In the U.S., baseball is big business. According to CNBC, Major League Baseball (MLB) earned $10.7 billion for 2019. In 2020, each team in MLB gathered around 122 million U.S. dollars in earnings.
Currently, the Los Angeles Dodgers leads the list of baseball teams in terms of revenue. For the year 2020, the team has earned 185 million U.S. dollars in revenue. There are reports that because of COVID-19, the revenues of MLB are down. However, it is undeniable that these teams are still earning huge amounts of money.
How MLB generates revenue
MLB generates revenue from different sources. In 2019, most of its earnings come from ticket sales. Pre-pandemic, the league earns a lot of revenue during game day. Aside from ticket sales, MLB gets additional profit from souvenirs and concessions.
However, due to COVID-19, these ticket sales were non-existent because games were played without their audiences and fans. Hence, media was extensively used to show the games.
Media deals
Media deals are an essential source of revenue for any professional sport, and baseball is no exception. Media and television make up a huge chunk of the MLB revenue. Television deals at local and national levels give a vast amount of money to the league’s earnings.
In 2018, MLB and Fox Sports struck an agreement that involves 5.1 billion U.S. dollars. The league also struck deals with other networks such as ESPN and Turner Sports. In 2012. With Facebook’s broad reach, the league has smartly chosen to utilize and strike an agreement with the platform, too.
Small television channels also bring in revenue to the league. For other MLB teams, they even opted to have their own sporting network. An example is SportsNet LA, where fans can watch their favorite Dodgers team compete.
When games are aired live, this gives the baseball business a massive opportunity to earn more revenue. This is through streaming commercials during breaks. Air time for these live games is considered prime real estate for advertising. Hence, payment for this prime commercial spot can skyrocket.
Sponsorship
Another major contributor to the league’s revenue is sponsorship. Over the years, MLB has been finding more and more revenue through sponsorships. In 2017, sponsorship revenues reach the amount of 900 million dollars. To top it off, this amount does not include stadium naming rights yet. For instance, Mets’ Citi Field has contributed to the total MLB revenue with a whopping 400 million dollars.
Some of MLB’s major sponsors are big companies like Apple, MasterCard, and Amazon. Just recently, Ralph Lauren has scored a sponsorship with the league. Teams included in the partnership with Ralph Lauren are the top teams Los Angeles Dodgers, New York Yankees, Chicago Cubs, and St. Louis Cardinals.
Licensing
Licensing agreements are also an essential source of MLB revenue. Companies such as Nike and New Era Cap Company have struck licensing agreement with MLB, providing official apparel to the league. Gaming software companies also want to tie up with MLB, which involves a considerable fee to use the league’s name.
Baseball players’ earnings
As MLB earns a lot of revenue, the next question is, where does the money go? A considerable amount of this revenue is given to the players of the league. This means MLB has to pay its 750 active players.
Regarding the earnings, the players are paid twice a month, and they also get a postseason share coming from ticket sales. A player’s contract can also include signing bonuses and incentives based on performance. Rookie deals may have different rates, too.
On average, a league player receives a salary of around 4.38 million dollars. However, some star players earn multi-million dollar salaries. Currently, about 38 professional baseball players earn approximately 20 million dollars annually. More than a hundred players of the league, on the other hand, receive around 10 million dollars a year.
No wonder there are a lot of people who aspire to become baseball players. To be part of the league, one does not need to have formal education. Some of the players even get drafted during high school. What matters is talent and the ability to level up and become a baseball star.
The highest position one can earn in the league is a pitcher and a designated hitter. As a pitcher, one can make a starting salary of 5.2 million dollars. Among the 38 professional players who are earning 20 million dollars, 15 are pitchers. This is why most people try to enhance their skills to reach the position. To see a pitch’s effectiveness, an accurate sports radar gun is used.
In the American League, designated hitters earn the highest salary. On average, a designated hitter makes around 14.3 million dollars.
Baseball is big money
Because there is so much money on the line when it comes to baseball, many people choose to take a path related to the sport. Some people train as early as they to become the best in baseball. Some become sports managers and take advantage of the popularity of the game.