Ballpark figures... baseball’s problem with fair salaries

After some of the blockbuster contracts signed in baseball’s off season, can anyone really argue that America’s major league clubs are screwing over their workforce?

As opening day approached, all world slugger Mike Trout signed a record breaking $426m, 12-year extension with the LA Angels. Star free agent outfielder Bryce Harper had previously inked a 13-year, $330m contract with the Philadelphia Phillies shortly after third baseman/shortstop Manny Machado got $300m over 10 from the San Diego Padres, plus an option to test the market part way through.

Supplemented by endorsements, those deals make them among the world’s top paid sports people. Each man is a mini corporation.

But high profile telephone number contracts such as the ones those three signed conceal a wider truth: the players’ share of baseball’s pie is shrinking. Beneath the superstar level it’s getting colder, and even Harper and Machado, genuine top tier talents who reached free agency at an unusually young age (26), had to wait a lot longer than anyone expected to sign.

According to a report by the Associated Press, the average MLB salary was on track to be down on opening day for the second straight season, even after taking these monster deals into consideration.

The MLB Players Association has, since 1967, published an average of its own at the end of the season. Last year saw the first reduction since 2014 and only the fourth in total. The average has never declined for two consecutive years. That could now change.

The most recent “hot stove” – the informal name for the sport’s winter off season – was cold as ice despite a glut of high-quality players available for signing.

The bidding frenzies that have added spice to previous years weren’t much in evidence. Some very good players remained without a team into the new season.

Pitcher Craig Kimbrel, just off a World Series victory with the Boston Red Sox where he served as the ninth inning closer, and starting pitcher Dallas Keuchel, are prime examples. They were both in Sports Illustrated’s top 10 free agents, at numbers five and seven respectively.

They only signed after the MLB amateur draft, after which time teams no longer had to forfeit compensatory picks to their former employers, and for short term, cut-price deals given their respective abilities. This despite there being a long list of franchises that they would both have improved at a time when the sport’s coffers have never been fatter. According to a report by Forbes, citing industry sources, the league raked in baseball related revenues of $10.3bn in 2018. That wasn’t a big increase over the previous year when MLB broke the $10bn barrier for the first time, and certainly not when compared to what league has achieved in previous years (since 1992 revenues have ballooned by an inflation-adjusted 377 per cent).

But the league’s growth should pick up again this year and in the future courtesy of new sponsorship and media rights deals, despite the flat or falling attendances that have confronted teams at the ball park.

These days kids are less likely to say take me out to the ball game (as the song goes) than they are to say leave me here with the tablet. It’s hard to argue with that when so many MLB franchises seem reluctant to spend on putting competitive teams on the field.

With the current collective bargaining agreement scheduled to come to an end in 2021, could the 27 years of peace the sport has enjoyed come to an end?

Is there a strike in the sport’s future?

The MLB Players Association is arguably the feistiest of the major American sports unions. It oversaw eight labour stoppages between 1972 and 1995, although they didn’t all result in games being cancelled.

The last of them was a particularly bruising affair. It lasted for 232 days between 1994 and 1995 and saw the cancellation of the 1994 World Series, the first time in 90 years that America had to do without its beloved Fall Classic.

The dispute angered fans and did considerable damage to the league in the process.

The calm that followed has been facilitated by both players and owners getting rich.

League revenues have risen for 16 straight years, and salaries rose with them until last year’s decline of $1,436 to $4,095,686.

There are a number of factors serving to squeeze the players’ share of baseball’s ever fatter pie.

Teams have taken note of the model favoured by number of recent World Series champions who largely eschewed hot stove bidding on free agents in favour of building from within.

The Chicago Cubs, the Houston Astros and the Kansas City Royals all constructed winning rosters through the amateur draft, supplemented by international signings. They moved in on free agents and tapped the trade market only when they were ready, deftly signing those who would complement what they already had.

Last year’s victorious Red Sox were a bit different. The Sox are a big market team with the majors’ fattest payroll. But the return of Commissioner’s Trophy to Fenway Park was still driven by a corps of young, homegrown, stars such as Mookie Betts, Andrew Benintendi, Xander Boegarts.

At least half the league’s teams, and maybe more, are now tanking with the aim of repeating the trick even though it can’t possibly work for all of them.

Another factor cooling the hot stove has been the way traditional big spenders, such as the New York Yankees and the LA Dodgers, have prioritised getting below MLB’s payroll-based competitive balance, or luxury, tax.

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Per the current collective bargaining agreement, clubs spending more than $206m this year pay a charge on each dollar above it. It’s 20 per cent for the first season, 30 for the second and 50 thereafter. There is a 12 per cent surcharge for teams that go more than $20m above it. More than $40m and they get hit with an extra 42.5 per cent in the first year, 45 per cent after that. Teams can also lose places in the draft.

A salary cap, such as those operated by NFL or the NBA, has always been fiercely resisted by baseball players. They might just have found themselves with one by default. But unlike the other major sports leagues, there is no floor.

Then there is the advance of analytics.

There have always been plenty of real-world examples of underperforming players on big money contracts. Take Albert Pujols. In terms of wins above replacement, a stat that seeks to assess a player’s value to a team by comparison to a fill-in player from the minor leagues available at minimal cost and effort, Pujols has performed below replacement level over the last three years –during which time he’s made $78m.

The numbers are sourced from Baseball Reference, and the same site shows he’s owed $87m for the next three years.

Pujols is a revered icon of the sport, a pitcher’s nightmare in his earlier years, so he doesn’t get too much flak for his more recent struggles. But that sort of contract is known as an albatross, and with good reason.

Analytics have advanced to the extent that it’s now possible to make a fairly accurate projection of how a player you plan to sign will perform through the years of a long contract.

Those projections do not favour players in their thirties and teams are paying attention. Pujols joined the Angels at 32. Most players hit free agency in their late twenties, or later.

During the “steroids era” some players turned to pharmaceuticals to extend their careers. But the league’s drug testing policy has taken that out of the equation.

The chilly free agent market has helped persuade players that a bird in the hand is worth two in the bush. Some 27 players gave up free agent years by signing extensions totalling 132 years with their existing clubs this year.

It reached an extreme with the case of Ozzie Albies, the Atlanta Braves’ second baseman who inked a seven-year deal with an average value of $5m a year.

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While it’s true that $5m is more than most people will earn in a lifetime, it vastly undervalues Albies when set against his ability. Criticism of the deal was swift and brutal. Sports Illustrated declared that the player “got scammed”. The 22-year-old was good for 3.8 wins above replacement last year and won’t now reach free agency until he’s 30, so it’s hard not to agree. Some estimates suggest he’ll be $200m short of what he’s worth.

With the contract, Albies gained a measure of certainty. If he gets hurt, or his production declines earlier than expected, he’ll still get paid. But this is a player on an upward trajectory. He’ll be getting a fraction of his true value even if his numbers flatline.

Part of the problem that players face is a structure that keeps the younger ones under team control for longer than any other American sports league.

Many of the players in last month’s NFL draft will be starting for their teams in the autumn. Their rookie deals last for just four years, with an optional fifth for first round picks.

Even the most highly touted prospects in the MLB draft usually have to spend at least a year working their way up through clubs’ minor league farm systems. It’s usually much longer than that.

Clubs also game the system by deliberately delaying prospects’ ascension to the major leagues.

If major league players are getting fleeced, it’s nothing compared to what their compatriots crisscrossing the country by bus in the minors face.

Thanks to the Republican Party’s shamefully misnamed “Protecting America’s Pastime Act”, clubs can get away with paying them less than even the miserable federal minimum wage of $7 an hour by classifying them as seasonal workers.

High draft picks usually have a substantial signing bonus to sustain them. But the league managed to get them capped in an earlier collective bargaining agreement. The same thing was subsequently done with international signings.

Even after making the majors, players have to spend three years on the league minimum before being eligible for salary arbitration, and three more before reaching free agency.

No wonder Kyler Murray shunned baseball in favour of the NFL. Even had he not gone quite as high as the top overall pick in the latter’s draft, he stood to earn more money sooner as a quarterback playing football than he would have done playing the summer game, in which he was a first-round pick for the Oakland As.

Player unions in all US sports haven’t kicked up too much fuss about rookies having their pay artificially capped. Signing youngsters to huge contracts only for them never to realise their potential was, in theory, taking money out of the pockets of those who did (and who might have been drafted lower on minimal signing bonuses).

But in baseball, players are now getting squeezed at both ends.

If there is to be a strike, fans will hate it. Many will see it as spoiled millionaire athletes throwing a hissy fit and denying them a pastime that gives them a break from the daily grind of making a pay cheque, paying the mortgage and keeping the wolf from the door.

It’d be easier for the union to sell if, in launching a fight to reform baseball’s economic model, it took up the case of the poor non-union schmos in the minors and the kids being denied the market rate for their services.

If a deal can’t be reached, a dispute will still ultimately boil down to a fight between millionaire athletes and billionaire owners, with the former seeking a better share of league revenues from the latter.

But if the union spent some time focusing on those at the bottom of baseball’s pile, reforms would be easier to pitch.