MLB Salary Structure
Here are the details of the current Major League Baseball collective bargaining agreement, compiled by Lance Hornby of the QMI agency:
Rookie Salary Cap: Players often spend years in the minors making as little as $700 or $800 a month and are only paid from 3 April until Labor Day. Most get around $100,000 to sign, but some do it for as little as $1,000 and the chance to play.
Top draft picks are a much different story, what with their huge signing bonuses. However, MLB reduced those in 2012. A team such as the Twins with 13 picks in the first 10 rounds of the draft was limited to $12.3 million to split along them, Any team exceeding spending by more than 5% lost a pick for the following year. The Blue Jays were 3% over the limit in 2012 and had to pay $80,000 in taxes.
Standard Player Contract: Most are fully guaranteed. Players become eligible for arbitration after three years (plus the top 17% of players with two years’ service) and are eligible for free agency after six seasons.
Buyouts & Bonuses: Those eligible include players in the third year of a contract, which becomes guaranteed if they get a certain number of at-bats or innings pitched in the first two years. Players can be signed to minor-league deals, which aren’t guaranteed.
Minimum Salary: $490,000
Average Salary: $3.44 million
Career Earnings: $18.2 million
Salary Cap: Baseball continues to be the only major league without a cap; however, teams spending more than $178 million this season and next are assessed a luxury tax. Free-spending clubs such as the New York Yankees will pay between 40% and 50% in tax the next two seasons.
Players' Share of Revenues: In theory, teams kick in almost one third of revenues to a pool meant to improve have-not teams. However, some clubs circumvent this by not spending the money, just collecting it.