Unfortunately, when MLB's best players are earning $40M or more per season, the inevitable fallout is the price of tickets, concessions, merchandise, etc. all rising. It will soon reach a breaking point, where lifelong fans simply won't be able to afford to watch their team play.— Dan (@DanClarkSports) December 9, 2019
In the wake of Gerrit Cole and Stephen Strasburg signing contracts that have shattered salary records, I saw this tweet yesterday. Scrolling through my timeline, I saw multiple tweets either agreeing or disagreeing with the premise. And simply reading it without putting much thought into it, it seems pretty reasonable. But is this actually the case?
Since 2010, the value of one U.S. dollar has dropped. This is the simplest definition of inflation. One dollar in 2010 is roughly equivalent to $1.18 today (an 18% increase). Let’s keep this in mind while we look at some statistics that factor into that tweet directly.
MLB payrolls have definitely seen a marked increase since 2010. This is especially evident in the monster contracts we’ve seen signed over the past couple off-seasons. Last off-season, Manny Machado broke the position player average annual value record, receiving $30 million/year for 10 years. Shortly thereafter, Bryce Harper broke the record for total contract value, receiving $330 million for 13 years of his service. Next up: Mike Trout! Trout (who is perhaps the greatest baseball player of all time) signed away his future with a 12-year, $426 million dollar extension. That deal gives him a whopping $35 million/year, and the richest total contract value in history. Fast forward to this off season, when Stephen Strasburg broke David Price’s pitcher contract record, receiving 7 years at $245 million (Price was 7 for $217 million). Strasburg was at the top for only a few days, as Gerrit Cole’s deal signed late Tuesday night broke both of these records (9 years, $324 million).
All told, the average payroll of the MLB’s teams has seen a 44% increase since 2010. You’ll notice this is exceptionally higher than the inflation effect over that time period.
Next up, ticket prices. Since 2010, the average cost of an MLB ticket has risen from $26.74 to $32.99, per Statista. One quick calculation tells us the increase has been 23%, which is higher than the inflation effect, but not by very much. If the salary increase is responsible for a rise in ticket prices, it would be only the 5% difference between inflation and the price rise, equivalent to $1.34. While it is likely this may be more related to things like TV deals, I’m personally willing to drop an extra dollar to see a better on-field product.
Now let’s look at concessions. Using numbers found on Statista again, I found price comparisons between 2010 and 2019 for hot dogs, beer, and soda. The average price of a hot dog has risen $3.79 to $4.95 (31%) over that time, and actually dropped for the first time between 2018 and 2019. Soda prices have risen 32% over this time, and beer prices only 3%. Average those numbers out to get a fair representation of concession prices as a whole, and you find that concession prices have risen by 22%, a number very much on pace with the ticket price increase.
After combing through all of this data, it seems that the tweet at the top is very misleading. MLB teams are run by billionaires, and revenue often increases relative to payroll. Do you realize how many dollars a billion dollars is? A team of 28 Mike Trouts, making $35 million each year, would still have a payroll of less than a billion dollars ($980 million). I can’t imagine that any of us will see teams with this kind of payroll, as young players make substantially less money than this (except maybe the Yankees, at this rate.) Even so, for one of the very cheapest franchises, the Athletics, the net worth of the primary owner is nearly 2.5 times this ($2.4 billion). This fact, along with the revenue increase that is often experienced with a higher payroll and the inflation effect, makes it rather ignorant to point at player salaries for having a substantial effect on the prices of tickets and concessions.
If you were my economics teacher, would you give me extra credit for this article?
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