a certain class of lower paid player. More NBA teams cross that “cap” than in MLB, where just two teams were over last year.
MLB should have their de facto cap with taxes but also have a lower end tax with taxes that are enough of a deterrent to incentivize spending.
The 80 percent is a ridiculous figure. Somewhere between 30 and 40 percent sounds right.
At one point every player was arbitration eligible after 2 years, so 80% isn’t ridiculous historically. I’m not sure how or why 30 to 40% “sounds right.”
You want the best young players to hit arbitration sooner. You want them called up sooner. You want less service time manipulation.
About one out of every three players sounds about right. I would say most players are brought up simply to help out and fill in for an injury with no real long term staying power?
So, 30 to 40 percent sounds right..
It doesn’t have to be a percentage, which creates a lot of guess work.
Manipulation to avoid arbitration is much less common than it is to delay free agency. In fact, a player who has his call up delayed for a few weeks tends to be in the super two group and will get four years of arbitration.
I would make the super two cutoff at 2.5 years, which is 2.086, just 30 days less than it is this off season, but any player who has an all star selection becomes eligible after 2.0 years. But then, they never listen to me!
If you are up for a half season, that makes sense to me. But If possible I’d like to factor in PAs and innings pitched
If you are pitching 50 innings or have 200 PAs, You’re a super 2.
That’s not close to 80 percent of the players called up. The top third sounds fair to me.
By the way, I’m an Angel fan and out of the dozens and dozens of players with less than 3 years service time, not one deserves arbitration.
So 30 t0 40 percent seems more than fair. Eighty percent is absurd.
Jesse Rogers
@JesseRogersESPN
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MLB and the MLBPA have been inside Roger Dean Stadium for over three hours. Unclear how much time they’ve spent together or in different rooms but neither side has come out yet.
It was 37 years ago when the players bargained away arbitration for 2 year vets. Hardly has significance to these negotiations. The 22% eligible now is the only figure which matters, and that’s why 30-40% sounds about right.
You didn’t read the article, did you? Hard to have an opinion worth posting, if you have no clue what was said past the headline.
This is what I was saying toward the end of our comments in the last thread- with the poll asking sentiments on the season/ lockout.
Going all the way back to 2 years for arb eligibility is a non starter with owners, and the players know this. 80% is still not going to fly, although it should be enough to let teams call a prospect up in September without giving him an extra season of arbitration. So they’re going to have to come down, if they get any movement at all.
The players have strategically tied the bonus pool proposal into the arb eligibility proposal as a trade off, knowing that many owners simply hate arbitration as it pushes salaries closer to market value.
I counted 35 additional players who would have been eligible this year with a cutoff of 2.5 seasons (which is 2.086 or 30 days less than this year’s cutoff of 2.116.
In monetary terms, owners would be much better off to be very generous with minimum salaries. They could boost salaries for half a team’s roster (13 players) to $750K at a cost of $2.33 million per team. And they’d get a clear majority of players in support as it instantly and significantly improves their salary.
They already limited the number of players that can be called up in September to 2, so that makes no difference at this point. The KEY point is this. The players are looking to make up part of the $2+ billion gap between the percentage of revenue they made in 2021 and what the lowest paid players in the other major US sports made as a percentage of revenue in their sport. Tim pointed out that this is $72.4 million. The $115 million pool for pre-arb players would add to that a tiny bit. They are still not even close to equitable. Especially when the owners are asking for expanded playoffs and patches on player jerseys that would add a half billion more on the owner’s side of the spreadsheet. People REALLY need to understand what the REAL issue is. All these things are just small points in a much bigger picture.
Another great article, Tim- thanks. Hold strong, owners, and don’t give in anymore! The country will hardly care or even notice if there’s no “baseball” season, and you know it and you also know that you could make more money with other investments than with “baseball”. Minimum salary is immediately in the top 1% of incomes and average salary (more than $4 million!) is in the top 1/10th of 1% of incomes and lifetime benefits after 6 weeks on a MLB roster, for playing a game with a stick and a ball and mittens 7-8 months per year. ENOUGH IS ENOUGH!!!
Folks, we’re so sorry, we’ve been looking for our boy ever since he got banned from the comment section of The Athletic. Thanks to the anonymous tipster who alerted us to his whereabouts here. Time to come home now, kiddo. Got a nice hot pierogie with your name on it.
Thanks again,
Bob N.
You’re a liar because I have never subscribed to the Athletic or commented on that website, nor would I ever pay for a subscription for a “baseball” website. Complete lie.
I still think its funny you’re supporting Rockefeller or Getty. Must be nice to be part of the .1%
Completely agree. Salaries have gone nuts. As much as I love the players (at least most of them), no player is worth $30 million per year. A top earner should make $15 million. That’s it. What should happen is what happens in the real world. Your salary is commensurate with your PERFORMANCE. I’d like the League to lock out the players indefinitely and completely rebuild the games’s economics. Completely performance-based salaries.
The number of players still playing past age 30 has decreased dramatically in the last 20 years. The average age of players debuting has moved up over a year in the same period, to over 25. So players are mostly aged 25-30, which is their 3 pre-arb years and 2-3 arb years. Analytics say the 25-30 year old range is when players are in their primes. So MLB is getting the players’ prime years at a huge discount and then moving on the the next group, except for the super-stars (and they are done earlier, too).
This rule change absolutely makes sense to pay players adequately for their prime years.
$570,500 (& going up) is not adequate?
In all cases it’s less than market value, and in many, far less. This is the only relevant definition of adequacy.
Truly elite number 100 +/- players and few of them have 3 or less years of MLB.
$570,500 is a fortune after what they’ve been through getting there — which is nearly criminal.
Once a player makes it to an MLB roster, he becomes a “RICH MAN” even if it’s “only” $570,500 per year.
Top 1% of American household in 2020 was $504,420.
AND if a player is selected in the first two rounds of the draft, he most likely received a $1,000,000 signing bonus. Or more.
Boo hoo.
MLBPA, worry about what the players of the future make learning the game in the lower minors at subsistence wages (or less), having 6-month jobs in the fall-winter to make ends meet.
Penisenvy is not pretty.
Yes. Minor league wages are a major issue…and that is in no way the fault of today’s players. But the top 1% of households will be able to grow their wages throughout their lives. Baseball players, by and large, are done at 30 (especially if they are making the minimum). So your MLB minimum guy makes $2,5mm in his career, then is done. Those ‘top 1%’ earners in general make a minimum of $50mm. Apples and oranges.
And why anyone thinks that the owners’ share should continue to grow, both in today numbers and (astronomically) in franchise value, is a real mystery to me.
Apples and oranges is apt: 3 years and 30 years, not the same thing.
Should a minimal 3-year major league player be set for life?
He has a gift, played a game, and could set himself up to do what he wanted after baseball.
Minimal players rarely contribute more than minimally to their teams. $2.5 million is a nice payout — now get a real job!
Not to mention working for 3 years and never having to work again if you are smart with your money, is a pretty nice perk. Oh, poor guy, he only had a 3 year career and never has to get up early again.
Unless you inherit your money, most 1%ers have taken a LONG, LONG time to get there. The value of being a millionaire in your mid to late 20’s is huge vs someone who makes it to that level when they are 55.
Nobody stops a retired ballplayer who has made millions in his 20’s from getting a real job or investing when he is done from the game. So I don’t buy that they can’t earn when they retire from the game.
@redstitch You are correct there. I know for a fact that this is what they did in the 80’s to 90’s. When a 10 year veteran made 2 million average then and invested in starting a ranch and a couple other small investments turned that into a lifetime income and set his boys up for success with a college education. That is what a distant cousin of mine has done. Today’s players have that opportunity today also. It doesn’t have to be an dead end after playing baseball but a way to improve your life if you are a true mlb semi-successful player. That is the way this world works for those who are given a chance (like these players) and work for it before during and after.
For all of you complaining about the players high salaries, have you EVER noticed the pay rate of actors and actresses on the small screen & the big screen? Or how about musicians, individuals and groups (bands)? Compare an MLB salary to a “guaranteed” NFL salary.
The owners are never forced to do anything. They can choose to bid on a free agent like Scherzer or not. If a player is going to receive an arbitration amount they don’ t like they can non-tender him.
The players are forced, through the draft, to play for a certain team/city. They can be traded and forced to move to a new city at any time. Once getting through the minor leagues they have to compete at the highest level for six and a half years before they get a chance to be a free agent and finally choose where they live.
The draft and team ownership of players is illegal. It only occurs because the players agree to it through the CBA. Which is good because without a draft you can’t really have a league at all. If the majority of players just signed with large markets like New York and LA there wouldn’t be much point for any of the other teams to play at all.
Every player should get one year at league minimum and five years of arbitration. With rookies being recalled mid-season it would be one and a half years league minimum with five years arbitration.
The other topics like teams “tanking” and delaying call ups for service time issues are irrelevant if the players under team control are paid what they earn. The arbitration process fairly accomplishes that. If a player does really well in their first season they will get a raise in arbitration. If they struggle they won’t. What is unfair about that?
People are complaining that this will increase the owner’s costs. No, they still have total control of their budget. They just can’t force someone to be paid less than what the market would pay. If they think the determined salary is too much they will have to release the player and sign someone cheaper. The rest of the teams will then prove whether the arbitration amount was right or not through free agency.
The penalties applied to a team signing a Qualifying Offer player should be removed. The compensation for losing a player used to be the signing team’s draft pick but now it is a pick between draft rounds so why is the signing team penalized at all? This gives a partial 7th year of control over the very best free agents and should be removed.
An International Draft should be added. I understand the players want to choose where they play but a draft is required for all teams to have some chance of winning.
The only thing that the penalty does is to restrict the signing team (a little) and the player from going to some teams that won’t do it. That will go away.
A team has a lot invested in a player, from a signing bonus to paying a salary for up to 7 years, and paying trainers and instructors to get the player ready for the major leagues. The 6 years is the return on their investment in that player and the 10 that didn’t make it.
What’s wrong with players being paid worth their value? If they are non-tenured, doesn’t that define their value? If they are non-tenured, they can become free agents and establish their value. There is a reason why the owners can charge what they do for tickets, concessions, parking and media rights: people want to see those players. You don’t see billionaire owners buying independent teams.
They get non-tendered so that players earning less can take their place. If all the teams are doing it, nobody notices the drop in performance levels.. Until a team like the Giants makes up a team of older guys and they win 110 games.
107+2=109
Tim Dierks: Thanks again for the unique breakdown on these topics. It really helps to provide context to the numbers and how they impact players and teams overall. Excellent article.
Arbitration at 2 years makes a significant difference only to a relatively few elite players. MLB give it to them but forget about the rest of the crap.
Shut up and dribble, er, PLAY BALL!
Simon you are just wrong. It will raise the wages of every arbitration eligible player.
If third year salaries go up, then fourth year go up and so on.
How are you missing that?
80% is fantasy land stuff. But maybe 50% is more realistic. As Tim pointed out though, owners hate arbitration more than anything else. So 50% might not be realistic.
To me however, if the owners simply lifted up the league minimum to 1 million, this lockout would be over tomorrow. And, that would still likely be cheaper long term for them than screwing around with arbitration.
The number of non-tenders would certainly increase with an altered arbitration set up. But is that the end of the world? It might be if owners do it constantly. I also think this would actually increase the number of longer term type deals with younger players. Isn’t that good for the players? As we’ve seen the paradigm shift away from free agency for anyone over 30, it’s not the panacea it once was.
If there’s ANY movement on this issue, my guess is this will/is the issue that all the other stuff is directly or indirectly pinned on.
At this point, the players seem set on this issue. $72.4 million is a VERY small amount of money compared to the $2+ billion gap between MLB players percentage of revenue and what the lowest percentage the players in any of the other major sports in the US are guaranteed. MLB was at about 38%. NFL was at 48.8%. NHL 50%. NBA 49%-51%. THAT is the difference that must be closed for there to be a 2022 baseball season.
The next player’s union gripe, er, I mean Boras gripe, is that all those super 2’s are non-tendered. Except, of course, for those who were Super 2’s under the existing system.
Are you serious? Super Twos being non-tendered? They are the best of the young players. They are the ones NOT being non-tendered.
There seems to be variables available to both parties that could make it more palatable to both sides. If you have performance bonus available to arb eligible players you could move on the base salary.
I wonder if Derek Jeter’s view of player salaries as changed since moving to the owner’s side.
I doubt it. Derek Jeter has always seemed to have a level head & a very grounded view, even as a superstar. I think as both a player & an owner he understands it’s a business and each side has goals it’s trying to reach financially. I really don’t think it’s more than that to him.
Players and owners met for an hour, are taking a lunch break, and will resume talks after lunch. Good news, I guess.
So 20 players would get under $1 million
27 players would get 1.0 to 1.5 million
14 players would get 1.6 to 2.0 million
12 players would get 21. to 3.0 million
5 players would get 3.0 to 4.0 million
2 players would get over 4.0 million
I don’t expect that a lot of them would be non tendered right away.
The primary factors in arbitration are service time and salary history, then playing time. Obviously, starters get more than bench players and arbitrators take playing time as an indication of how much a team values the player. Stats don’t mean as much as many fans seem to think they should, but awards stand out to the panel of arbitrators.
Few of those 79 players would have been non-tendered.
Tim D. – If there is no change in arb eligibility and instead they just agree to the bonus pool money, would that bonus money itself then factor into the equation for any first-time arb player who’s earned some of it? Would those bonus payments act as an early escalator – that compounds each year – in the same way that getting earlier arb does?
Well, salary history is a primary factor in arbitration, so yeah it would matter.
Well, the bonus-money argument itself, has been that the best pre-arb players should get more pre-arb pay – not that they should also get more in their arb eligible years. So, I’d have to think that that part of it would be as negotiable as any thing else is. Therefore, they might well agree that any bonus money is to be specifically excluded as a factor in arb – in order to reach an agreement on the size of the pool. Hypothetically, the owners might say OK to a number that’s much closer to the players $100M+ ask, in such a scenario. That’s what I want to know, has that been any part of their back and forth?
Bonus money at my job is not factored into my raise on my base salary. I have to earn the bonus money again. Its a good question. If the union decides a player is worthy of bonus money this year, that player should have to repeat the performance to earn it again. I also believe any contract of 6 years or more should include a team opt out at the 4 year mark, in exchange for the changes in salary structure the players are asking for.
So stymeed, you are saying the owners should have to put a winning team on the field to deserve revenue sharing and their cut of the national TV and sponsorship money? I agree.
From what has been written about it on the Athletic the answer to that question is no.
So wait. 80% of players between 2 and 3 years’ service have between 2.0 and 2.028 (i.e. barely 2 and a quarter) years, and only 20% have between 2.028 and 3 years? That seems pretty unlikely.
Just the opposite. The other 20% have 2 years and 28 days or less.
IF the owners concede this point to the players, and that is a huge IF, there is just $2.015 billion more per season to move towards the players side of the equation so that MLB players make the same percentage of revenue as the worst paid players in the other major sports or 48.8% of revenue. Add in the $115 million pool the players are asking for to be shared by the remaining pre-arbitration players and its still $1.9 billion per season the players would have to get to be tied for the worst paid in the major sports in the US. NOW are you starting to understand the depth of the issue??
Ben Nicholson-Smith
@bnicholsonsmith
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MLB & MLBPA plan to meet again tomorrow for more bargaining talks per source familiar
Today described as wide-ranging conversation that covered a number of issues
I love this article. The cause-effect projections were outstanding. I don’t begrudge young super players from getting more earlier in their career, but it would certainly behoove clubs to lock up young players earlier to longer guarantees. And it could put tremendous strain on clubs who have played it close to the proverbial bone when it comes to payroll. Maybe force some owners to sell or move, or some contraction of major league baseball. Contraction would at least help improve depth, and rid the league of AAAA players trying to perform like big leaguers. MLB wont sell that one to the MLBPA.
I wonder why so many want the billionaires and millionaires to make more?