Murray’s decision highlights MLB’s restrictive financial system
TJ Mathewson | Monday, Feb. 11, 2019
It’s exceedingly rare for a single athlete to have two different sports leagues pushing for his or her services. But that’s what Kyler Murray experienced this winter, having to decide between the NFL and MLB.
And with the quarterback/outfielder announcing on Feb. 11 that he is “fully committing” to football, his decision has left many highlighting the ways in which MLB’s financial structure is restrictive to their young players.
Murray was drafted ninth overall by the Oakland A’s in the 2018 MLB Draft and signed a minor league contract with a $4.66 million signing bonus. Now, it appears likely he will be a first-round pick in the 2019 NFL Draft, where he’s in line to top the money he received from the A’s — perhaps by millions.
Football’s money comes fast, with risks
The guaranteed money in the first round of the 2018 NFL Draft ranged from just more than $22 million over four years for No. 1 overall pick Baker Mayfield to just more than $5 million for No. 32 overall pick Lamar Jackson. It’s a part of a slotted dollar-amount system the NFL has for their draft picks, which was introduced as part of the 2011 collective bargaining agreement.
Contracts for first-round draft picks are guaranteed for the first four years. They give the teams an option to extend the contract for a fifth year, which teams have to pick up prior to the start of the player’s fourth season. While on these contracts, player’s base salary will be at or near NFL minimum, starting at $480,000 in the first year and reaching $705,000 in the last guaranteed year, according to Forbes.
By the end of those contracts, players will either sign an extension with their current team (which can often be quite lucrative) or enter free agency. From there, the contracts are not fully guaranteed, but the salaries can escalate into the multi-million dollar range, and those salaries can be complemented by bonuses and incentives.
At no position is the earning potential greater than at Murray’s position of quarterback. Seven of the top 10 highest paid players in the NFL are quarterbacks — including the top three — and 15 starting quarterbacks make over $20 million. The top-paid player in the NFL, Green Bay Packers quarterback Aaron Rodgers, made an NFL record $66.9 million off of his salary, bonuses and incentives in 2018.
In baseball, paydays way down the road
Meanwhile, in Major League Baseball, the draft pick compensation structure has changed significantly in the last decade. Introduced in the 2011 CBA, each team is allocated a certain amount of money to use as a signing bonus pool, which is the money the franchises have to use to sign their draft picks.
The amount in the pool is based upon the value of their draft picks in the first 10 rounds. Each pick from the 11th round on are given the same financial value. The higher teams pick in the draft, the more money that is provided in their bonus pool, because those higher picks have greater value. In 2018, the amount of money teams had to sign their draft picks ranged from as high as $12,781,900 (the Kansas City Royals) to as low as $5,288,200 (the Los Angeles Dodgers).
This system causes much lower figures for signing bonuses in the MLB raft than in the NFL draft, ranging from $7,500,000 for No. 1 overall pick Casey Mize (signed by the Detroit Tigers) to just over $2,578,138 for the final pick of the first round. There are also certain penalties for spending more than the allocated amount in the bonus pool.
And yet, it’s at that point where baseball players make the most money before they start their progression through the minor leagues (MiLB). According to Forbes, the starting base salary is $1,300 a month at the lowest full-season level (Low-A ball) and $1,600 a month at the High-A level, where Murray was expected to play in 2019. And while the number does increase to $6,000 a month in Class AA and $10,000 a month in Class AAA, players are only compensated during the regular season (April-September).
In fact, MLB and MiLB were behind a recent lobbying push to keep the payment structure t that way. In March 2018, Congress passed the Save America’s Pastime Act, which exempted Major League Baseball teams from paying their minor-leaguers minimum wage and overtime for their hours worked during the regular season.
Even though many players never make the major leagues, those that do are paid the major league minimum salary for the first three full seasons as part of their six-year major league entry contract. MLB determines a full season based on a “service time” calculator that takes the amount of days a player is on the major league roster, with a full season equalling 187 days as of 2018.
Once a player reaches the end of their third year, they go into salary arbitration with their teams, where the two teams can either agree to a salary amount mutually, the player and team can each submit a salary amount and an arbitrator selects the figure, or the team can decline to offer a contract and the player enters free agency.
While players can negotiate contract extensions that guarantee contract years at any point, if the team or player elects not to, the player is on a year-by-year, non-guaranteed contract. Should a team elect to cut a player or not tender the player a contract in an arbitration year, the player does not receive any money.
It’s all a part of a restrictive system that, in the past, was set up for players to earn their big pay day after six years in the majors. But the 2017-18 offseason saw teams less willing to spend money on free agents, and leading baseball writers to wonder if baseball’s economic system might be broken.
The data actually shows the change that occurred because of that offseason. According to Forbes, overall player compensation across all of baseball dropped from $5.2 billion in 2017 to $5.1 billion in 2018, the first time the players received less money than the year before since Forbes began charting the data in 2006. At the same time, baseball’s revenue rose from $9 billion in 2017 to $9.4 billion in 2018.
Combining all of the factors — restrictions in draft signing bonus compensation, the low amounts made in the minors, the relatively low minimum in the major leagues, the length of time it takes for a baseball player to reach free agency, and now the perceived lack of spending in free agency — shows just how much baseball has worked to keep player earning down over the years.
In seeing all the financials, it highlights why Murray — a potential superstar and extremely talented athlete in both football and baseball — chose being an NFL quarterback over an MLB outfielder, even without considering which sport he personally preferred to play.
TJ Mathewson is a junior journalism student at Arizona State University