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The best way to understand Mike Trout, the outfielder for baseball’s Los Angeles Angels, who on Tuesday reportedly agreed to the richest contract in North American sports, is as the perfect reflection of his sport.
Little known to many Americans, including some sports fans, Trout, 27, is the best player in a game that has frequently been mocked as a fading form of entertainment with primarily regional audiences.
Baseball is often dismissed as far less enticing than the N.F.L., which is believed to bring in more than $14 billion annually even with its health and safety issues. Baseball also is called less dynamic than the N.B.A., even though it had about $2 billion less in revenue than M.L.B. last year.
So when Trout’s 12-year, $430 million contract was revealed, it prompted an obvious question: How could a sport that is struggling to attract a new generation of fans, and that is facing a potentially bruising labor fight with its players in two years, afford yet another nine-figure contract?
The answer has more to do with the mechanics of the collective bargaining agreement between players and owners than with anything that might constitute a referendum on the game’s popularity. There are several dynamics at work in the sport, where huge wealth still flows to the best of the best, while there is less money left over for the so-called middle class, despite continuing growth in baseball’s revenues.
Owners, it seems, have figured out how to keep costs down by using younger players, who are cheaper than veterans, thus freeing up cash for the occasional megadeal. Players like Trout, Harper and Machado benefit, while others are forced to accept less.
“In the past, teams were valuing players differently,” said James Paxton, a starting pitcher for the Yankees. “For a long time, that system was fine. Now that the teams have changed the way they’re valuing players, especially older players, it’s kind of broken the system and it is forcing us to take a look at it.”
In a study that has not yet been published, J.C. Bradbury, an economics professor at Kennesaw State University, calculated that baseball revenue rose at an average rate of 6.6 percent from 2003 to 2015, while player salaries rose at an average rate of just 4.4 percent.
Major League Baseball revenues reached $10.3 billion last year. The sources include evermore money from guaranteed sources, like multibillion-dollar media deals for the entire sport and other lucrative media contracts, many at the local level. Less important have been ticket sales, which generally fluctuate with wins and losses.
With the shift in valuation of players, the average salary went down in 2018 for the first time in 14 years (to a little more than $4 million), according to the players association. It was just the fourth time in the last 50 years that the average has gone down.
Dan Halem, the deputy commissioner of M.L.B., said there was no evidence of teams not trying to win, and he painted a very different picture of baseball’s economics.
Salaries have gone up on average 5.3 percent each year since 2012, keeping pace with baseball’s revenue growth during that time, he said, and while the pay may have been slightly down or flat in 2018, one year does not make a trend. He also said that over the last decade the players had received a consistent percentage of the game’s revenue, from 52 to 57 percent.
“In a market-based system, depending upon the year and how our clubs are valuing players,” said Halem, “certain players do better than others.”
Yet words like “collusion” and “strike” — once the third rails of the sport, especially after the ruinous strike of 1994-1995 — are now regularly uttered by players and agents — despite the huge contracts.
Focusing on giant deals misses the bigger picture, according to Jeff Borris, a longtime baseball agent who has represented stars like Barry Bonds, and is now the general counsel of the Ballengee Group, a sports representation agency.
“Contracts like Trout’s and Harper’s are aberrations,” Borris said. “The focus should be more on things like why isn’t Dallas Keuchel signed or the contract that Gio Gonzalez just signed. Those are the areas that are of concern.”
Keuchel, a two-time All-Star starting pitcher for the Houston Astros, remained unsigned one week before opening day, while Gonzalez, a solid, durable starting pitcher, has signed a minor-league deal with the Yankees.
“I think the owners are manipulating the system to their advantage,” Borris said.
For decades, baseball players have been represented by what is widely considered to be the strongest union in all of professional sports. As a result, baseball has no limits on salaries, though its luxury tax, which penalizes a team after its payroll rises above $206 million, can function as a de facto cap.
The problem now, at least as articulated by players, is that while teams reward superstars, they no longer feel compelled to spend to win if they do not believe they already have the pieces in place to compete for a championship.
“Why is there not an interest in players that can help teams win, particularly as we get to the last two weeks of spring training?” Tony Clark, the executive director of the players association, said before the Trout deal was reached.
Despite baseball’s strong union, certain provisions that kept salaries rising for decades turned out to be norms, not hard and fast rules.
Baseball players do not become free agents until they accrue six years of service time. They are generally paid at the league minimum for their first three seasons, while in the next three they can receive higher salaries through negotiation or arbitration. This leads to odd situations like Trout’s being voted the American League most valuable player in his third full season while earning just $1 million.
This used to be acceptable to players because they made up for it on the back end of their careers. There are the infamous albatross contracts given to veterans, like the $125 million extension signed by Ryan Howard in 2010, but most of the time it was veteran players being paid a fair wage, or being slightly overpaid, well into their 30s, and sometimes 40s.
It’s not a coincidence that Trout, Harper and Machado all got their megadeals at the age of 27 or younger. But as the circumstances of older players like Gonzalez and Keuchel demonstrate, teams have been working on the assumption that a veteran’s abilities are likely to decline soon after his salary peaks and that it makes sense to use younger players, who can fill out a roster at lower costs and risks — even if the chance to make the playoffs is also reduced.
“I don’t think that we thought that teams all of a sudden were going to just stop competing to the degree that they are now,” said Adam Ottavino, a Yankees pitcher. “A lot of things changed really fast.”
