Recently NFL, NBA Salaries Have Outstripped MLB

Image credit: Mike Trout and Shohei Ohtani (Masterpress/Getty Images)

It has long been discussed that one of the main reasons why negotiations between Major League Baseball and the Major League Baseball Players Association on a new collective bargaining agreement are so contentious is because the owners have “won” both of the past two CBAs and as such, the players are attempting in the negotiation to claw back some of what they have lost.

The data bears that out. If you look at several financial metrics, there seems to be a clear trend. Over the past decade, when you compare MLB to the other major US team sports (the NFL and the NBA), the amount of money flowing to players has not increased at the same rates as it has in the other sports. That’s true whether you look at minimum salaries, the highest-paid players or overall team payroll thresholds.

In 2011, the final year of the then-current CBA, MLB’s luxury tax threshold was $178 million. In that same year, in the first year of a new CBA, the NFL’s salary cap was set at $120 million. The NBA salary cap at that time was $58 million.

Admittedly, most MLB teams would not cross that luxury tax threshold, but at the time, the point where spending penalties would kick in was significantly higher than either of the other two largest US professional sports leagues.

Over the past decade, that has shifted dramatically. In 2011, the NFL salary cap was 67% of the MLB luxury tax threshold. In 2021, the NFL salary cap was 95% of the MLB luxury tax threshold. The NBA had a salary cap that was 33% of the MLB luxury tax threshold in 2011. It climbed to 52% in 2021. The NFL salary cap is projected to rise to $208 million in 2022.

It’s worth noting that the luxury tax threshold is not the same as the salary caps of the other sports. A salary cap is a semi-fixed limit of what a team can spend (although in both the NBA and NFL there are ways to spend beyond the limit). The luxury tax is not a limit on team spending in MLB, it’s the point at which penalties (financial and otherwise) kick in if a team spends beyond that point.

Most NBA teams spend beyond the cap limit, to the point that there is a further limit (the luxury tax threshold) that is currently $24 million beyond the salary cap. In the 2020-2021 season, only eight NBA teams spent less than the $112 million cap.

Most NFL teams spend to near the limit, with some going over and others staying well under. In 2021, the smallest payroll in terms of cash outlay in the NFL was the Miami Dolphins at $108 million.

Teams are under no such obligations in baseball, and there generally are a number of teams who will spend well under 50% of the luxury tax threshold in any given year.

When it comes to the highest-paid player in each sport, the trend has also shifted. In 2011, Alex Rodriguez’s $32 million salary made him the highest paid player in any of the three sports. Peyton Manning’s $26.4 million salary (in average annual value) topped the NFL list while Kobe Bryant’s $25.2 million salary led the NBA list.

In 2021, the highest-paid MLB player (Mike Trout at $37.1 million) made less than 11 NBA players and four NFL players (as measured by average annual value). Patrick Mahomes’ $45 million salary (in average annual value) leads the NFL while Steph Curry’s $45.8 million salary leads the NBA.

A look at the minimum salary shows similar trends. In 2011, the MLB minimum salary was $414,000 while the NFL’s minimum salary was $375,000 and the NBA minimum was $458,000. At that point, the NFL’s minimum salary was 91% of the MLB minimum and the NBA minimum was 114% of the MLB minimum.
In 2021, the NBA minimum was $898,000, the NFL minimum was $660,000 and MLB’s minimum was $570,500. The NBA minimum is now 157% of the MLB minimum and the NFL minimum is 116%.

So in comparison to its closest US contemporaries the MLBPA has lost ground in the past decade whether measured by its highest-paid players or its lowest-paid players.

What’s also notable is that this trend in MLB compensation comes in a pair of CBAs where the MLBPA also gave up significant concessions on talent acquisition spending. 

In the 2012 CBA, MLB installed relatively inflexible bonus pools for the MLB draft. Before that, teams could theoretically spend unlimited sums in the draft, even if MLB had recommended draft slots (which were often ignored by teams). Under the new draft format, any team that topped its bonus pool amount by 5% or more would face draft pick penalties. No one has done so in the 10 drafts since, effectively making that a hard and fast limit.

With draft spending limited, teams turned to the international amateur market in 2012. Teams that overspent their bonus pools would be limited in how much they could spend in future international amateur classes, but teams quickly realized that free spending in one year could be well worth the penalty of limited spending in a future class or multiple classes. At the extreme, the Padres spent nearly $80 million (including penalties for exceeding their bonus pool) on their 2016 international signing class. In that class, lefthander Adrian Morejon signed with the Padres for $11 million. The year before, Yoan Moncada signed with the Red Sox for a record $31.5 million (which meant the Red Sox also paid an equivalent amount as a bonus penalty).

In the next CBA for 2017-2021, those international amateur rules were altered to strictly limit the total amount that MLB teams could spend. In the most recent signing period, the highest individual bonus was less than $5 million and no team could spend more than $6,260,000 on its entire signing class (with exceptions made for players who receive the smallest bonuses). In other words, the five largest spending bonus pools of the 2022 international class combined are slightly less than what Moncada received himself in 2015.

The age and experience restrictions for international professionals to qualify to be exempt from bonus pool allotments was also raised. That meant that instead of landing an eight- or nine-figure initial deal, Shohei Ohtani signed for a $2.3 million bonus.

So in the past two CBAs, MLB owners have received concessions in CBAs that ensured that spending outside on amateur talent acquisition was strictly limited. At the time, there was a conventional wisdom that theorized that the spending that would otherwise go to draft picks and international signings would instead filter to MLB players.

The two most recent CBAs do not indicate anything of the sort. At a time where amateur spending was more and more strictly regulated, the rate of increase in MLB spending also slowed.

And that may help explain why this new CBA negotiation has proven to be the most contentious in several decades.

Spotrac, Basketball Reference, Associated Press stories and Cot’s Baseball Contracts were all used to help gather salary data.

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