Nobody Has a Better Deal Than Major League Baseball Owners

By Ken Reed

There are still a lot of unsigned free agents in Major League Baseball as spring training nears its end.

I hear and read a lot of chatter about how greedy Major League Baseball players are. Some people say it will serve these unsigned free agents right if they get a much smaller contract than they were hoping for, or no contract at all.

Fans seem to have an especially big problem with the new contract Jose Altuve signed with the Houston Astros. Altuve inked a $163.5M contract for seven years earlier this week.

One fan wrote on social media:

“No insult to him, no one is worth that kind of money. Our society has priorities out of whack if that is what people are getting paid to play baseball.”

I’d agree that’s a crazy sum to play baseball. But how about the obscene profits the MLB owners are making while sitting in the owners’ suites sipping scotch and eating shrimp cocktails?

Baseball franchise owners’ revenues are skyrocketing, as are the values of the teams they own.

According to Statista, a statistics website:

Major League Baseball (MLB), with its 30 teams, generated around 9 billion U.S. dollars in total revenue in the 2016 season, almost twice the revenue generated ten years ago, when total revenue was at 5.5 billion U.S. dollars.

On average, each team generated almost 300.9 million U.S. dollars in revenue in 2016. The New York Yankees were the highest-earning team in Major League Baseball with 526 million U.S. dollars in revenue in 2016, while the Tampa Bay Rays were the team with the lowest earnings with revenues at around 205 million U.S. dollars.

On top of that, MLB franchise values are soaring:

Strong revenue growth has had a large impact on the valuation of MLB franchises. In 2017, the average franchise value was estimated at 1.54 billion U.S. dollars. The New York Yankees are the most valuable franchise with an estimated worth of 3.7 billion U.S. dollars, followed by the Los Angeles Dodgers with an estimated value of 2.75 billion U.S. dollars.

If someone bought a big league team 10 years ago, held it for a decade, and then sold it, they would walk away with a humongous profit.

There is no business better from an owner’s perspective than Major League Baseball. Congress has granted MLB and its owners a variety of benefits through the years, including an antitrust exemption. The result is a self-regulated cartel. There may be competition on the field but the owners, who claim to be diehard capitalists, benefit from a socialistic system.

As long as the owners are making obscene profits, players like Jose Altuve deserve their fair share of the pie.

Jim Bouton, the former New York Yankee, put it best when describing the owners’ situation a couple decades ago:

“Who’s got a better deal than baseball owners? You have no factories, no raw materials, no inventory and no technological obsolescence in a monopoly business that binds your employees to you for the first six years after they’re hired. The media give you free publicity, the taxpayers build the stadiums and the players provide the labor.”

Can’t put it any more succinctly than that …

— Ken Reed, Sports Policy Director, League of Fans