All Things Money- Baseball is a Home Run
Baseball is one of the most popular sports in America, played across the country, it has become one of the most known sports in the world.
More than just a popular sport, Baseball is an incredibly lucrative industry, full of big businesses like sporting goods, organized amateur leagues and professional leagues like the Major League Baseball (MLB).
This piece will explore through the numbers behind the swings and sales of baseball.
We will deeply dig into the revenue generated by players, coaches, and teams and how baseball generates immense income for the US economy.
Baseball's Revenue
If there is one thing that baseball is excellent at, it's generating vast amounts of revenue every year.
In 2022, the MLB generated over $10.32 billion dollars from advertising, ticket sales, merchandise, and television rights, among other sources of revenue.
The MLB earns money from several sources, most of which come from ticket sales, local television deals, and advertising.
Some teams make a sizable chunk of their revenue from merchandise sales.
Flickr/Joe Shlabotnik
Every team in the MLB is set up as an organization operating an individual business, each with its business model and operating procedures.
Some groups, like the New York Yankees, are run like a significant company and turn substantial profits yearly, while others are not run as effectively and can sometimes struggle financially.
Baseball Team Revenue
All the teams in the MLB contribute about 48% of their revenue to the league; this fund is then evenly split between all the teams in the company regardless of where a team finished in the table.
Since there are 30 teams in the league, each MLB team earned approximately $344 million from the MLB alone.
Teams can then make more money on top of this MLB contribution, as over half of their revenue is kept to themselves.
So if a team generated $1 Billion in 2022, they should have contributed $480 million to the MLB, with $520 million staying in the group. The team will then receive their fair share of the MLB contribution, meaning they receive back $344 million. This brings the total revenue back up to $864 million. |
In contrast, a team that generated $100 million in 2022 would contribute $48 million to the MLB and still receive $344 million back from the fund. This brings the team's revenue up to $396 million for the year despite only generating $100 million themselves. |
The above hypothetical examples highlight the MLB's financial structuring benefits, as teams with smaller budgets can compete with larger groups.
This makes baseball more competitive and attracts more fans, further growing revenue for the league and the teams playing it.
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How Baseball Players Get Paid
Baseball players have some of any professional athlete's most lucrative TV and media rights, primarily due to the MLB Players Union's (MLBPU) strength in negotiating favorable terms for the players.
However, unlike in other US sports, the players and the teams negotiate how much a player will be paid and how often they receive their share of the pay.
Here are some key facts and figures about player pay in baseball:
- The average player's salary in 2022 was between $4.11 million and $4.22 million, depending on whether you go by the MLB's or Union's estimate.
- In 2023, the minimum salary in MLB was set at $720,000.
- The highest-paid players in the MLB earn $30+ million a year from their salary.
- The players on the winning team in the World Series earn a bonus
- High-profile players earn additional money from sponsorships and endorsement
Non-player Pay in Baseball
How much non-players make in baseball varies significantly between teams.
Larger teams have more robust budgets and may pay head coaches a few million dollars annually. |
In contrast, the smaller groups may only be able to spend a few hundred thousand dollars or 10% of that on coaches. |
Non-players in baseball, the coaches, and the background staff all earn a good living, but the numbers are not readily available like they are for players.
There are mixed reports about who makes what at which team, with pieces for some coach's salaries ranging from $500,000 to $10,000,000 per year, depending on the source.
The World Series of Baseball
The World Series is the peak of the baseball calendar.
The World Series is the biggest earner of the baseball year, with over $38,700,000 coming from ticket gate revenue to the final game alone.
The winning players receive a combined $107,500,000 divided between the teams in the off-season, primarily the winning and second-placed teams.
The winning team earns a substantial bonus for winning the series. In 2022, the Astros pocketed $35 million for their success, with players making an additional $440,000 each from the players pool.
However, despite the success of the World Series, it generates less revenue than the postseason in the NBA and NFL.
On top of this, in recent years, ad revenue has fallen for the MLB World Series finals while other sports have seen an increase.
How Baseball Impacts the US Economy
Baseball generates tens of billions of dollars for the US economy, which can be described as an enormous effect on the economy. These are some of its main contributions:
- Tourism: Baseball entices fans to travel following their teams when they play away, which drives domestic tourism revenue.
Baseball also has a large fan base overseas, bringing in tourists from around the world.
- Hospitality: The hospitality sector receives an immense boost from the MLB due to hotel bookings from supporters when games are in town. This mainly benefits hospitality in small and mid sized cities where fewer tourists visit.
- Travel: Fans must travel long distances nationwide to support their favorite teams during away games. As a result, bus, rail, and air travel companies all make additional revenue due to baseball.
- Tickets, snacks and drinks: 3.13 Billions of dollars were spent on MLB tickets in 2022.
According to a 2023 study made by Bookies.com, a family of 4, buying the cheapest tickets across all 30 stadiums, would spend $149.03, including parking spot, beers, 2 sodas and 4 hot dogs, although it can go up to as much as $235.41 for the same experience in a Boston Red Sox game. - Taxes: Baseball teams, players, and the MLB all make high amounts of income, which means they pay large amounts of income tax, spurring economic growth.
Tickets are also taxable, even the ones given as a courtesy, take that in mind the next time you make your tax statement.
- Merchandise sales: A significant proportion of baseball revenue and related business is attributed to the sale of team merchandise, although the most recognized teams and players usually sell more shirts.
For example the Los Angeles Dodgers have had a great streak lately, winning the World Series in 2020, being the National League champions for 2017 and 2018 and winning their division 9 of 10 times in the last decade, in 2022 they sold $5.24 B on merch alone. The New York Yankees made the most with $7.1 B.
Minor League Baseball Finances
You don't have to play in the MLB to be a professional baseball player in the US.
Recently, the minor league players in baseball came to a landmark agreement that increases the minimum pay for players.
The minimum wage for players will increase from $5,000 to $19,000 in 2023, with more money also given to other players in complex minor leagues.
Minor League Baseball Players wages in the US range from $19,910 to $187,200, according to Comparably, averaging $64,168 with a median salary of $44,680.
Little leagues can be profitable
The Little League Baseball, a nonprofit organization that organizes local youth baseball and softball leagues, pay their employees on average around $34,507 to $45,266; while the top executives earn from $64,500 to $124,000, according to data gathered by Salary.com
While this amount is a tiny fraction of a significant league player's pay, it's still enough to earn a living from playing the sport.
Key Takeaways
Baseball is one of the most lucrative sports in the world, with the MLB taking second place in the list of most successful sporting leagues behind the NFL.
Baseball generates billions of dollars for the US economy every year.
The staggering money behind baseball is one more thing that makes the sport great, as it gives teams an even playing field while allowing for innovation and smart business moves.