300K is A-OK

Over the weekend the debate has raged as to whether the new Collective Bargaining Agreement did enough for competitive balance within MLB. Naysayers seem to be winning out when a prediction is made, but more often the wait-and-see attitude with a slightly negative spin-it's been the prevailing mood for so long, it's hard to shake-is expressed. It's largely a matter of 1) the average analyst feeling that revenue sharing numbers were not large enough and therefore will not be effective and 2) the fear that low-revenue teams will not invest the shared funds in their teams since no minimum team salary was included in the CBA. Of course, the argument that there is no real lack of competitive balance and that the issue was floated by the owners as an means to impose stricter controls on salary increases was not often voiced.

The feeling was generally that the owners won the negotiation battle but that they might lose the competitive balance war and the public relations war with the fans due to the negative publicity. That may be true. But reviewing the major points of the plan, seven points in the owners' favor, 1 in the players', 2 that are a mixed bag, and 3 pushes (basically no changes). The points that I term a mixed bag are contraction and club debt. That the owners agreed not to contract for the term of the CBA is a win for the players, but the owners get the players' grievance against contraction withdrawn and the right to eliminate 2 teams for 2007, as long as they notify the players, with no argument before the NLRB. As far as the club debt issue, the owners' ability to impose such a plan given that the old 60/40 plan had fallen into disuse (though Selig tried to revive this year) is a win for them. However, the terms favor the players more than the proposed 60/40 plan because long-term contracts are excluded from debt and a more reasonable ratio of ratio to debt is being used.

The sole clear win for the players is the minimum salary increase of fifty percent, from two to three hundred thousand dollars. $100,000 seems like a small increase when you are dealing in salaries that average 20-25 times that and the minimum salary issue seemed like a throwaway when the negotiators were discussing issues that involved hundred of millions of dollars. There are a few salient points to keep in mind, however. For one, both the percent increase and the amount increase are the largest such figure increases ever negotiated by the players' union.

Also, the average salary rose in 2002 rose about $250 K to $2.38 M, but the median salary in 2002 dropped from $950 K to $900 K and the number of salaries over one million dollars decreased. Ten team salaries decrease in 2002. This means that the salary increases were made at the higher end of the spectrum while more players in the lower and middle salary ranges were losing money. This should do a good deal to rectify that. But what will be the extent?

Let's assume that all players currently at the minimum salary will see a $100 K windfall next year. Also the players making between the 2002 minimum salary and the 2003 salary will probably see at least the same sort of increase. Players who make between the $300 K and $400 K will also see a residual increase. Let's say it's about half the other group ($50 K). You may say that are assumptions are off and that these players may be replaced by minor-leaguers by or during next season as they are largely fungible, but A) their replacements cannot make much less, B) the increases for the young players who will get merit increases will outweigh the loses, C) teams by and large do not rid themselves of a player because he makes slightly more than the minimum just to replace them with someone making the minimum-the amounts are too small to dictate the change, D) there will probably be a ripple effect up to around one-million-dollar salaries that we are not even trying to assess.

Given these assumptions, here is a table of the number of players making $200 K, making $201-$299 K, and making $300 - $400 for each team along with the 2002 team salary, 2002 team average, expected increase due to the minimum salary increase, and the expected team numbers for next season just due to the minimum salary increase (source is ESPN):

Team  200K 201    300     2002 PAYROLL 2002 AVG.   Expected       Expected     Expected
            -299K  -400K                           Increase       Payroll         AVG.
Ana     1    7       6    $61,721,667  $2,204,345  $1,100,000     $62,821,667  $2,282,916.43 
Az      0    5       3   $102,820,000  $3,115,758    $650,000    $103,470,000  $3,197,008.00 
Atl     6    5       1    $93,470,367  $3,015,173  $1,150,000     $94,620,367  $3,111,006.33 
Balt    5    9       4    $60,493,487  $1,890,421  $1,600,000     $62,093,487  $1,979,309.89 
Bos     1    5       2   $108,366,060  $3,612,202    $700,000    $109,066,060  $3,699,702.00 
ChiC    0    7       0    $75,690,833  $2,703,244    $700,000     $76,390,833  $2,803,244.00 
CWS     1   10       2    $57,052,833  $2,113,068  $1,200,000     $58,252,833  $2,205,375.69 
Cin     1    9       4    $45,050,390  $1,501,680  $1,200,000     $46,250,390  $1,587,394.29 
Clev    1    9       0    $78,909,448  $2,630,315  $1,000,000     $79,909,448  $2,730,315.00 
Col     0    8       1    $56,851,043  $2,105,594    $850,000     $57,701,043  $2,200,038.44 
Det     3    3       4    $55,048,000  $1,966,000    $800,000     $55,848,000  $2,046,000.00 
Fla     2    4       5    $41,979,917  $1,499,283    $850,000     $42,829,917  $1,576,555.73 
Hou     2    2       8    $63,448,417  $2,349,941    $800,000     $64,248,417  $2,416,607.67 
KC      2    7       4    $47,257,000  $1,629,552  $1,100,000     $48,357,000  $1,714,167.38 
LA      0    4       2    $94,850,952  $3,648,114    $500,000     $95,350,952  $3,731,447.33 
Milw    0    7       1    $50,287,833  $1,734,063    $750,000     $51,037,833  $1,827,813.00 
Minn    1   10       1    $40,225,000  $1,547,115  $1,150,000     $41,375,000  $1,642,948.33 
Mon     2    8       6    $38,670,500  $1,381,089  $1,300,000     $39,970,500  $1,462,339.00 
NYM     0    6       2    $94,633,593  $3,639,754    $700,000     $95,333,593  $3,727,254.00 
NYY     0    6       0   $125,928,583  $4,342,365    $600,000    $126,528,583  $4,442,365.00 
Oak     0    6       1    $39,679,746  $1,469,620    $650,000     $40,329,746  $1,562,477.14 
Phil    2    5       3    $57,955,000  $2,069,821    $850,000     $58,805,000  $2,154,821.00 
Pitt    1   10       1    $42,323,598  $1,459,434  $1,150,000     $43,473,598  $1,555,267.33 
StL     0    3       2    $74,098,267  $2,849,933    $400,000     $74,498,267  $2,929,933.00 
SD      1   11       3    $41,425,000  $1,428,448  $1,350,000     $42,775,000  $1,518,448.00 
SF      2    3       2    $78,299,835  $2,899,994    $600,000     $78,899,835  $2,985,708.29 
Sea     1    2       1    $80,282,668  $3,211,307    $350,000     $80,632,668  $3,298,807.00 
TB      4   12       1    $34,380,000  $1,227,857  $1,650,000     $36,030,000  $1,324,915.82 
Tex     3    2       1   $105,302,124  $3,631,108    $550,000    $105,852,124  $3,722,774.67 
Tor     4    9       0    $76,864,333  $2,650,494  $1,300,000     $78,164,333  $2,750,494.00 
Total  46  194      71 $2,023,366,494  $2,384,779 $27,550,000  $2,050,916,494  $2,473,364.21 
Per tm  1.5  6.5     2.4  $67,445,550                $918,333     $68,363,883  

The average team salary will increase by about a million due to the new minimum salary. The average player salary will increase about $90 K. This is a modest increase especially with the salary decreases expected from the luxury tax and revenue sharing. But for a union that has always been accused of trying to protect its millionaire constituents' salaries at the expense of its poorer members, this has to be seen as the single greatest direct boon to those poorer players since the beginning of collective bargaining.