Why $200m player contracts are a great deal for baseball owners

Child with Baseball Bat

Two hundred seventeen million dollars for David Price.

Two hundred six million dollars for Zack Greinke. One hundred eighty-four million for Jason Heyward. Chris Davis is probably getting somewhere north of $150m guaranteed once he finally signs, and both Alex Gordon and Justin Upton should break at least $110m, perhaps more. Player salaries in Major League Baseball are going up.

And it’s not just the guys at the very top: starting pitcher JA Happ’s three-year, $36m deal from the Toronto Blue Jays was both longer and for more money than most commenters thought he was going to get. Happ, who is startlingly a nine-year veteran, had a 106 ERA+ last year and has a 96 ERA+ for his career – he’s roughly as good, in aggregate, as your average starting pitcher at preventing runs. Going forward, he might be less so, and he doesn’t throw a lot of innings; he’s right at the lower threshold of how poorly a starter can pitch in MLB and still get a multi-year deal. That threshold is now apparently $12m a year.

That’s a lot of money for a guy who was considered so expendable he rotated through four teams over the past three seasons. But Happ’s contract, and contracts like it, aren’t signs of MLB teams losing their minds – they’re signs, once again, of the ludicrous position professional sports hold in both western society and its attendant economy. If Happ – or Heyward, or Price – were to be paid a more “reasonable” salary of, oh, let’s say half of what they’re currently making, there would still be just as much money in baseball. It just wouldn’t be going to the guys, you know, actually playing baseball.

There’s actually less money going to players now, proportionally, than there was about a decade ago. Part of that is certainly due to new revenue streams – MLB has become a massive leader in the online streaming media market, and those gains have translated into more money for the organization as a whole. But team valuations continue to shoot through the roof, mainly due to the value of the regional sports network deals they can broker with media companies and the national deals that MLB has with Fox, ESPN, and TBS. Live sports remain one of the only solid TV draws in an era of cord-cutting, and that’s what’s moving the real money here. MLB is doing the best business in its history, quite expectedly, not because of any great innovations on the business or tech side, but because of the players on the field. No matter how much or how little money is in the game, the players deserve their fair share of it – and frankly, it’s not particularly difficult to argue that split should favor them over the owners.

While it would be nice, conceptually, to take the money out of sports, that would require a complete organization of our society and economy. We’ve signalled that being able to hit a ball with a bat (or being able to catch a larger ball while running across a field, or being able to shoot a ball through a hoop) at an elite level is an extremely valuable skill to the psychic and emotional health of our communities by simple dint of the wheelbarrows of cash we throw at athletes.

The major concern, then, is not that player salaries are going up in the abstract – it’s who they’re going up for, and why. The way baseball’s labor market is currently structured, the only players who cash in are old enough to have accrued four to seven years of MLB service time (at least) while still young enough to potentially be useful baseball players going forward. Jason Heyward practically sprinted to free agency at the age of 25, but he’s still got six years of MLB playing time under his belt. As you might imagine, relatively few players stick around long enough to reap that reward. Many drift in and out of the league until their arbitration years, then disappear back to the minors or off to a foreign league as soon as they would start being eligible to earn wages proportional to their value.

Ownership is fine with this model, because it’s clearly working for them – player salaries look like they’re through the roof, when in reality they’re being fast outpaced by rising revenues. The MLBPA, which under Tony Clark appears to be deathly afraid of anything even hinting of labor unrest, said that the revenue split wasn’t going to be an issue for his union in the upcoming CBA negotiations. That’s concerning, to say the least, because the MLBPA should be demanding two things: an overhaul of the service time requirements that make keeping young talent in the minors as profitable as it is, and an across the board increase in the wages and standard of living provided to the minor leaguers who, even when they’re not major league talent themselves, help provide the environment for teams to develop that talent.

The MLBPA should be doing that not because it’s the right thing to do – or not just because it’s the right thing to do – but because a labor market that vastly overpays a small subset of workers because it underpays everyone else will eventually split the union into haves and have-nots. The owners like labor peace, but what they’d like even more than labor peace is a union with no power. And despite the headlines David Price and Jason Heyward’s contracts are making, the owners might be closer to getting their wish than anyone thinks.

Powered by Guardian.co.ukThis article was written by Jonathan Bernhardt, for theguardian.com on Monday 14th December 2015 12.56 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010