With no Spring Training, no transactions, and no other baseball action to speak of, the entire baseball community is obviously focused on the developments related to MLB’s lockout. It’s all writers have to write about, and it’s all fans have to read about – and comment on. Baseball fans are all over the map when it comes to engagement with the game in general, so it is no surprise that they are also all over the place when it comes to their level of involvement in the nuances of the negotiation. Plenty of fans outright ignore any of the details, and I can really appreciate that standpoint. Who cares about the details, just play ball! I felt that way myself for a while in December, I figured they would get a deal done at some point but not that soon, and that it was rather pointless to obsess over the details in the meantime. 

Since the Internet exists however, far outweighing the ignorers are a whole lot of people who are ready to voice their strong opinion, well-informed or not. Some of these folks seem intent on getting their two cents in on the topic – even though while doing so they profess that they don’t even really like baseball in the first place. I have done maybe more than my fair share of reading up on various lockout developments, and when I make it to the comments sections it never fails to amaze me how many of the commenters make passionate arguments based around “facts” that are directly and clearly refuted in plain English in the piece that they are commenting on. 

You know you’ve hit a new low in lockout land when you write something complaining about people’s social media comments. I’m not trying to drag any person or group for making a strong, heartfelt Tweet about a topic they are woefully uninformed about. The problem as I see it is that the general public’s prevailing wisdom is blatantly opposite of reality. There are a number of misconceptions that most folks have, and while I certainly won’t be the first author to try to explain the realities behind some situations, I felt compelled to take a shot at it. 

I’m going to start with a misconception about baseball that almost everyone I know has, and while it started long before this current labor disagreement, I find it quite relevant to the current situation. This gross misunderstanding is about Moneyball, the terrific Michael Lewis novel that was used as the source material for one of the most iconic baseball movies of all time. I absolutely adore this movie. It is easily my personal favorite baseball-related flick, and I have watched it more times than I can count. Everything about it is flawless, and every time I watch it not only is my love for the game reinvigorated, but I am inspired to find new ways of looking at any problem that might be occurring in my life. The latter part is what everyone I’ve ever talked to about Moneyball misses about Moneyball. 

Everyone I’ve had a conversation with about the movie loves it, and says something like “wow, Oakland really changed the game by realizing that OPB was such a valuable stat”. They think that the A’s discovered a way to use math and analytics to come up with a way to create a team that had a strategic on-field advantage over their competitors. This is not true. What no one seems to understand is that Moneyball has next-to-nothing to do with on base percentage!

Oakland didn’t figure out a new on-field strategy for winning at baseball that worked better than the old way. What they discovered was a way to field a baseball team that was competitive with their opponents – while only spending a fraction on payroll of what their competitors were laying out. They had a problem to solve of needing to be competitive with good baseball teams, but being unwilling to pay the going market rates for comparable players. On base percentage was the vehicle, the loophole the A’s exploited, but their goal was never finding a new formula to win games. Their goal was to find a new formula to not suck so badly that the fans stop coming while maintaining a payroll around a quarter of the most successful teams. 

A walk isn’t better than a hit, and having a bunch of guys good at walking isn’t going to magically steamroll a team full of good hitters. The reason the A’s liked the guys who walked is simply that walks are almost as good as hits, and the market rate for someone good at walking was orders of magnitude less than the going rate for someone good at hitting. They identified a market inefficiency and took advantage, they didn’t change the fundamental elements of baseball success. The title of the book is “Moneyball” for crying out loud, doesn’t anyone realize that it’s only about the money? The only financial takeaway I ever hear from people about this film is how it highlights the disparity between the rich teams and the poor teams. While a whole lot of people have told me that baseball desperately needs revenue sharing and a salary cap to overcome this disparity, not once has anyone ever asked me why the owner of the A’s doesn’t even spend his entire current revenue sharing allotment on the team’s payroll. 

I will certainly hear arguments that current trends like launch angle, bullpenning, and leveraging advanced analytics were born from Billy Beane’s work in Oakland – but only insofar as that they were inspired by his vision of identifying undervalued assets and his outside-the-box thinking on solving the problem of being competitive. Some of these newer trends are unrelated to salary and are designed with the goal of maximizing the effectiveness of each player’s skill, but make no mistake about it – Billy Beane didn’t come up with a better way to win, he just came up with a different way to win while spending pennies on the dollar compared to his competition. You can trace the Rays innovation of the opener back to Beane’s ideas in that Tampa Bay discovered a way to emulate the performance of a mid-tier starting pitcher while paying bottom-tier salary money, but obviously on base percentage has nothing to do with maximizing the effectiveness of a hard-throwing one-pitch pitcher by utilizing him to knock out the first time through the order for the opposing team’s top hitters.

I don’t understand why a player being cheap strikes such a chord with fans. Even during the labor peace we’ve enjoyed for the last 27 years, I hear all the time “he’s a good player, but he’s not worth $X/year”. As if some guy who watches 40 Astros games a year on TV is a better judge of the value a multi-million dollar player brings to an organization worth billions than the well-trained and well-informed execs who are in charge of making those decisions. In order for any member of the general public to be in a position to intelligently weigh in on how much any player was actually worth to a franchise, said franchise would need to open up their books and let us dig into the financials, and we know that’s not happening. So why do fans get such a kick out of their team getting a “bargain” on a player who performs well? 

I think some of it has to do with pride. Everyone hates the Yankees, and no one wants to see their team go down the path of “buying a championship” like their hated rivals. A championship feels more pure and honest, more satisfying, if the team did it “the right way” and won it all without simply out-spending their foes and hiring the most expensive players. Homegrown talent is clearly cheaper than hiring mercenary free agent talent, and homegrown stars resonate more with fans than players brought in on high-dollar contracts. 

With the salary of every MLB player easily at the fingertips of any casual fan, it’s really easy to feel jealous of young men in their 20s getting paid massive salaries to play a fun game. I know I’d happily play a baseball game for a fraction of what those guys make, but I’m not a professional athlete, and I wouldn’t even bring a fraction of the value that real players do to a baseball team. This public knowledge of salaries while the profitability of teams is shrouded in secrecy is the root of many financial misconceptions that fans have about the game. 

This begins with the misconception that all the players are unfathomably rich, hence the perception that the labor dispute is “millionaires vs billionaires arguing about money”. When fans see top salaries over $40MM/season and the average salary cresting $4MM, I can see why casual fans jump to that conclusion. It’s just not true. In 2021, 62% of all players had a contract for less than a million dollars, and 35% of them were within a few bucks of league minimum. Total payroll and the average salary have dropped every year since 2017, while revenues have increased steadily during that same time period. While the financial numbers are on levels that most regular people can’t even dream of, when you take into account how hard it is to be a major league baseball player and how much money is generated by major league baseball, arguments based on dollar totals that don’t take scarcity and true value into consideration do not accurately depict the full picture. 

Making it to the big leagues is hard work. Thousands of players flame out, and all the ones who make it spend decades, from childhood, honing their skills and working constantly for a chance at the dream. With 26 roster spots per team and 30 teams in the league, there are 780 coveted MLB player jobs available at any given time. Being one of fewer than 800 people who are skilled enough to hold one of these jobs is insanely difficult, and folks who think that $570k is plenty for a minimum salary should take a look at other professions that are similarly difficult to master. For example, obviously there are 500 companies in the S&P 500. That means it is almost as hard to become a major league baseball player as it is to become the CEO of one of the top 500 companies in the world. The average salary for a S&P 500 CEO is about $15.5MM, and when viewed in that context, $570k seems like a paltry starting point for someone who is skilled enough to overcome similarly long odds. Even the average salary of $4.1MM seems like small potatoes especially when you realize that the pool of baseball players making more than four million bucks is tiny compared to the 500 CEOs who rake in vastly larger sums.

Of course ultimately it doesn’t matter how limited the jobs are and how hard it is to get one, it’s all about how much money you bring in and how much value is created. The players are what fans pay to see, and while obviously fans view player salaries in the context of payroll, what the players really are in the baseball business model is the product, they are inventory. We don’t have individual financials for each team, but MLB has built up a collective business that sold the “product” of the game for over $12 billion in revenue in 2021. Since player salaries are constantly shoved in our collective face, we know that the total payroll for all 30 teams was just over $4 billion. While a normal business might have to balance both high payrolls as well as high cost of goods, a baseball business effectively combines the cost of inventory with the cost of labor to create a situation that allows for the opportunity to reap massive profits. While we don’t know for sure if the owners reap that profit in reality, we can assume that such smart businessmen are probably not blowing this fantastic opportunity. 

The other three major sports in our country offer more transparency, and they all operate under a salary cap-based system that splits revenue roughly equally between the league and the players. With MLB players getting only a third of total league revenue, while the top-end MLB superstars earn about the same as top players in other sports, as a whole group, MLB players are woefully underpaid comparable to their counterparts in other leagues in terms of sharing in value they generate. It also means that MLB owners are either universally terrible with money or that they collectively are vastly more profitable than their counterparts who own teams in other leagues. My money is on the latter. 

To me, “$570k to play a kid’s game is more than enough” just doesn’t cut it. On the surface of course it is, but there isn’t enough context. If anyone who ever tweeted that argument was one of the top 780 people in the world at doing their job, they would certainly want to be paid consummate with the revenue they generate even if they loved what they did and could have a comfortable living doing it for less. I love writing about baseball, and I would do it for a very reasonable salary. Sometimes I even do it for free because I like it so much! However, if I was one of the best 780 writers in the world, and my writing was contributing to the revenue of a business generating $12 billion annually, I would probably want a hefty sum for every piece I wrote. Not because I am greedy or because I have to get paid six figures or I won’t want to write any more, but because if my work was generating that kind of money I would feel like I deserved a reasonable portion of it.

If MLB was only generating $8 billion per year in revenues, 99.9% of the players would be just fine with the current situation and gladly take their $570k minimum salary. If baseball was unpopular enough to only generate $4 billion, the players would have much lower needs and expectations. It’s not about the players just deciding that they want or need more money to play a game. They just see the situation as it is, see how much money is generated through their play, and they want a decent share that accurately reflects the rewards of the massive pile of revenue that is generated with their play. 

I’m sure that the real pain points come when they see MLB’s revenue graph shooting up to the right while players’ share of that revenue is not only not keeping up, but is actually dropping. If your company Christmas party featured an announcement that the company had increased revenue by 25% for the fifth year in a row, and also an announcement that all salaries would be cut by 3% for the fifth year in row, it would probably make for a pretty unhappy Christmas party for the staff no matter how much anyone was being paid to begin with.

When no one knows how much the owner makes and everyone knows that Max Scherzer is about to get $43MM/year, it’s easy to point at the players as being overpaid crybabies. The average fan’s financial interaction with the team comes from viewing the public payroll, and then buying tickets, beer, hotdogs, and merchandise. Obviously fans are going to associate those two things, which leads to the misconception that the reason it is so expensive to attend a game is because the players get such large salaries. That isn’t how it works! Baseball is a business, first and foremost. The owners set the prices for tickets and beer, and what they are spending on payroll has absolutely nothing to do with what they charge. 

Like anything else, ticket and concession prices are set by business people who have studied the laws of supply and demand. The prices are set as a function of what the market will bear, and like any savvy billionaire company owner, the owners of baseball teams charge absolutely as much as they can to maximize profits. How else would we explain total salaries dropping over the last five years, but ticket and concession prices marching ever higher? The Red Sox slashed almost $40MM (~15%) off their payroll following the 2019 season, but ticket prices at Fenway certainly didn’t drop by 15%, and neither did the price of a beer. I certainly sympathize with fans who are frustrated by the high costs associated with attending a game in person. I am too! I wish tickets were cheaper, and the concession prices really get me. I love ballpark food and it’s a big part of the atmosphere when I head to a game. I feel like after I buy a ticket for close to $100, getting myself a hot dog and two beers should be a financial afterthought, but it can easily add up to almost $50. While the high cost of attendance might be frustrating for me, it is obvious that the players have nothing to do with it. The owners are going to charge whatever the maximum that someone will pay for a beer is, whether their highest paid superstar is making one million, ten million or forty million. The owners are bringing in every dollar they can from the game in every facet, and then once they have counted the pile, they share as few of those dollars as possible with the highly-skilled players while still being able to convince them to get on the field.  

The public battle over ungodly sums of money is ugly, and made uglier by the fact that it is taking place while millions of Americans struggle to make ends meet with annual salaries that are comparable to rounding errors in the MLB financial debate. Regardless of whether fans side with the players as they fight for their fair share of the big revenue pile or if they support the owners in their quest to grow the MLB revenue pie significantly while keeping an even larger piece than the 66% they currently have for themselves, the entire situation is a terrible look for the sport and will get infinitely worse if any regular season games are lost. Regaining the fans’ trust and support will be a long road if they can’t have a normal Opening Day, and with more competition than ever for the entertainment dollar no one really knows how the average casual sports fan will react in the event that the season doesn’t start until Memorial Day. In the meantime, if you’re reading up on this because you wanted to learn more about the nuances behind the lockout, consider the context and the greater landscape before you vilify your former favorite player as a greedy scumbag just because he makes $750k/year and still would appreciate a more equitable distribution of the $12 billion that MLB generates annually.

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