MLB spending on player payroll down ‘dramatically,’ second-largest decline since 2004
Maury Brown of Forbes reports that spending on player payroll across baseball was down “dramatically” in 2018 and was the second-largest year-to-year decline since 2004. Citing figures from the Associated Press, Brown points out that MLB teams combined to spend $4.548 billion on player salaries, down $115.388 million from 2017. It is the first decline in player spending since 2010 ($2.911 billion from $2.913 billion) and the second-largest decline since 2004 ($204.8 million decline).
The biggest offenders were the Tigers, Yankees, and Dodgers. The Tigers went into a rebuilding mode, drastically cutting payroll. The Yankees and Dodgers raced to get under the luxury tax threshold. Only 12 of 30 teams spent more in 2018 than in 2017 on players.
None of this comes as a shock for those that followed the negotiations for the most recent collective bargaining agreement and have observed the consequences. As Craig wrote at the time about the luxury tax threshold, “Over time, of course, such a thing would depress salaries. From the owners’ perspective, a strong luxury-tax penalty is both a soft cost-containment mechanism and ... something of a field-leveler between large and small revenue teams.”
Despite issues with attendance, Major League Baseball has continued to set revenue records year after year. In 2017, revenues exceeded $10 billion for the first time ever. Due to a higher percentage of teams tanking/rebuilding at the same time, a zeitgeist in which it is deemed acceptable by many to not spend money to acquire players (one of the reasons why the free agent market stagnated), and an owner-friendly CBA, owners are pocketing most of the excess money. As a result, there has been strife between ownership and the union over the last couple of years -- enough that the MLBPA hired a new chief negotiator.
Bryce Harper and Manny Machado lead the current class of free agents. Even as recently as two years ago, Harper was thought to eventually become the first free agent to break the $500 million barrier in total contract value. As the free agent market grinded to a halt, however, those expectations were lowered to $400 million. Now, we’re not even certain that he will break Giancarlo Stanton’s record of $325 million. The CBA expires on December 1, 2021. If things keep going the way they’re going for the players, they will have to come out swinging in negotiations for the new CBA.