December 3, 2015

It’s the Analytics

Craig Calcaterra can’t figure out why Tony Clark believes the Owners and Players are splitting the pot 50-50:

Last spring Grow reported that since baseball’s last labor stoppage, in 1995, MLB’s revenues have increased nearly 650% (from around $1.4 billion to over $9 billion in 2014). During that same time period, however, MLB payrolls have only increased by around 378%, from roughly $925 million in 1995 to just under $3.5 billion last year. The spilt, Boras says, has gone from 60/40 in favor of the players to 57/43 in favor of the owners.

At the moment I can’t for the life of me figure it out. One possibility that fits here is that, in reality, those $9 billion+ revenue numbers that get passed around each year are bogus and that, in reality, baseball makes far less than it claims. If that were the case, Clark wouldn’t be “crying poor” the way the owners have done in the past. He’d just be operating from financial assumptions which he can reasonably defend in a negotiation. If that’s the case, a reasonable takeaway here would be for the media to never again credulously report baseball’s revenues as reported by baseball and, further, to criticize baseball for claiming the crazy-growth it has claimed for the past 20 years.

If that’s not the case — if the $9 billion+ and the payroll figures which get reported are legit — I’m at a total loss. And utterly unable to comprehend why a union boss would downplay the size of the golden goose.

The way I understand the numbers, the players share is represented as a percentage of revenue. The percentage of revenue left over does not all go in the owner’s pockets, much of it is used to run the game. It’s quite possible that the cost of running the game increased faster than revenue grew in that time period. Just as a quick example, fuel costs are way up in the last 20 years, even with the recent fall in energy prices. That means powering a stadium, flying players from city to city, staying in hotels costs a lot more.

One big driver may be the expansion of support staff in the front offices. I suspect that 20 years ago most teams did not have analytic departments, and those that did probably had one guy with a computer. Teams had scouts, but scouts were not paid much. They were former players who probably didn’t go to college and didn’t have many options once their careers were over. Analysts are different.

Here’s a post for an Angels Baseball Systems Developer. I am extremely qualified for this job, and when I see something like this I’m tempted to apply. I suspect, however, I would need to make about $150,000 to take the job, given that it is located in a very expensive part of the country. Of course, I’m experienced and would need to uproot my family. Someone just out of college would work for less, but maybe not. That person, with those skills, is going to have a lot of options. In other words, you can’t pay programmers like scouts. They’ll just go into an engineering company and make big bucks.

On top of that, there are usually two GMs now, although one is usually a president or VP. So that’s 30 more people getting paid like a GM. There are assistant coaches and bullpen coaches, and bench coaches, and coaching coaches.

So there is a division between the players, the operations, and the owners. I suspect the part in the middle has grown the most, so the players are fine with the current distribution of revenue. Remember, Tony Clark knows much more about where the money goes than you or I.

2 thoughts on “It’s the Analytics

  1. James

    I dunno, there’s something fishy going on.
    Fuel costs have risen, but they definitely have not risen 650% since 1995. So they have risen *slower* than baseball’s revenues and now constitute a *smaller* percentage of the total revenue, leaving a *larger* percentage to be divided up. And yes, teams now pay analysts, but that can’t be even a scratch in the surface of $9 billion.

    I do believe Tony Clark knows a lot more than we do, but I’m not going to take everything he says at face value. He owes an explanation.

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  2. rbj

    I understand the minor league player’s lawsuit didn’t go anywhere but how about a bump up in minor leaguers compensation. Babe Ruth got paid more than the president because he had a better year, now that every rookie makes more than the president I don’t care about major leaguers’ salary.

    As for what the Angels are looking for, especially given that it’s California, they are competing with Google. They are going to have to pay accordingly.

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