The Expected Value of Being a Baseball Player
From my graduate school buddy Mark Steckbeck:
Doing the math, and discounting $400,000 per year for three years, beginning at age 17 and entering the big leagues at age 21 (not likely), the expected value of a career in baseball is about $86. Who’s likely to pursue that?
Now, certainly it’s not the average high school athlete who considers himself pro material, but It’s still predominantly those with low opportunity costs of their time that pursue the professional athlete track. Even if we changed it so that a high school athlete was ten times more likely to make it to the professional level, the expected value is only about $860. That is total, not per year.
Thanks to Tyler Cowen for the pointer.
4 Responses “The Expected Value of Being a Baseball Player”
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[...] expected value of becoming a professional baseball player is extremely low. It reminds me of the old saying, the higher the risk, the higher the [...]
I’m not entirely sure that includes minor league pay, though…
Right, but minor league pay (especially at the lower levels) is nothing to write home about.
http://mlbplayers.mlb.com/pa/pdf/cba_english.pdf
“First contract season: $850/month maximum. After that, open to negotiation
Alien Salary Rates: Different for aliens on visas–mandated by INS (Immigration).
Triple-A–First year: $2,150/month, after first year no less than $2,150/month
Class AA-First year: $1,500/month, after first year no less than $1,500/month
Class A (full season)–First year: $1,050/month, after first year no
less than $1,050/month
Class A (short-season)–First year: $850/month, after first year no
less than $850/month
Dominican & Venezuelan Summer Leagues–no lower than $300/month
Meal Money: $20 per day at all levels, while on the road”
But most people going into pro sports think they are going to be stars. I doubt that many people enter with the idea that they will never make the majors.