This paper addresses the issue of the extreme increases in salaries of major league baseball players. It looks at the effects of these increases on all areas of the game, from competitiveness, to fan appeal, to financial issues. It also looks at the different perspectives of all involved, including the owners, players, and the fans. Also shown in the paper are the possible solutions to the problem of baseball salaries, along with some of the possible negative outcomes in the future if nothing is done Baseballs Skyrocketing Salaries It can no longer be said that baseball is just a game.
Actually, it has been many years since that statement could be considered true. Only recently, however, did the entire nation, not just sports fans realize the extent to which this fact is true. Athletes, for the most part, have always been paid better than the average American; but now, with Alex Rodriguezs new contract, he is truthfully worth just as much as the entire franchise that he plays for. Baseball salaries have skyrocketed out of control, and something must be done before the integrity of the game, and eventually, the game itself is destroyed.
There are many reasons why this will happen, and this claim will be supported by the viewpoints of all involved, players, owners, and fans. Many of the cold, hard facts related to this salary increase will be shown, along with exactly what has caused this exponential increase in pay. While the outcry against the outrageous contracts that the players receive only recently become national news, the anger towards the players for this dates back to the beginning of the game. However, since the creation of free agency in 1976, the increase in pay has become out of control.
In order to see this, one only has to look at the first two years of free agency, where salaries doubled (Bodley, 2000, par. 17). Additionally, the average salary is currently forty times higher than it was in 1976 (Fisher & Heller, 2001, par. 4). Baseball was the first sport to have free agency, and as it currently stands, the last to control it. All other major sports, basketball, football, and hockey, have plans in place in order to keep a check on salaries. As a result, they are not facing the crisis that Major League Baseball will soon have to deal with.
These sports all have a form of a salary cap or some revenue sharing between the small and large market teams. Baseballs one attempt at this, a luxury tax for teams with high payrolls, has done nothing to curb the extreme growth of salaries. It is also interesting to examine the roots of free agency, which in the beginning was a good idea. In December 1975, Peter Seitz, at the time baseballs arbitrator supported a grievance that two players had filed (Chass, 2000, par. 4). He ruled that when a players contract to a team expired, the player was free to choose from all interested teams.
In theory, this is a good idea that is fair for players. They werent property of their original teams after contracts expired and were free to pursue other options, just as in the same way a businessman could look for a new job. However, there was no system in place to stop a bidding war between teams if the money was available. It also failed to take in to account the human ego. If a player sees a person with similar statistics getting paid more, then that player will demand the same amount of money, and this cycle continues endlessly.
Salary arbitration is another cause of the salary inflation, which on average has resulted in a 100% increase of the average salary in recent years (Chass, 2001, par. 18). In short, salary arbitration occurs when a player and a team renegotiate the contract with a neutral third party officiating. If a player has a good season, and feels that he is getting underpaid, he can file for arbitration. Players win most of these cases, all they have to do is find someone with comparable statistics who is getting paid more, and the arbitrator in most cases will rule in his favor.
As it stands, teams in large markets, such as New York or Los Angeles have an extreme advantage over teams in small markets, such as Kansas City or Pittsburgh. An example of this can be seen in the 1997 season where the teams with the five highest payrolls all made the playoffs. In that season, the Florida Marlins were one of those teams; and after that season, the owner, Wayne Huizinga, sold off all of his high priced players because he couldnt afford it (Fuhr, 1999, par. 13). Essentially, in baseball, as in the rest of the world, you get what you pay for.
Teams that cant afford high priced talent will, year in and year out finish at the bottom of the standings. As things stand now, the fifteen smallest market teams should just become farm clubs for the rest of the league. As soon as a player has a big season, he is demanding outrageous money, which his team cant afford to pay, so the player goes to a team that is willing and able to pay what he is asking. While salaries have been high for quite some time, the recent spending is just downright ridiculous. Alex Rodriguez, now of the Texas Rangers recently signed a ten year, $250 million contract (Feinstein, 2000, par. ). What is sad about this fact is that just two years ago, the entire Rangers franchise was sold for about the same amount. When a single player is getting paid as much as the entire team is worth on the open market, it is fairly obvious that something is seriously wrong. Further supporting that fact, there were two teams in 2000 that paid their entire team less than what Alex Rodriguez will make by himself this year. The recent spending spree stems from three events: 72. 7 million paying fans last season, a new $2. 5 billion TV contract, and income from Major League Baseballs new website (Fisher & Heller, 2001, par. ). While these events show that baseball is a thriving industry, a closer look shows that this may not be the case. Most of the spending is being done by a few teams, so not everyone is benefiting. There are several perspectives on the current situation in baseball, the first shown is that of the owners. While owners continue to complain about the high priced players, they contradict themselves by turning around and giving the outrageous paycheck to their players. Representatives of small market teams, such as Kansas Citys Herk Robinson, feel trapped.
I cant see anything beneficial about these signings at all, and the industry as a whole cant support them. Theres no doubt that it will deflate the fans here a bit, and make it harder for us to keep our guys! in Fisher and Heller (2001, par. 5). As a whole, the game is more than $2 billion in debt (Fisher and Heller, 2001, par. 1). Even though attendance as a whole increased, 15 out of the 30 teams showed a decrease in attendance in the 2000 season. This can be attributed to the huge competitive imbalance. Even the Texas Rangers, who signed Rodriguez, lost money between 1995 and 1999 (Fisher and Heller, 2001, par. 4). With the current collective bargaining agreement expiring this year, the owners do not have history on their side. There have been eight strikes since 1972, and each time, the owners have come out on the losing end, giving a little more power to the players union (Feinstein, 2000, par. 5). During the last strike, the players union repeatedly rejected a salary cap, until the owners finally gave in to end the strike. Next is the players perspective. In looking at this the first point to make is: who in their right mind would reject $250 million dollars if it was being offered?
The answer is: Nobody. The owners are so caught up in competing for the title, that they will shell out every penny of available cash they have in order to compete (Saraceno, 2000, par. 20). The trouble lies in the fact that some owners just happen to have a lot more cash to give out. The players union is the single most powerful force in baseball. It doesnt matter what the owners say, need players in order to put a product on the field. Players union head Donald Fehr says there is no chance of a salary cap, and with the past record in labor disputes stated earlier, there is no reason to doubt him.
While players may be portrayed as greedy, there are some that agree that a plan needs to be put in place. The players have to be willing to sit down and work out something that will work for everyone, Brian Giles of the Pittsburgh Pirates said in Blum (1999, par. 9). It is hard for players that happen to be on a smaller market team, such as Giles. It is not easy to get motivated to play when you know that there is no chance of competing, because other teams simply have more money. As a player, one is powerless in this situation.
It all boils down to choosing between individual and team. Players must decide if making the most money possible is top priority or if being able to have a competitively balanced league is. Another factor on the players side that needs to be addressed is that of sports agents. Scott Boras is a name that has been in the news lately, because he is the one that negotiated the contract for Rodriguez. Agents not only provide contract negotiations for players, they give them personal services including sports psychologists (Noonan, 2000 p. 57).
They promote players to organizations, eventually finding the highest bidder, and agents such as Boras have been able to negotiate the recent outrageous contracts, and should be held partially responsible for the state of the game today. However, this problem is hard to contain, because most agents get paid a percentage of the players salary, so the larger the contract, the bigger the paycheck for the agent. Finally, the feelings of the fans have to be addressed. They are the single most important aspect of baseball. It doesnt matter how many good players there are, without fans, baseball makes no money, and the players do not get paid.
No one is forcing the fans to come out and watch, and with each bad incident, the fans patience gets tested just a little bit more. Over a dozen teams will increase ticket prices this season in order to support the payrolls they have established (Fisher and Heller, 2001, par. 11). There must be a limit to how much a person is willing to pay to go watch a baseball game. With the current rate of salary growth, there is no reason why ticket prices would not keep on growing right along with it. Fans want to go watch competitive baseball, and it their team is not in competition for the playoffs, then it will reduce attendance (Fuhr, 1999 par. 6).
An example of this was shown in the 1950s, when the New York Yankees were the single dominant team. Overall attendance decreased, because there was very little good competition. There are many negative outcomes that will occur soon if nothing is done to stop the current trend. Even fans of dominant teams will lose interest without competition (Fuhr, 199, par. 6). To support this claim, who would want to go watch a movie if they already knew the ending? In the long run, the imbalance will hurt everyone. The game is being destroyed by the massive payrolls. Another strike is looming on the horizon, when the current agreement ends this fall.
Fans took a few years to come back after the strike of 1994, and another strike this soon could be devastating. Still, the fact is, the owners and players are worlds apart on reaching a compromise. It is scary to think of what could happen. If nothing is done, the current trend will continue, or even pick up. After Rodriguezs signing, next years contract negotiations will be even more difficult, since there are several players with better statistics. There is always the possibility of a team actually going bankrupt, and having to cease operations. There are already teams that cant afford to compete, and it just snowballs from there.
Actually, that may be exactly what it takes before baseball wakes up and implements a plan to stop the current situation (Bodley, 2000, par. 5). Something needs to be done, and there are a few options to be put in place. The key is finding something that is acceptable to the owners, players and to commissioner Bud Selig. That may be the difficult part. One option is a salary cap. That is when all teams have a set limit on what their total payroll can be. It would put an end to the increase in salaries, because teams simply would not be able to spend as much as they wanted.
However, while this would be the best option, it has been said that the players union will not accept that. If they strike, there is nothing to be done except wait it out, and as history has shown, the players always win the strikes. Revenue sharing is another option. It is already being done in a small amount with the current luxury tax, but that has done absolutely nothing to correct the problem. True revenue sharing involves the large market teams giving to the small market teams. The larger markets will have more money in TV contracts, because there is a larger TV market.
Also, they will usually have higher merchandise sales, because there are more people in the metropolitan area. The large markets would be required to give a percentage of their profits to the smaller markets, in order to balance the incomes. While this sounds good, the large markets will be hesitant to give up any of their money, and that is somewhat understandable in the short run (Ozanian, 2000, par. 4). Why would anyone want to help their competitor become better? Another new idea is that of a salary floor. This is a plan where every team would be required to have a minimum payroll of a certain amount (Feinstein, 2000, par. ). This amount would be set at a level where even the lowest payroll would be enough to field a competitive team. If the owner is not willing to pay this much money, he has two options: Either fold the team, or sell it to someone who is willing to pay the money. A possible result of this is small market teams moving to larger markets, which will hurt the individual communities. A plan to share revenues could be included by pooling all TV money, not just national contracts, each teams local contract. This would shift more money to smaller market teams, and allow them to get up to the salary floor.
While everyone says baseball is a business, and people are worth whatever the owners are willing to pay, we need to step back and take a look at that statement. In the business world, each company is competing only against each other. A company can survive by being a monopoly. In baseball, teams compete against each other, but they are also on the same side. It wouldnt be much of a league if there were only five teams, but we are nearing that level now. Everyone benefits from competiveness, even the large market teams. Baseball needs all of its teams to be competitive, and be able to step up and play in the World Series occasionally.
If not, fan interest will drop off everywhere in time. While the sides are miles apart, something must be done soon. Both sides are going to have to give a little. Both are going to have to swallow a little pride and look at the big picture. If not, there may be no game for the players to play, in order to make their living. It has been said that baseball is Americas pastime, so baseball needs to take a look at America. It was created by people who had different views on both sides, but in the end, they compromised, and found a solution that worked for all sides. Baseball needs to take a lesson from this.
