Why do professional baseball players earn so much?

Written By Quora
(AP Photo)

Why do top baseball players earn so much?


Answer by Stephanie Vardavas, MLB employee 1979-1989

The Major League Baseball Players Association (MLBPA) has been the strongest union in US league sports for many years. The MLBPA has developed a sophisticated educational program to make sure the players are well informed about the history of the sport and the history of the MLBPA. During the lifetime of Marvin Miller (first executive director of the MLBPA), the PA sent him to spring training every year, where he visited all the training camps and talked about the history and economics of player salaries in baseball.

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Because Marvin was a labor economist and not a lawyer, over the years he was able to negotiate collective bargaining terms that were extremely favorable to the negotiation of higher individual salaries by members of the bargaining unit, and which, frankly, the guys on the other side of the table probably did not understand as well as Marvin did at the time they were agreeing to them.

The availability of salary arbitration for three year veterans and a few two-plus year veterans is a great example of this. Arbitration eligible players are permitted to compare themselves to players with up to one more year of MLB experience, and the arbitrator must choose either the club's number or the player's number, but is not allowed to split the difference. This incentivizes the club to make a realistic offer, higher than it wants to, because a lowball will never succeed, and so the player basically can't lose.

These salaries then become comparables for the next class of players going through arbitration. Year after year this is a one-way upward ratchet for player salaries.

Free agency is another significant driver of player salaries and the absence of any kind of salary cap means the bidding wars can go very high. The "luxury tax" imposed on high payrolls by MLB has not been a good incentive for restraint on the part of the major league clubs. MLB is the only one of the "big four" league sports that has no salary cap. Again, this circles back to the strength and determination of the MLBPA. The players support their union and are willing to go out on strike as long as they have to to preserve their economic security.