Robert M. Pimpsner

Economics of Sports

Minor League Baseball Players Salaries and Expenses

When a player hears his name called on draft day it is an exhilarating experience, but

none of them know exactly how difficult of a life they will be leading when they put pen to the

paper and sign that contract. The life of a professional baseball player for many is not an easy

one as it is a profession where people are expected to scrape just barely by trying to make ends

meet and live off of a signing bonus, if they are lucky enough to earn one. Unlike other sports

the signing bonuses offered to amateur baseball players are low; usually only those drafted in the

first or the supplementary rounds earn bonuses reaching seven figures.

The average signing bonus to an amateur player just drafted in the first 20 rounds is

$100,000 with players in the later rounds receiving little or no bonus. After the standard 4% fee

for their agent is taken out the player will be left with $96,000 before any taxes are taken out of

their paycheck. Since bonuses are taxable up to 40% we will assume that amount is taken out of

the $100,000 which takes away another $40,000 from the players signing bonus leaving him with

$56,000 before he reports to camp which would theoretically have to last several years.

As a player in their first contract season players are allowed to make only a maximum of

$1,100 a month during the season with the average monthly salary being around $900 a month or

less depending if the player is a foreign player (MiLB.com). If we take the estimated average

monthly salary of $900 and deduct the average taxes taken out of their check the players will be

left with an estimated amount of $675 before paying an of their expenses.

The initial expense players have in their first professional season is housing. In some

smaller towns and cities the players do not have to pay for their housing as they have host

families in the low minors but with the recent shift from small towns to bigger cities this trend

has been declining and players must find a place to stay on their own or through the minor league

team they are assigned. Most players stay at a hotel during spring training, mini-camps and the

regular season. The prices for these hotels can range from $20 a day to $75 a day depending on

the city or town that they are playing in.

If we estimate that the player is paying for a hotel room that is $25 a night with a

roommate that can equal $2250 in hotel expenses for a three-month Rookie or Short-Season A

team. This does not include cost of rooms for extended spring training before the season. If we

average the cost of the hotel room for three months the cost comes out to $750 a month which is

above the average net income of a first year player (Interview, Vinnie Colangelo).

There are some things that are done to help alleviate some of the financial burden off of

the players in their first contract year. One such thing is if the minor league affiliate the team is

playing for works out a deal with the Hotel to offer advertising for a reduced rate at the hotel or

getting a discount for multiple rooms booked. Another thing commonly done is the possibility of

working out a deal with a local college that has student dormitories, this can help reduce

expenditures by players immensely especially if the players are able to receive a meal plan at the

dorm’s dining facility. Another thing commonly done to help reduce hotel expenses paid for by

the players is when the team goes on extended road trips the team back up all of their belongings

and store them in only one room instead of many. This way instead of sharing the cost for 10-15

rooms’ players will only share the cost of paying for one or two.

However we have not taken into consideration the other expenses players are faced with

on a monthly basis. All players on the roster are expected to pay their clubhouse dues to the

team’s clubhouse manager. In the New York Yankees organization players at the Rookie and

Short-Season A level must pay their clubhouse managers $20 every two weeks when they

receive their paychecks. This adds a monthly expense of $40 during each month (Interview,

Vinnie Colangelo). In addition players must face other expenses such as food, cell phone bills,

etc… which could add up if they do not budget their money correctly.

In addition to their base salary players are eligible for meal money for days they are on

the road. The amount they receive is $25 per day and is the same throughout all of the minors.

(MiLB.com) If the players are lucky they can pocket this money if a meal is provided by the

hosting team but usually goes to the clubhouse manager for a meal he provides in the clubhouse

after the game (Interview, Vinnie Colangelo).

Initial minor league baseball player contracts are six years in length with a maximum

salary placed only on their first year. However after the first season players are free to negotiate

their annual pay with the major league organization. In addition players might receive higher

pay when they advance a level each season. Players can find other ways to make some money

during the minor league season such as participating in special team clinics with the minor

league affiliate.

In 2005 each level of the minor league season had its own minimum salaries for players.

At that time players playing in the United States were paid $850 a month in the Rookie and

Short-Season leagues in their first season. When they were promoted to the full season league

their salary was increased to $1,050 then $1,500 in Double-A and finally $2,150 when the player

reached the Triple-A level. If a player spends more than one year at the same level their pay

usually increases from the previous season (MiLB.com, 2005).

After four years of service in the minors for players who signed over the age of 19 years

of older or five years of service for players who signed at age 18 or below they are eligible for

the second Major League Baseball draft called the Rule-V draft. At this time players must be

placed on a 40-Man Roster or left eligible for other teams to select them in the draft. If a player

is placed on their Major League team’s 40-Man Roster then they are free to negotiate a new

contract. In 2010 a player who was placed on the 40-Man Roster during the 2009-2010 off

season make a minimum of $32,500 a year. For those players who were placed on the 40-Man

Roster during the 2008-2009 off season and have no made their Major League debut they make a

minimum of $65,000 in 2010. (MLBPA Collective Bargaining Agreement) Those numbers

cannot be lowered in 2011 but can rise. Many veteran players who play at the Triple-A level and

have Major League experience can make around $100,000 to $200,000 during the season.

Currently the Major League Baseball First-Year-Player Draft does not have a hard

slotting system but there are rumors of them attempting to implement one when they negotiate

the new collective bargaining agreement with the MLB Players Association. At present time the

Major League Commissioner’s Office has a system where they have a recommendation of the

amount of money that should be given to a player as a signing bonus. Any signing bonus above

that number must be approved by the Commissioner’s Office. In 2006 changes were made to the

draft that put a deadline for players to sign with the teams that draft them, the reasoning was at

the time to speed up the negotiating process and ultimately bring down bonus sizes. However

with the implementation of the deadline draft bonuses for top talent have risen.

Players from outside the United States, Canada and Puerto Rico are considered free

agents and are free to sign with any team they wish. In a way this gives foreign born players an

advantage in negotiating with teams for their services because unlike their counterparts in those

areas mentioned they are not bound to one only team. Because of the draft players born in the

United States, Canada and Puerto Rico can only negotiate with the team that drafts them. At

present time top young international free agent talent are signed by the teams who offer the

highest signing bonus at what is called the July 2nd signings.

Big time talents like Arodis Chapman who are international free agents can play teams

against each other while an American player like Stephen Strasbaug could only negotiate with

one team and that was the team that drafts them. However recent changes being considered for

the new collective bargaining agreement with the MLB Players Association include

implementation of an international draft for foreign born players. However foreign born players

also make considerably less money especially if they open their careers in the Dominican

Summer Leagues which has a maximum salary of $300 a month (MiLB.com).

For those who are not in the affiliated minor leagues it can be even rougher as life in the

Independent Baseball Leagues mean playing in front of small crowds for small pay unless you

are a star. In leagues such as the Atlantic League there is a $3,000 maximum salary for players

but players could find other ways to make more money through camps and clinics like their

affiliated counterparts do but also through merchandising rights with teams.