History of Compensation: Baseball's Move to Big Bucks

Compensation Data Facts - What's What in Compensation



History of compensation... In the early 20th century, baseball players in North America were bound to their teams due to a reserve clause. This allowed team owners to retain players as long as they desired – even after the contract itself expired - and blocked athletes from contracting with another team. Even though baseball's popularity had become a lucrative business for teams, players were at a disadvantage because they were not free agents.

The dissolution of the reserve clause in 1975 gave baseball players the ability to negotiate higher salaries and paved the way for them to become free agents. When other North American professional team sports (ice hockey, football, and basketball) developed leagues, their owners emulated baseball's reserve clause. But once baseball's reserve system was dismantled, other sports soon followed suit.

In 1920, the average salary in baseball was $5,000 a year. In the early 1970s salaries averaged $30,000, but with the reserve clause out of the picture, the average player salary jumped to $143,000 by 1980. Today, the average baseball player salary is $3.3 million.

More tomorrow... 

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