The current astronomical salaries of MLB (Major League Baseball) players are the direct result of the advent of free agency in 1975. Pitchers Andy Messersmith and Dave McNally challenged baseball’s nearly 100-year-old reserve clause, winning in arbitration what previous players had failed to achieve via the Supreme Court. Player salaries, which had increased incrementally since the 1800s, exploded over the next few decades. Although baseball players have always earned good livings relative to the rest of the country, today’s single-season and multi-year contracts are some of the richest in history for any occupation, even adjusted for inflation.
For the first time in history, MLB players averaged more than $3 million for an entire year in 2010. The increase was only 0.6 percent over 2009, the lowest jump since a drop in 2005, but still pushed the average yearly salary to $3,014,572 million. Players’ average salaries are always higher at the start of a season ($3.3 million in 2010) before dropping during the year as high-paid veterans are released and replaced on rosters with younger players. The New York Yankees per-player average salary was MLB’s highest at $7,604,937. The Pittsburgh Pirates had the lowest payroll, averaging $1,140,598 per player. By comparison, the average MLB salary was about $7,000 during the 1920s, below $20,000 as late as 1966, and $44,676 in 1975, the year free agency began. The first million-dollar average salary was in 1992 and 2002 was the first year players averaged $2 million.
Minimum-salary levels in major league baseball were at the discretion of owners until 1968, never rising above $6,000. Marvin Miller, executive director of the MLBPA (Major League Baseball Players Association), negotiated the first minimum-wage increase since the 1940s during collective bargaining talks in 1968, bumping the minimum wage to $10,000 annually. The MLB minimum salary for 2011 is $414,500—nearly four times the salary of 1968’s highest-paid player, Curt Flood of the St. Louis Cardinals ($111,000).
Alex Rodriguez holds the distinction of being paid the highest single-season salary in MLB history ($33 million in 2010) and of signing the most lucrative total compensation package in history ($275 million for his current contract, which runs through 2017). His previous contract, which he signed with the Texas Rangers in 2001, was for $252 million, the second-highest total ever. The New York Yankees in 2010 had baseball’s largest payroll at more than $200 million and also had the game’s four highest paid players—Rodriguez at $33 million and pitcher C.C. Sabathia, shortstop Derek Jeter and first-baseman Mark Texiera, each at more than $20 million each.
The first million-dollar salary was signed by Houston’s Nolan Ryan prior to the 1980 season. The Pittsburgh Pirates’ Hank Greenberg was the first MLB player to make $100,000 in a season (1947). King Kelly of the National League’s Boston Beaneaters was the highest-paid player of the 1800s ($12,500 in 1892, or about $250,000 in current dollars). During the first decades of the 20th century, the highest-paid players were Honus Wagner of the Pirates ($10,000 in the 1900s), Frank Chance of the Yankees ($20,000 in 1910s), the Philadelphia Athletics’ Ty Cobb ($80,000 in the 1920s), and Babe Ruth in 1930 with the Yankees ($84,000). Cliff Lee, who signed a new contract with the Philadelphia Phillies in 2011, is the highest-paid pitcher in history, averaging $24 million over the life of a five-year contract.
Minor league baseball players make a pittance compared to MLB players. At the lowest level, Class A, minimum salaries are $850 a month for a short season and $1,050 for a full season. Class AA players receive a minimum of $1,500 per month, and the Triple-A player monthly minimum is $2,150. Dominican and Summer League minimums are $300 a month.