The next time you hear someone complain about the seemingly skyrocketing salaries in Major League Baseball (MLB), remind them of two things. One, the amount players make must be viewed in tandem with what the League and its owners are pulling in; and two, in the last five years, the percentage of League revenue paid to baseball players has dived from a high of 63% in 2003, to as low as 51%. The statistics, reported in this week’s Sports Business Journal by Rob Manfred, MLB executive vice president in charge of labor, can be viewed negatively when compared to the NFL (since the 2006 renegotiated CBA, league revenue paid to players has increased from 54 to 59%), the NBA (whose players are guaranteed 57% of basketball-related league revenue under the CBA) and even the NHL (where players received 55.6% of hockey-related revenue in 2006-2007).
What gives? Baseball’s historically hard-nosed union has not only resisted arguably invasive drug testing (not that management ever really pushed for it) over the years, but more importantly has also eschewed any mention of a salary cap, meaning theoretically, its players’ revenue sharing potential was infinite. Moreover, how do football players, who can be cut on a whim, whose salaries (aside from some bonuses such as signing bonuses) are not guaranteed, and whose Players Association’s executive director Gene Upshaw is buddy-buddy with League management, make out with the most?
The article notes that Manfred provides two reasons for the players’ percentage plummet. One is the luxury tax and revenue sharing provisions of the 2002 and 2006 CBAs. It’s important to remember, he says, that the players’ share peaked at 63%, just after the League and union agreed on a luxury tax revised CBA. And second, Manfred points out, player compensation has not kept pace with revenue growth, which has increased 65% (3.7 in 2003 to 6.1 billion in 2007).
As to the NFL, the percentage increase can be attributed to the PA’s decision to take 59 percent of all revenue in lieu of 60 percent of designated gross revenue, which didn’t include a lot of team-generated local revenue and in hindsight would have amounted to only 54 percent of total revenue.
So if the percentage of league revenue paid to players is “the best measure of a sports union’s effectiveness,” how should we grade out MLBPA executive director Donald Fehr (pictured)? What can be done, by the union, by arbitrators, and by player representatives, to help bring baseball players back into the competitive fray?
5 replies on “MLB players receive the lowest percentage of leaguewide revenue”
How is this revenue paid out to the players in each of the leagues?
My girlfriend likes to argue with me and tell me that all sports players get paid too much.
I think a market correction will be in order very soon. Saying baseball’s union isn’t doing a good job is not looking at the complete picture, in my view.
All Fehr and Co. have to do is wait for another big free agent period, with a lot of plum players available, to come and go, and they’ll be right back where they used to be. Major League Baseball has had a lot of luck marketing itself lately, and its new media platforms are taking off. It won’t be long until the players are getting their hands on that money, because all owners are competitive and if they think spending money will give them a competitive advantage, they’ll happily spend it.
[…] and would like a greater share of total football revenue. Last week I blogged about how Upshaw’s tactics have lead to NFL players taking home a bigger share of revenue than players f… But the terms of that deal may ultimately backfire on the union if the owners feel a need for […]
i do not blame baseball players at the pro level getting every penny. With the service time and arbitration they play for a few years on the cheap so if they get the payday in free agency thats great. Revenues to payroll is 63% in 2003, to as low as 51% where teams like the Pirates pay out 33% or the Marlins paid out as low as 15%.