Detroit Tigers first baseman/designated hitter Miguel Cabrera, the two-time reigning American League Most Valuable Player, this morning signed a contract extension with the Tigers that is going to make living the rest of his life pretty easy. The deal, reportedly an eight-year, $248 million extension, comes on top of the two years remaining on Cabrera’s current contract, and his deal also includes two option years. By the end it could pay him $352 million.
That’s caused plenty of people to freak out, some of them for good reason: as Deadspin’s Barry Petchesky explains, giving a guy who will turn 31 this season this much money as part of contract that will take him through his age 41 season generally isn’t wise no matter how good he’s been thus far (ask the Angels and Albert Pujols). Add to that the fact that Cabrera still had two years on his contract (and that the Tigers recently broke off negotiations with starting pitcher Max Scherzer), and there are plenty of legitimate questions about why Detroit chose to do this deal now.
Cabrera’s is actually the second in the $30 million-per-season range this offseason, coming as it does after the Los Angeles Dodgers handed pitcher Clayton Kershaw a seven-year, $215 million contract in January. In the near future, Los Angeles Angels wunderkind Mike Trout will almost surely shatter both of these numbers when he signs a deal with the Halos or anyone else. $300 million and $30 million per year are going to be the new normal for superstars, like $200 million was in 2003 and $100 million was before that, and that’s going to cause a freak out for a much worse reason than questioning whether this is sensible from a winning baseball games perspective, simply because there’s a segment of the population that sees these numbers and likes to get indignant about the amount of money these players make.
Why shouldn’t they freak out? Well, start with this: while Cabrera and Kershaw’s deals look exorbitant, Major League Baseball salaries are actually growing at a far slower rate than Major League Baseball revenues are, which means baseball players are making less of the money that they’re generating. Matt Swartz from The Hardball Times crunched the numbers and found that while salaries have increased 22 percent over the last decade, MLB revenues have far outpaced that, growing by an astounding 122 percent, as he documents in this chart:
If you read Swartz’s full piece — and you should — you’ll find another chart that shows that baseball players’ salaries as a share of total revenues have dropped to 40 percent. Forty percent. That’s lower than any of the other major pro sports leagues, where recent labor fights have reduced the players’ share but where players still pull in somewhere between 45 and 50 percent of revenues. Baseball players are still making a lot of money, but as the league and its teams bring in more from bigger TV packages and through other means, their salaries are failing to keep up with growing revenues and their share of those revenues is falling precipitously — as recently as the mid-90s, MLB’s players hauled well more than 50 percent of revenues.
Should that concern you? That depends mostly on whether you actually view baseball players’ salaries as a problem on the order of, say, the salaries of the average American worker, which aren’t keeping up with productivity gains and are falling way behind the incomes of their bosses. In other words, no one’s going to begrudge you if you’re not throwing a pity party for the lowest-paid guy on a Major League roster.
But it is problematic for a few reasons, first because a falling salary share could become a major sticking point in labor negotiations when baseball’s collective bargaining agreement expires after the 2015 season, at which point owners will probably ignore charts like Swartz’s and arguments like mine while arguing that salaries like Cabrera and Kershaw’s are putting their teams in financial peril. That could threaten an unprecedented period of labor peace that has lasted since 1995 and has made baseball more enjoyable for everyone. Even more troubling, though, is the fact that the money isn’t flowing other places where it could. I’d be less troubled if Major Leaguers were losing salary share because it was trickling instead to minor leaguers, many of whom make less than the federally-mandated minimum wage, according to a recent lawsuit against MLB that alleges major wage and labor violations. I’d also be more OK with smaller salary shares in the big leagues if the money was going to workers in a sport where wage theft and labor violations involving clubhouse staff and front office employees are, in MLB’s own words, “endemic to our industry.” Rather, all that money is only further lining the pockets of already-wealthy owners.
Even if you don’t care about any of those things, these facts ought to at least reshape the way we talk about salaries. Rising baseball salaries aren’t indicative of the bigger problems facing the average American worker. Neither are they making it more expensive for average Joe fans to buy tickets and go to games. Those salaries are just an attempt to gain fair market value for services and a piece of the rather large financial pie baseball players are creating. Unfortunately, even with large numbers like $300 million floating around, their share of that pie is only getting smaller as owners keep more and more of the riches generated by baseball’s prosperity for themselves. And that, even if you don’t care about the plight of baseball players themselves, is indicative of the larger problems facing the average American worker too.