As Major League Baseball and the MLB Players Association negotiate over a new collective bargaining agreement, the sport’s salary structure is coming under a microscope.
What’s being revealed? That the game’s youngest players are getting the shaft. Teams are more reliant on them than ever, and they’re better than ever. But they’re getting less compensation, and requiring more time than ever to get raises.
What do the numbers say?
The lion’s share of public attention in CBA negotiations focuses on what’s happening in free agency. And the topic is central in the negotiations because the average salary has declined in recent years. According to the Associated Press, the average Opening Day salary in 2021 was $4.17 million, down 6.4 percent from 2017.
That decline is softened by huge salaries at the top of the market, but it masks a far steeper drop that has taken place among the lion’s share of players.
The AP reports that the 2021 Opening Day median salary in MLB — the line of demarcation between the top-paid and bottom-paid players — was $1.15 million, down 30 percent from the high of $1.65 million in 2015.
How did we get here?
A number of factors negotiated in past collective bargaining agreements have contributed to this.
The last CBA, negotiated after 2016, represented a huge loss for players, who agreed to the minimal increases of minimum salaries as well as the lowest increases in the luxury tax threshold since its introduction. Those two factors resulted in both the top and bottom of the player market getting squeezed.
Yet those losses are only part of the picture for players, particularly young ones.
A 2006 change to the rules for adding players to the 40-man roster, which gave teams an extra year of control over players as they make their way through the minors, has had a huge impact on when players reach arbitration and free agency. A change to the draft rules after the 2011 season made it easier for teams to tank, which resulted in less money spent on players who would improve a team’s chances of winning.
Meanwhile, — chasing romantic concepts such as “resource efficiency” and “roster optimization” — have become increasingly adept at working within the rules of the CBA to slow players’ paths to bigger earnings.
Is this allowed?
In all of these respects, teams have worked within the current MLB system — one negotiated and agreed upon each time with the MLBPA. Yet the way that the market has functioned, the increasingly adversarial nature of the business, and the fact that players are seeing declining earnings has created a widespread boil of player dissatisfaction with the business of the game and how it is being run by owners and front offices.
What does this have to do with the lockout?
It is the owners who have put a halt to the game, electing to lock out players the moment the most recent CBA expired. Nothing is stopping the owners or commissioner Rob Manfred from lifting the lockout, having players report to spring training, and playing the 2022 season under the rules of the now-expired CBA while working to negotiate a new contract.
It’s far from unusual for businesses to operate with expired CBAs while negotiating new ones.
Any negotiation of a new CBA will have to account for the player dissatisfaction with the current system – and in particular, the various drags that teams can exert on the major league salaries of young players, most of whom have spent years in the minors making less than $20,000 a season.
Here are four stories that explore the topic in detail:
Service time manipulation
Until most players accumulate three seasons of major league service time, they make little more than the MLB minimum, which was $570,500 last year.
Virtually every team employs strategies that suppress the big league service time — and ultimately the earnings — of major league-ready players. The Red Sox are no different. It’s called “service time manipulation” and it’s a key area to address in negotiations.
The experience of Nick Pivetta explains why the MLB Players Association is focused on improving pay for players in the early years of their careers and finding ways of limiting the transactional shenanigans that slow the path of players to performance- and market-driven salaries.
When the Sox acquired Pivetta in 2020, he represented a viable short- and long-term option than some of the starters and openers who’d flickered in and out of the rotation.
Yet that didn’t mean he would immediately be summoned to the big leagues.
While the Sox churned through starts by Zack Godley, Andrew Triggs, Mike Kickham, and Robinson Leyer — all of whom would be released within days of the end of the season — they waited until the final week of the season before bringing Pivetta up from Pawtucket for two starts.
Why? A full big league season of service time is defined as 172 days on the active major league roster. The Sox’ decision to wait to call up Pivetta, a 2013 fourth-rounder who made his big league debut in 2017, meant that he finished 2020 with two years and 166 days of big league service time. He was six days short of getting to three full years, the threshold that would have made him arbitration-eligible after 2020 and free agent-eligible after 2023. It saved them money.
The yo-yoing between the majors and minors
Tanner Houck was one of the best Red Sox pitchers of 2021.
Yet despite his contributions, he spent just 64 days in the big leagues while remaining on Triple A Worcester’s roster for 122 days. That service-time split meant Houck earned roughly $217,000 in the big leagues and about $58,000 in the minors — a total of roughly $275,000, or less than half of the major league minimum of $570,500.
That development was possible because teams can yo-yo young major leaguers on and off their big league roster — something the MLB Players Association and Major League Baseball have agreed to address in a new collective bargaining agreement.
The Sox shuffled him between Boston and Worcester repeatedly, often after spending just one day in the big leagues for a start. Why all the shuttling? It’s all done in the name of roster flexibility.
Once players are added to the 40-man roster, teams generally have three options on them — meaning three years in which they can be sent to the minor leagues without having to clear waivers. Yet within each of those years, under the collective bargaining agreement that expired at the end of the 2021 season, players can be shuttled an unlimited number of times between the big leagues and the minors.
Every demotion to the minors comes with financial and career consequences for players. Typically, young players have “split” contracts — meaning one salary in the big leagues, another in the minors. When they’re optioned to the minors, they receive their minor league salary instead of their big league salary. In Houck’s case, that meant earning just under $500 per day when in the minors, compared to just under $3,100 per day in the big leagues.
On top of that, players only accumulate big league service time while on active major league rosters.
Now, the sides are once again discussing ways of limiting the sort of roster tornado that swallows some optionable players. The MLBPA proposed limiting teams to using an option four times per year; MLB countered with five.
The minimum-salary issue
Garrett Whitlock was perhaps the most unexpected story on the Red Sox in 2021. A 2017 18th-round draft pick of the Yankees, he’d never pitched above Double A, underwent Tommy John surgery in 2019, missed all of 2020 while recovering, then got plucked in the Rule 5 draft by the Red Sox.
Whitlock did not merely stick with the Red Sox for the full season. He emerged as one of the most valuable pitchers on the team, a multi-inning bullpen force who delivered many of the most important outs. For that, he earned a salary of $570,500 — the MLB minimum.
If Whitlock had played in the NBA, he’d have earned at least $925,258 in his rookie season. Had he been in the NHL, he’d have taken home at least $750,000. In the NFL, his rookie minimum salary would have been $660,000. But as a baseball player, despite the years of meager minor league salaries that preceded his arrival in the big leagues, Whitlock made less than a rookie in any other sport.
Other labor stories to check out
- Was Rob Manfred right that owning a baseball team isn’t as lucrative as the stock market?
- On Baseball: Even a casual fan can see Major League Baseball is headed in the wrong direction
- Dan Shaughnessy: These baseball squabblers don’t realize that no one cares about their petty beefs anymore
- Does baseball’s competitive-balance tax actually encourage competition?