Last Updated on March 22, 2023
Baseball’s rich history, passionate fanbase, and cultural significance have become integral to American society and are often referred to as America’s pastime. The fact that baseball players, from rookies to seasoned veterans, consistently rank among the world’s highest-paid athletes has caused many to question why baseball players make so much money.
The answer is, combined revenue streams from ticket and merchandise sales, revenue streams for baseball endorsements, and broadcasting rights contribute to the high salaries paid to baseball players.
In this blog, I’m going to explain the economic, social, and cultural factors making baseball players the most well-compensated athletes in history.
The Economics of Baseball: Revenue Streams and Player Compensation
Baseball is a multi-billion dollar industry, and a significant portion of this revenue comes from ticket sales, merchandise, broadcasting, and sponsorship.
Ticket sales are one of the major revenue streams for baseball teams. I have seen teams earning millions each season from ticket sales alone. The more recognizable players a team contains, the better revenue it can earn from ticket sales.
Team jerseys, hats, baseball cards, and other merchandise are another notable revenue source for baseball teams. Additionally, broadcasting rights generate huge revenue for the league, as television contracts are often worth billions of dollars.
Another significant revenue stream for baseball is sponsorships. Companies like Chevrolet, Nike, and Coca-Cola invest millions of dollars in associating their name with the game, players, and teams. In some cases, the sponsorships extend to individual players. Some top players may often sign lucrative endorsement deals with companies in addition to their salaries.
Player compensation in baseball can be complex and vary from player to player. Player performance, experience, and position can factor here largely. Players can also earn performance-based bonuses and incentives for reaching specific goals, like winning awards or achieving certain goals on top of their salaries.
Another crucial factor determining player compensation is collective bargaining agreements. This agreement takes place between the league and the players’ union, negotiating the changes to the salary structure and other benefits for players.
This is how MLB makes money, and the players get paid. Let’s discuss all these factors in detail.
How do Baseball Players Get Paid?
Ticket Sales
A major source of baseball money comes from ticket sales. When fans buy tickets to a game, the revenue is split between the home team and the visiting team. This revenue is used to cover different team expenses, including player salaries.
Ticket sales revenue can be influenced by factors like the size of the team’s market, success on the field, and the popularity of individual players.
For example, the New York Yankees is based in the largest city in the United States. They got a large and loyal fan base, resulting in consistently high ticket sales and revenue. In contrast, the Tampa Bay Rays are based in a smaller market in Florida. Thus, they experience lower ticket sales and revenue.
This discrepancy in revenue is translated to differences in player salaries, with the Yankees often having a higher payroll than the Rays. Additionally, newer stadiums with state-of-the-art amenities attract more fans, leading to higher ticket sales and revenue. Therefore, teams strive to maximize revenue from ticket sales through various strategies to compensate their players better.
Team Merchandise
The second important factor in the salary of baseball players is the revenue from merchandise sales. A portion of the generated revenue goes to the team when fans purchase team merchandise like jerseys, hats, and other clothing items. Similar to ticket sales, this is used to cover various team expenses.
Teams with larger fan bases and higher merchandise demand tend to generate more revenue. Individual player popularity also factors in this manner. Some top baseball players also have their own merchandise lines.
In some instances, ticket sales and merchandise revenue get interconnected. For example, the Seattle Mariners have a program called the “My Mariners Account,” where fans can earn reward points by purchasing season tickets and/ or merchandise. Later these points can be redeemed for various benefits, including discounts on game tickets.
This type of promotion encourages both ticket and merchandise sales, resulting in higher revenue. Additionally, individual players, popular among peers, may negotiate higher endorsement deals with companies that produce and sell team merchandise.
Revenue Stream for Baseball Endorsement
Baseball attracts several large companies to associate their name. Thus, these companies reach out to teams or individual players to endorse or promote their products or brand. Teams and players with a large fan base can influence customer behavior and generate significant brand awareness for these companies.
These endorsement deals can take various forms, including product sponsorship, social media promotions, and television commercials. For example, Mike Trout has a lucrative endorsement deal with Nike. This endorsement deal with Nike includes a line of baseball cleats and apparel featuring them in their commercials.
These kinds of deals can be highly lucrative for baseball players. These deals depend on the players’ performances on the field, off-field images, and reputation. Highly skilled, well-respected players with strong personal brands may command higher endorsement deals.
Thus, top players with lucrative endorsement deals can earn millions of dollars in addition to their salaries.
Broadcasting Rights
Broadcasting rights refer to the fees paid by television networks and streaming services for the rights to broadcast games live. These fees are negotiated between the league and the broadcasters and divided among the league teams.
In baseball, broadcasting rights are a significant source of revenue for MLB to make money and significantly impact player compensation. Teams with larger fan bases and located in larger markets may be able to negotiate higher fees for these. Also, individual player popularity may cut a lucrative deal in this manner.
The league negotiates contracts with networks such as ESPN, Fox, and TBS to air regular seasons and playoff games. Fans can also stream games from MLB.tv online for a fee.
Another factor impacting player compensation through broadcasting rights is the length of the season. For example, Clayton Kershaw, a left-handed starting pitcher for the Los Angeles Dodgers, earns seven figures per year. A significant portion of their income comes from broadcasting rights.
Additional Circumstances
In addition to the abovementioned reasons, some other circumstances contribute to the high salary of baseball players. For instances,
- Max contracts or salary caps do not bind baseball players. Also, big-market baseball clubs often blow past the luxury tax threshold to recruit marquee-free agents.
- Also, Major League Baseball players have a strong union that firmly upholds the players’ interests.
- Baseball season is significantly long. This means baseball players get to demonstrate their skills more than any other athletes.
- It is easier to distinguish individual players’ contributions from team performance. This implies less risk than their colleagues in other sports.
All these factors strongly contribute to the astronomical salary of baseball players.
Let’s look at baseball players’ average salary in different leagues.
Average Salary by Year
MLB
Over the years, the average MLB salary has steadily increased. This reflects the growth in revenue generated by the league.
Back in 2019, the average MLB salary was around $3.8 million, which increased to $4.4 million in 2021 (source). The increase in average salary is due in part to the growing popularity of baseball and the corresponding increase in revenue generated by the league.
MiLB
Minor League Baseball is the player development system for Major League Baseball, composed of several affiliated leagues like Triple – A, Double – A, and Single – A. MiLB players are not union members and do not have collective bargaining rights. Thus, the player salaries are determined by individual contracts negotiated between the players and their teams.
The average salary for a MiLB player in 2021 was around $6000 to $10,000 per season (source). However, this salary is well below the federal poverty line, and many MiLB players struggle to make ends meet.
However, in recent years, there has been a push for higher salaries for MiLB players, arguing that players deserve a living wage for their hard work and dedication. In 2021, MLB and MiLB reached a new agreement that included salary increases for many players and improved working conditions.
American Association Baseball
The American Association of Independent Professional Baseball is not affiliated with MLB. Thus, player salaries in the league are typically much lower than those in affiliated minor or major leagues.
According to reports, the average salary for a player in the American Association is around $1000 to $2000 per month, with some players earning slightly more or less (source).
This varies on several factors, including a player’s experience, skill level, and position. For example, Pitchers may command higher salaries than position players due to their importance in the game. Also, teams can offer incentives to players according to individual or team performance throughout a season.
Others
Other than MLB, MiLB, and American Association, professional baseball leagues, such as the Japanese Nippon Professional Baseball (NPB) and the Korean Baseball Organization (KBO), are available worldwide. These leagues have also seen significant increases in average salaries in recent years.
In the NPB, the average salary for players in 2021 was around $319,000 per year. For the KBO, it was $140000 per year. Both these leagues offer incentives and bonuses for top-performing players (source).
Overall, the average salaries of players in foreign professional baseball leagues continue to rise, reflecting the sport’s global appeal and the value that fans and organizations place on top talent. The length of the season, player performances and experiences, the team’s location, and market size also play an important role in determining the players’ high salaries.
FAQs
Q. Do baseball players make more than football players?
Ans. It depends on the specific players and their contracts, but baseball players generally have higher salaries than football players.
Q. How much do baseball players make per game?
Ans. There is no set amount for MLB players to get paid per game. Their salaries are dependent on the contracts they have negotiated. An MLB player’s average salary is between 4.4 million per year.
Q. How much does MLB make a year?
Ans. According to Forbes, Major League Baseball made an estimated $10.3 billion in revenue in 2021.
Q. Will baseball player salaries continue to rise in the future?
. Historically, baseball player salaries have generally trended upward over time. They will likely continue to rise over time at a slower rate than in previous years.
Check these out
What Age Do Baseball Players Retire and Why? Unlocking the Mystery!
9 Reasons Why Are Softball Bats So Expensive
What Do Moms Wear to Baseball Games
Hello everyone. My name is Jason Butler, and I live in California, America. I was a professional AAA Minor League Baseball player. I lost my chance of playing MLB for injury issues, but I did not lose my love for baseball. I attended the coaching training program and am now working as a coach in a small school in San Diego.
I always love to share my experience and knowledge if that can help you. Play baseball, and stay fit.