Lutz Blog

Bob Lutz: MLB continues to spend the big bucks

Max Scherzer signed a seven-year, $210 million free-agent contract with the Washington Nationals this week. Half of the money is deferred, which means he’ll be paid $15 million for the next 14 years.
Max Scherzer signed a seven-year, $210 million free-agent contract with the Washington Nationals this week. Half of the money is deferred, which means he’ll be paid $15 million for the next 14 years.

Hey, did you hear the news?

You can get a ticket to a Major League Baseball game this season for $8 and it’ll be the best seat in the house. An ice-cold beer will cost a buck and a half. Hot dogs? They’re giving them away.

Of course, none of this is true. Revenues in baseball keep skyrocketing but the little guy – you and me – continue to pay more. Funny how that works.

The latest free-agent signing – Max Scherzer to Washington for seven years and $210 million – made us all gasp the way we’ve been gasping since free agency came to MLB in 1975.

There’s crazy money all across professional sports, of course. I didn’t just arrive on a boat. But I am continually amazed at just how rich the rich are getting.

President Obama is going to devote much of his State of the Union address tonight to income inequality, ironically in the city celebrating over the Scherzer signing. I wonder how many baseball owners will be listening?

Listen, I’d be the first guy signing up with Scott Boras if I could throw a fastball 98 miles an hour and had a wicked curve. I don’t begrudge these guys the money they’re making or the owners for being able to pay them.

I just think it’s difficult for most of us to grasp. Does being really good at baseball, or any other sport for that matter, really warrant these crazy salaries? It’s a rhetorical question, folks. The answer obviously is “yes.”

I was reading Bernie Miklasz’s column today in the St. Louis Post-Dispatch and he cited a Forbes magazine article stating that revenue in Major League Baseball has increased 321 percent since 1995 and reached a record $9 billion in 2014, $1 billion more than 2013.

Last year, broadcast rights for MLB doubled, increasing to $788 million with the 30 teams receiving an equal share of that pie. That comes to a little more than $26 million per team.

Yet payroll accounts for just 43 percent of total revenue; it was 60 percent not too long ago.

These teams are swimming in money, which is why these huge, crazy contracts that send so many people into a tizzy really aren’t all that crazy. The Washington Nationals can afford to sign Max Scherzer and probably one of their other soon-to-be free-agent pitchers, too.

It’s a matter of allocation. There are still teams in baseball that have to be careful with how they spend. But even a small-market team like the Kansas City Royals is able to open up the purse strings more than they would have been able to do in the past.

KC’s payroll in 2014 was just more than $92 million, which ranked 19th in baseball. Just 10 years ago, the Royals’ payroll was just $47.5 million.

According to ESPN.com, Major League Baseball's average salary shot up to more than $3.8 million in 2014, putting big leaguers on track to top the $4 million barrier for the first time in 2015.

According to the Major League Baseball Players Association, the average salary last season was $3,818,923, up from $3,386,212 in 2013. The 12.78 percent hike was the biggest since a 12.83 percent rise from 2000 to 2001.

The average topped $1 million for the first time in 1992, crossed the $2 million barrier in 2001 and the $3 million mark in 2010.

MLB's wages are a stark contrast to the economy at large. The average U.S. wage rose 1.3 percent in 2013 to $43,041, according to the Social Security Administration.

Millions of people go and watch these players perform every season. They aren’t kept away by the rising prices of tickets, concessions, parking, etc. They enjoy going to the ballpark.

I can’t tell you the last time somebody offered to pay to watch me write a column, and I’d only charge a dollar. Plus, I’d make tea.

These baseball salaries might be a turn-off to some, but for most they’re just the price of doing business. I know I was disappointed when Scherzer’s deal with the Nationals was announced because I was hoping the St. Louis Cardinals would step up to the plate and make a deal for the hometown kid who went to Missouri.

Didn’t happen.

The Cardinals are taking a more prudent approach, waiting to see how things shake out with their pitching staff in spring training before potentially making a move.

B-O-R-I-N-G.

But also smart, I suppose. Still, with so much funny money out there, every team can afford to be a little gratuitous with its payroll.

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