April 9, 2012
Why Baseball Players Are Actually Underpaid

There are three big stories here. First came the rise of radio and television riches. Revenues soared, but this extra money mostly made its way into owners’ pockets because players had so little legal leverage. For example, they couldn’t change teams, and contract negotiations mostly consisted of owners telling them what they’d get paid.
That changed when the Oakland A’s made a very expensive $50,000 mistake in 1974. After failing to make a payment into Hall-of-Fame pitcher Catfish Hunter’s insurance annuity, a judge ruled his contract void — including the provision that forbid him, and all players, from negotiating with other teams. Free agency was born. And that was very, very good news for players. Over the next two decades, teams threw ever-increasing gobs of money at players. For a moment in time around the turn of the century, baseball players probably were overpaid. And that brings us to the final part of the story.
Teams have pulled back, albeit modestly, in recent years. Even the Yankees want to save money now. (Maybe the Mayans were on to something). It’s has been modest, but significant. The players union, of course, has regularly accused the owners of collusion. The more likely culprits, though, are Moneyball and the Great Recession. It turns out that years of near double-digit unemployment is bad news for ticket sales. Baseball owners now spend an even smaller share of revenue on players than their counterparts in the NFL and NBA. The latest collective bargaining agreements for the NFL and NBA pay out 48 and 50 percent of revenue respectively to the players. In 2010, baseball players took home roughly 45 percent of team revenue.
Read more.

Why Baseball Players Are Actually Underpaid

There are three big stories here. First came the rise of radio and television riches. Revenues soared, but this extra money mostly made its way into owners’ pockets because players had so little legal leverage. For example, they couldn’t change teams, and contract negotiations mostly consisted of owners telling them what they’d get paid.

That changed when the Oakland A’s made a very expensive $50,000 mistake in 1974. After failing to make a payment into Hall-of-Fame pitcher Catfish Hunter’s insurance annuity, a judge ruled his contract void — including the provision that forbid him, and all players, from negotiating with other teams. Free agency was born. And that was very, very good news for players. Over the next two decades, teams threw ever-increasing gobs of money at players. For a moment in time around the turn of the century, baseball players probably were overpaid. And that brings us to the final part of the story.

Teams have pulled back, albeit modestly, in recent years. Even the Yankees want to save money now. (Maybe the Mayans were on to something). It’s has been modest, but significant. The players union, of course, has regularly accused the owners of collusion. The more likely culprits, though, are Moneyball and the Great Recession. It turns out that years of near double-digit unemployment is bad news for ticket sales. Baseball owners now spend an even smaller share of revenue on players than their counterparts in the NFL and NBA. The latest collective bargaining agreements for the NFL and NBA pay out 48 and 50 percent of revenue respectively to the players. In 2010, baseball players took home roughly 45 percent of team revenue.

Read more.

10:24am
  
Filed under: Sports Baseball MLB 
  1. gazetaoriental reblogged this from theatlantic and added:
    About Atlantic Magazine:
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    Kind of crazy.
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