The TBC Newsletter
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Salaries refers to a player's earnings for a given season. Payroll will refer to a team's sum of salaries. The salary listed is the one published as guaranteed to the player before the season starts. Meaning it does not include signing bonuses or incentives. It is likely intended to represent the portion that will be pushed to the player via paycheck each week or month or whatever their pay cycle is.
Players will often start their full season at the Major League Minimum (now about half a million) and will earn that as long as they have a major league contract. Players who are called up will earn MLB minimum unless their contract otherwise specifies but when they return to the minors, will go back to their minor league salary. As players accrue service time, their earning power goes up with teams being allowed to renew their contracts each year at slightly higher values until they reach the arbitration years in which teams and players can begin negotiating salaries that are more market oriented and if they cannot come to an agreement, a binding arbitrator will decide the salary in a hearing that both parties most likely do not want to attend. This prevents players from holding out. Once players reach Free Agency or as Free Agency approaches, their earning power goes up even more as teams start to give big extensions to players to coerce them to stay with their team or other teams will offer big free agent contracts as they hit the open market. The reward for sticking around can be a tremendous windfall.
Each contract signed can have a trickle down effect for other players and the market place in general as agents and teams often use comparables to find a fair market value for a player. In more recent years, the influx of analytics has added another layer to contract negotiation where teams have now begun to assign a dollar value to the projected wins a player will add to their team.
Though baseball does penalize high-spending teams with revenue sharing, it does not have a hard salary cap.