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MLB Average Salaries and the Brewers

Recently the Major League Baseball Players Association released its annual report on average salaries in baseball. Obviously this is something that is important to fans of all teams, but especially to those in small markets. Milwaukee fans were rudely reminded of the state of salaries in baseball early last week when CC Sabathia declined the Brewers' maximum offer, instead heading to New York.

Through serendipitous link-clicking and the wonders of e-mail, I've come across the report in PDF form. It's got some pretty cool numbers inside. The methodology of determining the 2008 salaries of players is as follows:

The value of each contract for the year 2008 was calculated by adding each of the following:

  1. All salary, deferred compensation, and performance, award, and attendance bonuses specifically attributed in the contract to 2008;
  2. The amount of any signing bonus, option buyout, or similar payment, set forth in the contract, divided by the number of years of the contract term; and
  3. The amount of any deferred compensation not specifically attributed in the contract to 2008, divided by the number of years of the contract term.
  4. The actual cost to the Club of any insurance policy, divided by the number of years of the contract term; and
  5. The amount of any loan, only to the extent it is given at a loan rate lower than the Article XV(K) [of the 2007-11 Basic Agreement] rate.

Whew, that's a mouthful. Now that the way the MLBPA figures salaries has gone over our heads, let's get to the interesting part! The report lists both minimum and average salaries between 1967 and 2009.

In 1967, the minimum salary was $6,000 per year. It rose to $10,000 the next season, reached $20,000 in 1978, and hit $60,000 in 1985. Rookies were paid $100,000 for the first time in 1990, $200,000 in 1999, $300,000 in 2003, and will be paid $400,000 in 2009. Ignoring all those scientific things like cost-of-living adjustments and converting 1967 dollars to today's dollars, it's possible to say the MLB minimum salary is forty times what it was forty years ago.

The MLB average salary has risen even faster. The main reason for this escalation is free agency, but salaries were increasing even before free agency began following the 1975 Messersmith/McNally decision. In 1967, the average salary was $19,000. By 1970, it had increased to $29,303. On the eve of free agency, it was up to $44,676. In five years, the average salary tripled to $143,756 as poor, unsuspecting owners got snookered into one-upping each other for the latest free agents. The average zoomed past $200,000 in 1982 and hit $412,520 in 1986 when, suddenly, it stalled. In 1987, the average salary actually decreased by $66. In 1988, it increased by $26,000. Of course, those were the years of collusion, when teams agreed not to pursue each other's free agents to try and keep salaries down. Following a grievance by the player's union, collusion was ended and salaries shot up again. The average major leaguer made $500k in 1989, $600k in 1990, $850k in 1991, and over $1 million for the first time in 1992. The $1.5 million mark was breached in 1999, $2 million was hit in 2001, and all signs point to 2009 being the first year with an average salary above $3 million. If/when it does, the average salary will have jumped 120-fold in 40 years.

But hey, we all already knew baseball salaries have been increasing for years. What's more relevant to us as Brewers fans is the data about players, teams, and positions last year. Players with less than three years of service were relatively cheap last year: coming in at a little over $500,000. Players in their first year of arbitration (between 3 and 4 service years), however, made nearly $2 million. Players between 4 and 5 service years made $3.4 million, and those between 5 and 6 years cashed in at almost $4 million. The first-year arbitration guys' average was the lowest since 2004, while the 4-5 year guys continued their upward trend. The 5-6 year guys decreased slightly for the third season in a row.

Remember the good old days when the Brewers trolled along at the bottom of the league in payroll? Even as recently as last season, the Brewers were in the bottom half of the league in average salary, but in 2008 they jumped up to 10th. Here is the Milwaukee average salary and league rank since 2005:

Year Milwaukee
Average Salary
League
Rank
League
Average Salary
2005 $1,743,476 23 $2,476,589
2006 $2,160,012 21 $2,699,292
2007 $2,602,110 17 $2,824,751
2008 $3,562,592 10 $2,925,679

This past season the Brewers wound up settling between the Houston Astros ($3,610,588) and Philadelphia Phillies ($3,393,916). They were third in the NL Central (the Cubs placed 2nd) and the fifth-highest NL team. I'll give you one guess without looking at which team was last in the league.

Finally, the PDF contains numbers by position. Those numbers are calculated by looking at position players who appeared at a position in more than 100 games last year, starting pitchers who started 19 or more games, and relievers who made 25 relief appearances.

Position AL
Average
NL
Average
MLB
Average
C $5,275,613 $2,222,788 $3,676,514
1B $7,700,777 $6,536,261 $7,118,519
2B $2,932,360 $4,161,983 $3,547,171
3B $8,893,924 $4,992,301 $6,588,419
SS $7,256,202 $3,576,680 $4,978,402
OF $4,944,305 $4,564,763 $4,756,936
DH $7,506,036 -- $7,506,036
SP $4,215,601 $4,606,486 $4,429,366
RP $1,925,116 $1,805,362 $1,859,796

Just eyeballing the list, it seems the Brewers were generally above NL average for catchers (Kendall), starting pitchers, and relief pitchers. Bill Hall & Friends, Inc., was a little below the NL average for third basemen.

The rest of the report lists the players who were included in figuring out the average salary by position. There's also some (but not much!) information I kind of skimmed over in this summary, so if you're in the mood for lots of historical salary data or just want to feel depressed again about the Brewers' future, check out the report for yourself.