The Atlantic - Why baseball players are actually underpaid

[StL]

Tampa Bay Rays: awesome team with a great manager and some incredible athletes... very little revenue
Chicago Cubs: [expletive] team with a manager whose name I can't pronounce and they have Soriano... yet they have huge revenue

Those situations are mostly affected by market size, but the fact is the Cubs are a much better selling product than the Rays.

There's a [expletive] ton more that goes behind how much money a team makes than the product on the field. AK's point is valid.

First off I agree with you and AK. The 'talent' never gets paid anything close to those behind the seens responsible for the marketing. LL Cool J gets about 87 cents for every $10 CD he sales. Jack Black's salary is less than 8% of the movies gross revenue. The guys doing the marketing and work behind the seens get paid more than the talent on the field. However, if for some reason the Rays can land a fish stick deal that gives them significantly more revenue, the players on that team will get their cut by way of bidding more or extending their star players to higher contacts than they would had they not landed that extra money. Teams are always trying to maximize their revenue in any way possible, mostly so they can give more money to their star players and keep fielding a winning team.

[AdmiralKird]

Regardless, the point is that the Pirates, for all of their faults over the last few seasons

You mean 19?

The point is the Pirates are one of the most profitable franchises because a) they use the revenue sharing to their advantage, b) They realize that you have diminishing returns the more you spend on player contracts in regard to revenue generation. If you don't care to win, you can still make crazy tons of money convincing people to see your product - because they are still an MLB caliber team thanks to the draft system and paying league minimum.

You don't need to spend more money on contracts. Yes, you need to if you want to be one of the popular teams, but you're better off spending the money on the business side and hiring 30 salesmen and 25 analysts = 55 Salaries x an avg salary of 55,000 a year totaling $3M than hiring Braden Looper to throw some balls around for you for a season.

Now I'm not saying the Pirates are a model franchise, but they do their strategy well, and the Marlins have also taken a crappy team and made it the talk of the town. Look, if MLB was really the selling point of the Marlins, then why is there a giant sculpture in CF, with fish tanks behind the plate, and a dance club in the corner OF? With the new Miami park, the baseball team is really just an attraction because its popular in the sense its a national sports team, but the real goal is just to sell you a bunch of crap you don't need or lure you to be entertained by cheerleaders and fish races.

[cpebbles]

The Pirates have made a lot of money off of other teams' players, true, but that also makes them accountable to the MLBPA, which has pressured MLB to end that loophole. It's not a viable long term strategy, and neither is a night club in the stadium. The team will always be the product.

[vinsanity]

I'd be curious to see how it plays out by profit.


They are using revenues which matters. It seems that the salaries rise pretty close to what happens with the tv revenues. And I wonder how much of that revenue stream is frtom 162 game schedules and the concessions from it. I didn't give it a huge read, but this guy seems to suggests NFL profits are higher on less revenue.

I focus here on two numbers, revenue and operating expenses, in two leagues, the NFL and the MLB. Particularly striking is how the NFL’s and MLB’s revenue differ by only 13% of the NFL’s revenue or about $1 billion, but the NFL’s operating income is almost exactly double that of the MLB’s.

[tlombard]

The article talks about player salaries as a percentage of revenue but comparing baseball to other sports is not apples to apples. The extra cost involved in running scouting, minor league teams, travel expenses for the players/staff/trainers/etc. for 81 road games a year in addition to the extra nights on the road on a long road trip and who knows what else is well above a football team traveling for 8 games a year during the regular season.

I stopped complaining about player salaries a long time ago. They get paid what the market will support. When people stop going to games and watching on TV or listening on the radio then the salaries will go down with revenue. Likewise, when people start buying season tickets to watch a teacher teach (or stop whining and accept higher taxes to pay them) then teachers will make more.

[pioneer98]

Faulty Logic. It assumes that baseball players' performance is directly driving the increase in revenue. A lot of it is new business schemes that are expanding the brand and the sport. If a salesman for Miami goes out and strikes a deal with a food company to create Miami Marlin's Fishsticks, generating $1 million in profit, does Jose Reyes really deserve 40% of this new deal?

Let me break it down simpler:
There are two people in MLB, those that actually run onto a field of grass and hit [expletive] with sticks, and those that work to keep hitting [expletive] with sticks popular. Who is worth more? The guy who can hit [expletive] with a stick, or the guy who can convince people to drop thousands of dollars on seeing people hit a damn ball with a piece of wood?

Don't the NBA and NFL also have guys who work to make their product more popular? Don't the NFL and NBA also get taxpayers to build them new stadiums? Aren't there also NFL teams (like the Bengals) that have had long stretches of suckiness?

[pioneer98]

I'd be curious to see how it plays out by profit.


They are using revenues which matters. It seems that the salaries rise pretty close to what happens with the tv revenues. And I wonder how much of that revenue stream is frtom 162 game schedules and the concessions from it. I didn't give it a huge read, but this guy seems to suggests NFL profits are higher on less revenue.

I focus here on two numbers, revenue and operating expenses, in two leagues, the NFL and the MLB. Particularly striking is how the NFL’s and MLB’s revenue differ by only 13% of the NFL’s revenue or about $1 billion, but the NFL’s operating income is almost exactly double that of the MLB’s.

Uh, that's not rocket science. Just to throw out some numbers…Say Corporation A brings in $20 billion in revenue, but only $1 billion in profit. And Corporation B brings in $20 billion in revenue but $2 billion of that is profit. The two really aren’t any different in size, but because “B” has $1 billion less in costs, they are twice as profitable.

There could be a number of reasons for this. TV money is just wildly more profitable in general than ticket sales, and that is where the NFL makes the vast majority of its money. Also, the NFL doesn’t have some pesky overhead costs, like a minor league system, to worry about. Their developmental players play for free in the NCAA. MLB has to pay their top developmental players some big money in some cases.

[Jmodene]

OTOH, it can be legitimately argued that without the players, the marketers have no product to market.

[MTyson]

IMO - At best this is a case of selective math, at worst just plain bad math.

Using revenue vs pay as a guide, what should a person working on an oil rig be paid? I see it as an over simplified view of the issue.

Now if you could actually list the profits made........

Have a Grateful Day!

[Jmodene]

The difference, though, between baseball and oil rigs is that in baseball, the players *are* the product. Without the players, you only have a nice patch of grass with seats around it.

With oil rigs, the oil is the product.

The oil rig workers would then be roughly equivalent to the stadium workers, not the players.