Paying the price

Assessing Major League economics as the new season begins

The New York Yankees, baseball's wealthiest team, has also won its last three World Series

April 2, 2001
Web posted at: 5:52 PM EDT (2152 GMT)

(CNN) -- Baseball has always been defined by numbers.

There is 755, the number of home runs hit by Hank Aaron -- the most ever in a Major League career. There is .406, Ted Williams' batting average in 1941 -- the last time any batter has hit over .400 in a season. And there is 70 -- the homers Mark McGwire slugged in 1998.

At the dawn of the 2001 season, numbers have never been more important to Major League Baseball. But this time, most of the dates and figures making headlines are doing so off the field, rather than on it.

Season's greetings First power rankings of 2001 From SI: Fearless Predictions Ozzie Smith's Spring Rankings Key players out for Opening Day From SI: Team Scouting Reports

BASEBALL STOCKS The score on baseball-related investments     PLAY BALL Baseball opens its 2001 season     ECONOMIC HITS Will baseball strike out?     RESOURCE Report from Blue Ribbon panel on baseball's economics (Adobe Photoshop required)     EDUCATIONAL RESOURCES From HighWired: 'Balancing Act: Understand the law of supply and demand' -- For more information on the economic principle of supply and demand

The off-season was marked by major numerical moves, including new Texas Ranger Alex Rodriguez's $252 million contract and league officials' attempts to shorten the length of a nine-inning game from a record average 2 hours and 58 minutes. For good measure, there's also a major jump in ticket prices and an ominous date of October 31 when the current labor agreement between players and owners ends and, possibly, a new work stoppage begins.

The sweet science of baseball notwithstanding, the sport's economics stand center stage. And even with attendance expected to soar to record highs this spring and summer, some believe that baseball's future lays in the balance.

"If it happens again, there's no chance the game of baseball will ever rebound, ever again."

Those words, from esteemed slugger Mark McGwire, refer to the possibility of a work stoppage -- either due to a players' strike or an owners' lockout.

Baseball has had nine such stoppages since 1972, the last of which occurred in 1994 and 1995. That strike, which canceled the World Series for the first time in 90 years and delayed the start of the 1995 season, put a serious dent into the Major League fan base as attendance dropped drastically across the country.

Propelled by the historic 1998 home run race between McGwire and Chicago Cubs outfielder Sammy Sosa, the game saw attendance numbers rebound to record new highs in recent years.

But in that same period, a number of other issues arose, and grew, and in the process threatened the sport.

One such issue is the growing divide between baseball's "haves" and "have nots" -- the teams with large revenues, payrolls and success rates versus those from small markets who struggle, economically and otherwise, to stay even. The fact that baseball's richest team, the New York Yankees, with a payroll last year of $114 million and total revenues of $190 million, has won the last three World Series is no mistake, say those advocating reform.

"At the start of spring training, there no longer exists hope and faith for the fans of more than half our 30 clubs," MLB Commissioner Bud Selig told the Senate Judiciary Committee's subcommittee on antitrust, business rights and competition in November 2000.

An expert panel, led by former Senate Majority Leader George Mitchell, recommended a 50 percent luxury tax on the portions of wealthier teams' payrolls above $84 million -- meaning Major League baseball gets 50 cents for every dollar in salary a team spends beyond $84 million. The money that is collected would then be given to baseball's smaller market teams, who would have to spend at least $40 million.

But some large market teams have been reluctant to embrace this policy or other means of revenue sharing.

The Major League Baseball Players Association, or the players' union, has also been opposed to revenue sharing if it threatens player paychecks -- and, according to its argument, the right of a player to be paid as much as what "the market" will give him. It's a matter of supply and demand, they insist.

But many fans and sportswriters across the country expressed pessimism that any person should be paid what Alex Rodriguez will be paid -- $252 over 10 years, according to his contract signed in December 2000 -- to play baseball.

Increasingly, small market teams cannot afford elite players -- those like Rodriguez, who will earn about $45,000 every time he steps to the plate -- or even middle-level players. The average annual salary has more than doubled in the last decade, from $851,492 in 1991 to more than $2.2 million this season.

In the past 10 years, baseball's average ticket price increased more than 120 percent, from $8.64 in 1991 to $18.99 today, according to a survey by Team Marketing Report. The Consumer Price Index, a measure of prices over time and a prime inflationary indicator, rose 30.4 percent during the same time.

In the last year alone, ticket prices soared 12.9 percent, up from $16.67 last season, according to Team Marketing Report. This increase compares to 4.3 percent ticket price increases in pro basketball and hockey in the last year plus an 8.4 percent jump for NFL tickets.

But the players' union insists higher salaries aren't to blame.

"Players have absolutely nothing to do with ticket prices," says Donald Fehr, executive director of the Major League Baseball Players Association. "These are management decisions, which management makes based on what each club ... determines is the economic condition of the country and each market."

Recent bad economic news, then, would not seem to bode well for teams as they try to fill stadiums. But the prospects aren't bleak, says Kurt Hunzeker, associate editor of Team Marketing Report.

For one, the opening of two new ballparks this year -- PNC Park in Pittsburgh, Pennsylvania, and Miller Park in Milwaukee, Wisconsin -- boosted the average significantly. Hunzeker said these two parks, like many others nationwide, will have a much higher ticket price average due largely to several new high-price ticket options.

Hunzeker added that the median prices for tickets are much lower than the average, and that baseball still is the lowest-price option among major sports.

"A great majority of the seats are well below the average price -- in the $10-to-$15 range," he said, predicting an attendance hike throughout the Major Leagues this season.

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Team Marketing Report
Major League Baseball

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