Showing Us… The Money

by James Vlietstra

February 1, 2022

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With the current labor negotiations taking place between Major League Baseball and their Players Association, I decided to take a deep dive into root of all Collective Bargaining Agreements…. Money.

At the time of the 1994 work stoppage, I was a 16 year old. Because, the term “strike” was being used, I was firmly on the side of the owners, believing that the players were being greedy. In the process this stoppage cost the Yankees a chance at their first championship in my memory.

Now, being quite a bit older and hopefully also wiser, I now know that negotiations are all about business. Some may argue the prudence of having a work stoppage just as the country is emerging from a pandemic, but that’s another article for another day.

The recent trend among front offices has been to suppress salaries by using younger players that cost a lot less than veterans would. Players are kept in the minors until they are deemed fully prepared for the vigors of a Major League season.

The real tragedy is how they treat minor leaguers where they only are paid a couple of hundred dollars a week for half the year. A player who signs at 17-years-old has 5 years before they have to be placed on the 40-man roster. 3 years of “options” follow which allows for the club to send the player to the minors at any point. The next 3 years are considered “pre-arbitration “ which basically means that the team can renew their contract at minimum wage. Then finally the next 3 years are arbitration years in which a player can begin to get paid before they are through their prime. By now the player is 29 and his window for making significant money is quickly closing.

Most organizations have 250-300 minor leaguers. Most teams are valued way in excess of $1B. If each of these minor league players were given $50,000 a year to train at their spring training facility year round, it would cost the team around $15M.

I randomly chose 2006 as a year to do some comparisons with the recently concluded 2021 season. 15 years seems like a good amount of time.

2006

1. 
   

Minimum salary $327,000

1. 
   

Median salary $1.0M

1. 
   

Average salary $2.7M

1. 
   

Team average salary $77,556,890

1. 
   

Yankees salary $194,663,079

1. 
   

MLB revenue $5.5B

1. 
   

Yankees attendance 4,248,067

1. 
   

Yankees value $1B

2021

1. 
   

Minimum salary $570,500

1. 
   

Median salary $1.1M

1. 
   

Average salary $4.17M

1. 
   

Team average salary $104,385,000

1. 
   

Yankees salary $191,205,631

1. 
   

MLB revenue (2019) $10.7B

1. 
   

Yankees attendance 1,959,854 (limited seating due to covid)

1. 
   

Yankees value $5.25B

(Above sources are from Fueled By Sports, Forbes, Statista, Sportico)

According to Baseball Reference there were 1,508 Major League players in 2021. 41 of them (2.7%) made $20M+. USA Today lists 391 of them (25.9%) as making under $1M. 112 were under $600,000. There is a great divide in the salaries of the highest paid players and the rank and file trying to reach their dreams.

The recently expired national television deals from ESPN ($700M annually), FOX ($500M), and TBS ($300M) are only set to increase. Each team contributes 48% of their home receipts into a general fund which is shared and then each team keeps the other 52%.

Bless You Boys claims each teams received $118M from the 48% and another $91M from the national TV deals. These numbers do not include local radio and television deals nor the other 52% of gate receipts.

Another major source of income is streaming services. I have been unable to find exact figures, but teams are making deals with Amazon, Hulu, Direct-TV, Facebook, Twitter, and on and on. All of these deals are likely at substantial rates.

As shameful as it is for all teams to suppress payrolls when the sport is flush with money, The Yankees are particularly guilty of doing this. As stated earlier, The Yankees payroll is lower than it was 15 years ago.The following are some additional sources of income from the Yankees umbrella, which was bought by George Steinbrenner in 1973 for $8.8 million dollars.

1. 
   

In 1998, Steinbrenner joined forces with the New Jersey Nets to form YankeesNets. They split ways in 2004, which is when Yankees Global Enterprises was formed.

1. 
   

The Yankees received around $20M for their radio rights to be broadcast on WFAN. Their television rights are harder to quantify. In 2000, MSG paid the team $52M for television rights. The YES Network was created in 2001 and in addition to games, provides original programming year round. In today’s fair market, probably easily worth $200M per year.

So add the $118 (48%), $91 (TV), $20 (radio), $200 (YES) and $125 (52%) and they could easily support a $500M payroll including their minors. But that is just the tip of the iceberg.

In addition to owning the Yankees, here are some other items that the Yankees Global Enterprises controls:

1. 
   

33% of Legends Hospitality (concessions at the Stadium) worth $750M

1. 
   

26% YES Network worth $3.5B

1. 
   

Yankees Stadium worth $2.3B

1. 
   

20% NYCFC recently valued at $655M, expected to double in next five years

1. 
   

GMS Field and surrounding properties

So together that is a whopping $5.25B+$250M+ $950M+$2.3B+$140M+$?= which is over $9B and climbing quickly.

MLB is currently bringing in money hand over fist.

Prices for the consumers are not going to drop any time soon. So in the best interest of all parties involved, the owners and the MLBPA need to resolve the lockout and resume with the business of playing the game.

It’s just a game, but it’s a game awash in money and to see them stooping a game that has this much cashflow is frustrating to say the least!

#LaborDispute #lockout