Blake Snell is underpaid, just like every pre-arbitration player

The Cy Young winner’s situation is not unique in baseball.

If baseball had a real free market for player salaries then Blake Snell, coming off his Cy Young Award winning 2019, would be looking at a huge raise.

Instead, Snell received a salary increase of $15,500 to $573,700 next season, $10,000 of which was mandatory for all players. The critical stories are continuing to come because there’s no way for a 2.8% raise to look good when you’ve won your profession’s highest honor, particularly when most of that small increase was mandatory.

Throughout this, Snell has remained professional. He released an official statement through his agents, and is keeping the commentary out of the clubhouse.

Because the Rays reluctance to spend money is, like Tropicana Field’s catwalks, a theme that never gets old to parts of baseball punditry, Snell’s bargain-basement salary has found its way into countless commentaries and tweets, all derogatory. The focus on the penny-pinching Rays therefore buries the real lede: pre-arb players get renewed for pretty much the league minimum pretty much all the time.

Recent Rookie of the Year winners like Cody Bellinger, Corey Seager and Michael Fulmer? All got league minimum their second year. The Yankees rewarded Aaron Judge for his stellar first year by....paying him some $50,000 higher than the league minimum.

Players in their first three years have no bargaining power, and teams very rarely pay them more than the required minimum, with some adjustment for service time, whatever their onfield success. To be sure, such a player is earning what to most of us is a very nice salary. But if he is worth even half a win, he is underpaid by several million.

So Blake Snell is hardly alone in earning significantly less than his value. For example, Francisco Lindor earned $579,000 in 2017, when he was worth 5.8 fWAR to the Indians. Alex Bregman, a key cog for the dominant Astros, earned $599,000 last year for which he produced 7.6 fWAR, which puts his real value to his team about about $76 million.

There are to be sure a few cases (Mookie Betts, Mike Trout, and now Shohei Ohtani) of players who got raises after a few ultra-productive pre-arb years, but even these goodwill gestures pay players millions below their actual market value — and they are very much the exception.

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A Refresher on the Uniform Players Contract

For those fans who don’t spend all of their time studying contracts, what players are paid early in their career can be confusing. Here’s the shape of a successful player's career, ignoring service time details for simplicity’s sake.

1. For the first three years after a player reaches the majors, his team only has to pay him the major league minimum, which is a bit above $500K (going up slightly each year). This is what the vast majority or “pre-arb” players get. Teams go through the formality of offering contracts which players “accept” or “decline” but this is all a strange and unnecessary ritual as players have no bargaining power.
2. Generally, a player reaches arbitration in year three (we’re ignoring Super 2 status, in which case a player reaches arbitration in year two). At that point, the team and the player try to reach an agreement, and if they cannot, they go to arbitration, where they each make their offer to the other and a panel of impartial arbiters decides which is more fair. How the teams and players argue, and how the arbiters decide is a whole other matter, but for simplicity’s sake, the outcomes are supposed to be based on true free agent worth. In his first year of arbitration, the player is supposed to make about 40% of what he would make on the free agent market, in year two, 60%, and in year three, 80%.
3. After six years (although yes, this often ends up closer to seven), players become free agents and can sign anywhere. The player’s goal at this point is to sign a lucrative, multi-year free agent contract with guaranteed money (throughout those first six years, every contract is for a single year, so major injury can mean a huge loss in earnings).

The Current Collective Bargaining Agreement Relies on Underpaying Early Career Players

What this means, then, is that baseball operates off the under-compensated labor of its youngest players.

In the not so distant past, the willingness of at least some teams to reward veterans with lucrative, multi-year deals once they hit free agency made the Major League Baseball Players Association (MLBPA) willing to bargain away the earning power of its youngest members. Many unions are dominated by the more senior members of the workforce and tend to favor policies of greatest concern (seniority; pension security) to those senior members; the MLBPA is perhaps simply another example.

In theory, at least, the surplus value teams accrue when they field players earning league minimum then allows them to find $300 million to pay a Machado or a Harper.

The last two off-seasons, however, have featured what have been considered to be slower than normal free agent markets. Some concerns about free agency, we would note, have been a bit overstated — with a few surprising exceptions most free agents likely to produce at least 1 WAR have found homes, and the superstars have their record-breaking contracts. But it is quite likely that most teams have become more analytics-driven and less likely to offer a multi-year deal to a free agent based on his name recognition.

To analytics-oriented and profit-driven teams, finding players who are still on those rookie contracts, has far greater upside than signing veterans. If among your guys earning $570,000 there could possibly be one Blake Snell or Aaron Judge, you’ve struck gold. Perhaps that is why industry wide free agency results in only marginal increases in WAR for teams.

This is why we see more money spent on scouting and player development, more money spent signing international free agents (with less money for marginal veterans), and fewer bidders for top free agents.

If the sight of Cy Young Award winners earning league minimum is troubling, and if the reluctance of baseball front offices to stack their rosters with free agents is concerning, then the MLPBA would be well advised to press for major changes in the next CBA.

What needs to change in the next CBA

A revamped CBA could, for example, dramatically raise the league minimum. It could cut the number of years to arbitration and free agency. This would have some real advantages. It would accelerate decent pay days for younger players, whose contracts are not guaranteed and who are one injury away from unemployment. It could open the door for free agent signings, too, because the huge gap between a free agent salary and a rookie salary would close.

Of course the downside of such a system would be that small market teams with payroll constraints would be further disadvantaged. Such a change in player compensation, then would require far more meaningful effort to maintain competitive balance across the league. Right now, competitive balance consists of some revenue sharing and a whole lot of exploitation of pre-arb players.

Kim Klement-USA TODAY Sports

Circling back to Blake Snell: If we were the Rays front office we would have offered Snell a bit more of a salary bump as a reward for a very good season and an investment in what we hope we be a longer term relationship. Surely, despite some denials, there are conversations about potential contract extension; surely a bit of good will can’t hurt.

You could bump him up to $600,000 with that extra $26,500 considered to be anything from an investment in future contract negotiations to a public relations expense.

Exploring candidates for a long term extension, our site recently pointed to Corey Kluber as a path forward for Snell and the Rays, and it’s his salary Snell’s agents might have had in mind for their ace. Kluber received a salary increase from $514k to $601k after winning the Cy Young when the league minimum was just breaking above $500k for the first time.

Before the off-season was over, the Indians then turned that good-faith salary increase, above and beyond what was required, into a long term extension. But precedent, in this case, is team specific, as noted by Marc Topkin in discussing Snell’s comments on the situation:

[...] while some teams, as Snell said, reward players for certain accomplishments, the Rays held fast, deciding there was no benefit in creating precedent or potentially courting goodwill in future negotiations.

The Rays did not offer that increase. They also, thankfully, did not dock Snell’s pay, but they’ve docked players before and could do it again. The Snell situation has brought that policy to light, and to be honest, it’s a bad look hovering over the situation.

In discussing the CBA, it’s a mystery as to why the option to accept or decline a salary increase is required at all. Some teams will drop an increase to the league minumum if the player declines, the Cardinals drop it by $10,000 as a penalty, the Rays by $5,000. It’s a drop in the bucket, to be sure, but it still muddies the water unnecessarily. Why sew seeds of ill will?

But the issue at hand is not the Rays willingness to spend that small amount of money to look better in their handling of Blake Snell. The issue is the structure of the agreement signed between MLB and the MLBPA and the reliance of all of baseball on (often) underpaid pre-arb players. Until the CBA changes, we are unlikely to see teams voluntarily increase their players’ base salaries with regularity.

But hey, at least pre-arbitration players are paid a living wage (unlike minor leaguers), right?