No end in sight for baseball’s soaring salaries
KENNESAW, Ga. (Apr 16, 2016) — Forty years ago this month, baseball fans were amazed by the contract that free-agent pitcher Andy Messersmith signed with the Ted Turner-owned Braves: three years for $1 million, which seemed like a lot at the time.
Baseball salaries have been amazing folks ever since Messersmith ushered in the sport’s free-agency era.
“Even in just the last couple of years, you wouldn’t have guessed what would happen,” said Terry McGuirk, who worked for Turner’s fledgling TV business 40 years ago and now is the Braves’ chairman and CEO. “We are now at a $30 million-a-year pitcher, and we’re probably on our way to a $40 million pitcher.”
From there, who knows?
Baseball’s highest paid player this season, Los Angeles Dodgers pitcher Clayton Kershaw, will make $32 million, while two other pitchers, Zack Greinke of the Arizona Diamondbacks and David Price of the Boston Red Sox, will make at least $30 million. Thirty-seven players will make at least $20 million this season.
Miami Marlins outfielder Giancarlo Stanton is in the second year of a 13-year, $325 million contract, while 10 other active players have long-term contracts worth $200 million or more. Already, there’s speculation that Washington Nationals outfielder Bryce Harper could command a 10- or 12-year deal worth as much as $500 million — half a billion dollars — when he becomes a free agent at age 26 after the 2018 season.
Just as fans marveled at the first $1 million-a-year player (Nolan Ryan in 1980), the first $5 million-a-year player (Bobby Bonilla in 1992), the first $10 million player (Albert Belle in 1997), the first $20 million player (Alex Rodriguez in 2001) and the first $30 million player (Rodriguez in 2009), they can expect to be amazed by further excursions into the salary stratosphere.
J.C. Bradbury, a Kennesaw State sports economist who has extensively researched the history of baseball salaries, won’t be the least bit surprised when $40 million-a-year and $50-million-a-year players arrive.
“It is absolutely going to happen,” Bradbury said. “Absolutely.”
The continuing surge in player salaries “makes perfect sense,” he said, when viewed in tandem with the continuing rise in Major League Baseball’s revenue. As revenue has risen from higher ticket prices, fancier stadiums, local and national TV deals, sponsorships and the Internet, player salaries have risen “at a similar pace” through most of the free-agency era because of competition for players, he said.
“I know it’s very hard for people who sit there and watch the sport and go, ‘How can this person make so much money? No one should make that much money,’” Bradbury said. “But the issue isn’t why the player is getting so much money. The issue is: Who gets it, the owner or the player? When fans complain about the players’ salaries, what they have to understand is they’re siding with the billionaires (owners) over the millionaires (players).
“People say, ‘Oh, if you lowered the ticket price, then players wouldn’t make as much and more people would come to the games.’ The problem with that is that fans want to go to the games to see a better product, and team owners are making more money when they have a better product that is more expensive.”
Industry-wide, MLB is expected to generate almost $10 billion in revenue this year and to spend almost $4 billion on player salaries — both record highs for the sport.
The average player salary across MLB this year is almost $4.4 million, up from about $45,000 in 1975, the season before the Messersmith case.
An arbitrator declared Messersmith and retiring pitcher Dave McNally free agents in December 1975, striking down baseball’s “reserve clause,” which previously bound players to their teams in perpetuity unless traded, sold or released. Although Messersmith had gone 53-30 with a 2.51 ERA over the previous three seasons with the Dodgers, few teams pursued him as a free agent. When negotiations with San Diego broke down, Padres owner Ray Kroc famously said: “He can work in a car wash.”
Turner, in his first year as the Braves’ owner, stepped up with the three-year, $1 million offer.
“That was unheard-of money back then,” recalled Atlanta public-relations executive Bob Hope, the Braves’ PR director at the time. “It was totally shocking.”
When the Braves completed the deal April 10, 1976, two days into the season, Turner quipped: “We just felt Andy Messersmith was too good to work in a car wash.”
Turner had a plan to recoup part of the investment by placing the word “Channel,” rather than the player’s name, above the No. 17 on the back of Messersmith’s jersey. (Turner was putting players’ nicknames on the back of jerseys.) That made the pitcher a billboard for Turner’s TV station, Channel 17 — until MLB put a stop to it.
Messersmith had relatively little success on the mound for the Braves — an early warning that expensive free agents come with no guarantees — but the game’s economic transformation was underway.
Fast-forward 40 years to spring 2016, when Boston’s David Ortiz told teammate Mookie Betts, a veteran of just one full major-league season, that Betts is in position to earn a long-term contract worth $250 million.
The Braves, one of baseball’s bigger spenders through the 1990s, haven’t participated in the recent surge in payrolls — and are paying for that decision in their win-loss record.
Their current payroll of about $87 million ranks 26th among the 30 MLB teams and is slightly lower than it was a decade ago. Even that $87 million figure is deceptively high because it includes $14 million toward the guaranteed salaries of Nick Swisher and Michael Bourn, both released in spring training. Another $15 million toward their salaries came from Cleveland in last year’s trade and isn’t included in the Braves’ payroll figure.
The Braves have vowed that their payroll will increase after the move to SunTrust Park, but they currently have only $54 million committed in guaranteed contracts for next season, according to a securities filing by team owner Liberty Media. So it remains to be seen how sharply, or how quickly, their spending will rise.
“We want to be one of the high-payroll teams,” McGuirk said. “As we move into our new stadium, we have the opportunity to take a large jump from the level we’re at right now. My goal would be to be a top-10 payroll team.
“As these young guys (in the Braves’ minor-league system) grow up and we have championship teams, we’re going to have to pay them as championship teams. We have done that before, and we understand how it works.”
Still, the runaway salaries for free-agent pitchers is part of the reason for the Braves’ strategy of accumulating pitching prospects to try to develop their own top-of-the-rotation starters.
McGuirk has watched salaries evolve from the Messersmith contract to today’s $30-million-plus-a-year deals, and like most fans he has marveled at the escalation.
“These are nutty numbers,” he said. “I don’t know where it ends. You always think it’s ending.”
Baseball’s highest paid player in each fifth season starting with the first $1 million-a-year player in 1980:
Year / Highest paid player (team) / Salary
1980 / Nolan Ryan (Houston Astros) / $1,000,000
1985 / Mike Schmidt (Philadelphia Phillies) / $2,096,967
1990 / Robin Yount (Milwaukee Brewers) / $3,200,000
1995 / Cecil Fielder (Detroit Tigers) / $9,237,500
2000 / Kevin Brown (Los Angeles Dodgers) / $15,714,286
2005 / Alex Rodriguez (New York Yankees) / $26,000,000
2010 / Alex Rodriguez (New York Yankees) / $33,000,000
2015 / Clayton Kershaw (Los Angeles Dodgers) / $30,000,000
Source: Society for American Baseball Research (sabr.org)
The teams with baseball’s five highest and five lowest payrolls this season:
1. Los Angeles Dodgers $248,129,162
2. New York Yankees $227,854,349
3. Boston Red Sox $200,343,907
4. Detroit Tigers $200,008,040
5. San Francisco Giants $171,464,943
26. Atlanta Braves $87,120,573
27. Oakland Athletics $85,799,865
28. Miami Marlins $70,464,500
29. Tampa Bay Rays $65,015,523
30. Milwaukee Brewers $63,914,319
Source: Spotrac.com MLB Team Payroll Tracker (as of Wednesday)
(Note: Braves payroll includes $14 million toward the combined salaries of Michael Bourn and Nick Swisher, who were cut in spring training. It doesn’t include another $15 million of those players’ combined salaries because that portion was effectively covered by cash the Braves received from Cleveland in last year’s trade. Braves payroll includes $2.5 million they sent to Detroit in trade of Cameron Maybin to offset part of his salary. The payroll includes players on the disabled list and Hector Olivera on paid administrative leave. Salaries for players currently on the Braves’ 25-man active roster total $63.7 million.)