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Thursday, August 14, 2014

Searching for Racial Earnings Differentials in Major League Baseball

This never would have happened if baseball adopted a racial salary cap.

White players do not seem to get paid less when they re-sign more than a year before free agency, but black players do.  Latinos take a severe discount and sign for $4.9 million per WAR when they sign early. Obviously Albert Pujols’ contract plays a role in this, but even excluding him the earnings per WAR among Latinos who re-signed more than a year before reaching free agency would be $5.3 million, far less than the pay per WAR for white or African-American players.

This is actually not surprising. An individual’s willingness to sign early is largely based on his desire for financial security. If a player has strong earning potential outside of baseball, he will not be as willing to surrender potential future earnings for current financial security. A player who is more likely to face economic hardship if he gets injured and fails to earn a fortune in baseball will be more amenable to a team-friendly discount.

 

RoyalsRetro (AG#1F) Posted: August 14, 2014 at 09:16 AM | 19 comment(s) Login to Bookmark
  Tags: player salaries, race

Reader Comments and Retorts

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   1. Joey B. is counting the days to Trea Turner Posted: August 14, 2014 at 11:36 AM (#4770983)
White players do not seem to get paid less when they re-sign more than a year before free agency

Wow, who knew that Mike Trout isn't white? Appearances sure can be receiving.
   2. Joey B. is counting the days to Trea Turner Posted: August 14, 2014 at 12:07 PM (#4771015)
Deceiving even.
   3. Barry`s_Lazy_Boy Posted: August 14, 2014 at 12:15 PM (#4771023)
There are far fewer African-American players nowadays than their share of the United States population would suggest.

False.
   4. Joyful Calculus Instructor Posted: August 14, 2014 at 12:31 PM (#4771043)
It makes sense when you think of it from a risk management perspective. Latinos tend to be from poorer areas and thus the utility of the first big contract is greater to them. The white players tend to be more well off and thus be willing to take greater risks in waiting for free agency.
   5. LA Podcasting Hombre of Anaheim Posted: August 14, 2014 at 12:47 PM (#4771057)
1. Joey B.: posting for the kids of northeast Ohio Posted: August 14, 2014 at 11:36 AM (#4770983)
[ Ignored Comment ]
2. Joey B.: posting for the kids of northeast Ohio Posted: August 14, 2014 at 12:07 PM (#4771015)
[ Ignored Comment ]
This is amazing. My BTF experience has improved an immeasurable amount. I actually look forward to BTF's resident terrorist's posts now.
   6. dr. scott Posted: August 14, 2014 at 12:55 PM (#4771067)
The article comes to the same conclusion as number 4, but there is another reason the Latinos make less per WAR than other players which I find quite interesting. In general the glove first positions (SS, 2B, 3B, and C) all make less per WAR, and Latinos are over represented in this group. I assume this is because teams have not yet caught up with WAR in evaluating defense, but its just a guess.
   7. Random Transaction Generator Posted: August 14, 2014 at 01:14 PM (#4771079)
#5
I was thinking the same thing.
   8. McCoy Posted: August 14, 2014 at 01:17 PM (#4771081)
I assume this is because teams have not yet caught up with WAR in evaluating defense, but its just a guess.

Or it is kind of easy to find good glove-light bat hitters.
   9. BDC Posted: August 14, 2014 at 01:17 PM (#4771082)
My BTF experience has improved an immeasurable amount

Among other advantages, it gives today's Game Chatter a very Zen feeling.
   10. LA Podcasting Hombre of Anaheim Posted: August 14, 2014 at 01:32 PM (#4771091)
In my head, it sounds like ocean waves.
   11. Never Give an Inge (Dave) Posted: August 14, 2014 at 01:45 PM (#4771101)

Haven't RTFA, but do they look at this based on forecast performance at the time the contract was signed, or actual performance after the fact?

Another thing I would be curious about is whether there is a difference between U.S.-born Latinos and foreign-born Latinos. i.e. I'm wondering whether the fact that foreign players are not subject to the draft means that they tend to hit free agency at a different age and that could influence the results here.
   12. Steve Parris, Je t'aime Posted: August 14, 2014 at 02:33 PM (#4771141)
Just think how bad it'd be without the Ryan Howard contract.
   13. cardsfanboy Posted: August 14, 2014 at 04:40 PM (#4771234)
The article comes to the same conclusion as number 4, but there is another reason the Latinos make less per WAR than other players which I find quite interesting. In general the glove first positions (SS, 2B, 3B, and C) all make less per WAR, and Latinos are over represented in this group. I assume this is because teams have not yet caught up with WAR in evaluating defense, but its just a guess.


I also imagine it's because those positions (except shortstop) have a higher tendency to crash and burn at younger ages.

As far as teams evaluating defense, they might as well have proprietary information that is 100% accurate and it might even agree with the different versions of WAR, but they aren't negotiating based upon the players future value, but instead on the players perceived future value by the players agent. I assume agents use every trick they can come up with to list their clients value, but ultimately it's often boiling down to "here is what he did at this age, here is what players with these numbers made at that age, this is what we want." and those numbers are going to be heavily based upon offense.

   14. cardsfanboy Posted: August 14, 2014 at 04:54 PM (#4771241)
Just think how bad it'd be without the Ryan Howard contract

Or Carl Crawford.
   15. PreservedFish Posted: August 14, 2014 at 05:04 PM (#4771255)
I'm not getting this article.

Even though African-Americans are not proportionately represented in the majors, they earn the same relative to their production when they do make it.

Ok. So blacks earn just as much as whites. Cool.

The same is not true for Latinos, who earn less than white players or African-American players per level of production.

Uh-oh.

The research in this article suggests that there are two primary causes for this. One is that glove-first position players get paid substantially less per WAR than comparatively productive players at other positions, and Latinos play glove-first positions far more frequently than other races.

The other reason is that Latino players are more prone to take discounts when they sign extensions far in advance of reaching free agency.


So it isn't racism? Cool!

Racial earnings differentials are persistent and problematic, and they can often be explained by opportunities. Major league baseball appears to be no different.

Wait, what?
   16. PreservedFish Posted: August 14, 2014 at 05:08 PM (#4771259)
Also, #### like this is just so lazy:

Latin America has nearly twice the population of the United States, yet Latin American players make up only 33 percent of major league players. While some might say that would make sense given the U.S. base of major league baseball, I doubt many Latin American athletes are choosing to forego playing baseball in the United States to dominate leagues in their home countries.


I mean, come on. This guy literally just googled "population Latin America" and came up with a number that included Brazil, Argentina, Peru etc.

Embarrassing.
   17. cardsfanboy Posted: August 14, 2014 at 05:10 PM (#4771260)
Just read the article and will give it kudos. Excellent article, and it's nice to see that the writer researched as many possibilities as he could think of. Yes he missed potential value(which post 11 asked about...there was no forecasting in his article)

But he approached a lot of different angles, from positional value(how much teams pay for each position) to increased in contract status, to teams keeping their own players versus letting them go, and "racial" makeup of the different positions.

   18. cardsfanboy Posted: August 14, 2014 at 05:14 PM (#4771265)
I mean, come on.


I didn't really pay attention to any parts of the article where he wasn't talking about the study(and the first few setup paragraphs...most of the concluding comments, I just glanced at...his writing style isn't interesting enough to keep me focused on minutia)
   19. Rennie's Tenet Posted: August 14, 2014 at 05:27 PM (#4771284)
and came up with a number that included Brazil, Argentina, Peru etc


How does Haiti not play baseball? They used to sew the balls there!

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