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Saturday, December 21, 2019

Average MLB salary drops for 2nd straight year

NEW YORK (AP) — The average salary in the major leagues has dropped in consecutive years for the first time since the players’ association started keeping records more than a half-century ago.

The 988 players on Aug. 31 rosters and injured lists averaged $4,051,490, the union said Friday, down 1.1% from $4,095,686 last year. The average peaked at $4,097,122 in 2017.

This was just the fifth decline since records started in 1967, when the average was $19,000. There also were drops in 1987, when clubs were found guilty of collusion; in 1995, after the end of a 7 1/2-month strike; and in 2004.

This year’s drop followed two slow free-agent markets and new contracts with large signing bonuses for Mike Trout, Alex Bregman, Manny Machado and A.J. Pollock. Those four players received $62 million in signing bonuses during 2019 that are prorated over the length of each contract in the calculation of the average. If the entire amounts had been counted for 2019. the average would have been about $54,000 higher — more than the $44,196 drop.

We’ve discussed quite a bit about individual contracts here- here’s a sense of what they add up to in the aggregate.

 

QLE Posted: December 21, 2019 at 01:08 AM | 15 comment(s) Login to Bookmark
  Tags: salaries

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   1. bookbook Posted: December 21, 2019 at 08:00 PM (#5910354)
I honestly believe the focus should shift from average to median salary.
   2. bbmck Posted: December 21, 2019 at 09:05 PM (#5910364)
Salary as a percentage of revenue, the NFL and NBA get 50% and these numbers suggest MLB is around 40%.
   3. Walt Davis Posted: December 21, 2019 at 09:47 PM (#5910367)
I believe after you make other adjustments (especially money to minor leagues but also pension contributions, the rest of the 40-man roster, draft bonuses, etc.) that MLB's total outlay on players gets pretty close to the equivalent MLB/NFL numbers. But I might be mis-remembering.
   4. The Yankee Clapper Posted: December 21, 2019 at 10:06 PM (#5910373)
In related news from Forbes:
Revenues for Major League Baseball continue to grow and should accelerate in the coming years. Gross revenues for the league were $10.7 billion for 2019, up from $10.3 billion last year, according to industry sources who spoke on the condition of anonymity. That marks the 17th consecutive year that MLB has seen record growth.

The league surpassed the $10 billion mark in 2017 after seeing steep growth. League sources indicate that that trajectory should reoccur over the next few seasons as new national television deals kick in. FOX reached an extension in 2018 that starts in 2022 and runs through 2028 with a reported value of $5.1 billion, a 40% increase from the current media rights agreement. Negotiations for extensions with ESPN and Turner Sports are on-going and would arrive at the same time. In 2020, a $1 billion uniform deal with Nike kicks in.

More importantly, industry revenues that account for expenses and other investments came in at $9.7 billion for 2019, up from $9.4 billion last year. MLB player payrolls, bonuses that raised average annual value of new deals for the likes of Mike Trout, and benefits for the year came in at $4.7 billion.
Yet, the owners have been crying poverty for more than a hundred years.
   5. bobm Posted: December 21, 2019 at 10:11 PM (#5910374)
Also interesting to look at the top end average via the qualifying offer trend, i.e., "average of the top 125 major league contracts."

From ESPN:

 Year  QO($M)
 2012    13.3
 2013    14.1
 2014    15.3
 2015    15.8
 2016    17.2
 2017    17.4
 2018    17.9
 2019    17.8


Note similar impact of signing bonuses here:

large signing bonuses in the contracts of Bryce Harper, Manny Machado and Mike Trout had an impact on the drop, because the signing bonuses are prorated over the length of the contract rather than the year they were received. The trio had relatively low 2019 salaries, and if their 2020 salaries had been included instead, the qualifying offer figure would have risen to $18.3 million.
   6. flournoy Posted: December 21, 2019 at 10:20 PM (#5910376)
This seems like it's entirely a function of the ever-growing AAA shuttle. Teams are shuffling around more fringe players now than ever before, and those guys are dragging down the average.
   7. Bhaakon Posted: December 21, 2019 at 10:46 PM (#5910378)
Then clearly the answer is to prohibit teams from having minor league affiliates within 1000 miles of their major league home park or in cities with international airports. The minor league shuttle is a lot harder to pull off if there's 12 hours of plane hopping.

Or maybe just move all the minors to Venezuela. Take advantage of that weak economy to cut costs while using travel restrictions to lock down frivolous roster churn.

(those weren't serious suggestions)
   8. Jeremy Renner App is Dead and I killed it Posted: December 22, 2019 at 08:25 AM (#5910395)
Really using averages should be banned. Terrible math. Pretty much useless. I read the article but didn't find a link that would explain the actual calculation in detail so can only assume this is the classic average which as I wrote is a number without real meaning
   9. Walt Davis Posted: December 22, 2019 at 03:24 PM (#5910468)
Note similar impact of signing bonuses here:

But we need to make those adjustments for every year. 2018's "average salary" didn't include signing bonuses in contracts signed that year either. Meanwhile although pro-rating Trout's signing bonus gave him a lower "salary" for 2019, it gives him a slightly higher "salary" in all the subsequent years.
   10. bobm Posted: December 22, 2019 at 04:07 PM (#5910476)
Note similar impact of signing bonuses here:

But we need to make those adjustments for every year.


Agreed. I just noted that because of the point made in TFA:


This year’s drop followed two slow free-agent markets and new contracts with large signing bonuses [...]

If the entire amounts had been counted for 2019. the average would have been about $54,000 higher — more than the $44,196 drop.
   11. RoyalsRetro (AG#1F) Posted: December 22, 2019 at 05:25 PM (#5910489)

This seems like it's entirely a function of the ever-growing AAA shuttle. Teams are shuffling around more fringe players now than ever before, and those guys are dragging down the average.


And in part, on deciding that AAAA guys being paid minimum wage are preferable paying $5-8 million on an old vet.
   12. Jack Sommers Posted: December 23, 2019 at 10:43 AM (#5910573)
Using Forbes numbers from their two most recent reports, covering the 2017 and 2018 seasons, MLB avg player expenses, as a percentage of revenue were

2017: 49.7%
2018: 47.4%

My guess is 2019 drops another point or two, but shouldn't fall below 45%

Table Here

   13. Joe Bivens, Elderly Northeastern Jew Posted: December 23, 2019 at 10:51 AM (#5910578)
Yet, the owners have been crying poverty for more than a hundred years.


This isn't exclusive to MLB.
   14. Stevey Posted: December 23, 2019 at 11:27 AM (#5910606)
I believe after you make other adjustments (especially money to minor leagues but also pension contributions, the rest of the 40-man roster, draft bonuses, etc.) that MLB's total outlay on players gets pretty close to the equivalent MLB/NFL numbers. But I might be mis-remembering.


But don't we need to do the same for the NFL/NBA? The 50% guaranteed to them seems to be strictly for salaries.

Really using averages should be banned. Terrible math. Pretty much useless.


It's great for this kind of analysis because we can see much better what percentage of revenue is going to players. Median, while more useful to see what the typical player is getting, won't tell us that.
   15. Never Give an Inge (Dave) Posted: December 23, 2019 at 11:54 AM (#5910615)
Cross-posting from the other thread:

These statistics are somewhat misleading. In recent years, the number of players being used by MLB teams has slightly increased as more players get shuttled back and forth to AAA and more players are on the DL/IL. So the average is being driven down by new guys presumably making close to the minimum, but the total player salaries actually increased.

The 2018 average salary of $4,095,686 was based on 968 players who were on active rosters or the IL on August 31. The 2019 average salary of $4,051,490 was based on 988 players. So total player salaries went up 1.0%, from $3.96 billion to $4.00 billion. That doesn't match the 3.8% increase in revenues, but it's not a decline.

Likewise, 2018 was a 0.5% increase over 2017 even though the average salary declined slightly. And 2017 was a 3.2% over 2016.


Interestingly, the number of players on active rosters/IL actually has not increased as much as I thought. Barely any change from 2016-2018 but then a modest increase in 2019, from 968 to 988. This, despite a large increase in the number of players being used by teams each year due to the AAA shuttle. So the numbers above probably still slightly understate total MLB compensation (while overstating the averages), because those AAA guys get paid at least the MLB minimum when they are up in the majors. However, they are not being counted in the totals/averages since those figures only count active rosters + IL as of a specific date, August 31, and don't reflect the shuttle.

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