Baseball and Money

From Player Contracts to Beer Prices

Baseball and Money
April 6, 2015

Spring is finally here and another season of baseball is upon us. Will another Cinderella team come out of nowhere like the Kansas City Royals did in 2014, falling one game short of the title? Can any other small town teams compete in today’s market, or has money completely thrown the game out of balance?

One can argue about the effect of money, but there is no argument that Major League Baseball (MLB) is awash in it. Let’s take a look at some of the economics of MLB, from the team, player, and fan perspectives.

  • Net Worth – According to a 2015 compilation by Forbes, the New York Yankees topped the net worth list at $3.2 billion—almost twelve times the amount of the Alex Rodriguez contract (see below). Meanwhile, the Tampa Bay Rays bring up the rear, with a total net worth of “only” $625 million.

  • Ticket Prices – Compared to the other major sports, the average MLB ticket is a bargain. According to Ticket City, the average face value ticket price in 2014 was $27.93 across all major league parks with Red Sox tickets topping the list at $52.32. Averages on the secondary market are much higher according to TiqIq, with the Boston Red Sox topping out at $141.59 and the Washington Nationals coming in with the lowest at $49.

  • Spending – According to Team Marketing Report based in Chicago, the average spending per game at a major league ballpark for a family of four is $212. Again, the BoSox tops the list at $351 for an average expense, with the Arizona Diamondbacks coming in at just $127 per family. Among the other average costs are $6.09 for a beer, $4.02 for a soft drink, $4.32 for a hot dog, $15.09 for parking, and $17.23 for a souvenir team cap.

  • Player Contracts – The average MLB player’s salary hit a new record of $4.25 million in April 2015, and the minimum was $507,500 — hardly at the poverty level, but far below the massive contracts that grab the most attention. As of this writing, the current winner in the largest contract derby is Giancarlo Stanton of the Miami Marlins, who signed in November 2014 for $325 million over 13 years. Of course, by the time you read this, that record may have been broken. Oh, did we forget to mention that the players get months of winter vacation?

    Arguably, one of the poorer contracts in terms of ROI may be found in Yankee Stadium, as Alex Rodriguez attempts to play and collect the remaining $61 million from the original $275 million, 10-year contract he signed in 2007. Since the former All-Star is coming off multiple surgeries, a year’s suspension, and turns 40 in July, it seems unlikely that the Yankees will get anywhere near their return on investment from A-Rod.

  • Team Payrolls – Heading into Spring Training, the MLB salary tracker at Spotrac.com shows the L.A. Dodgers blowing the field away with a total payroll of over $277 million – a whopping $88 million over the luxury tax limit. The Miami Marlins had the lowest payroll at just over $61 million.

  • TV Deals – The last national contracts signed in 2012 brought in $1.5 billion per year into the MLB coffers — $800 million from Fox and TBS and $700 million from ESPN. Meanwhile, there are plenty of lucrative long-term local TV deals such as $2.5 billion to broadcast the Philadelphia Phillies (25 years), $3 billion for the Texas Rangers (20 years), and the over $8-billion, 25-year contract to broadcast the L.A. Dodgers… and that does not include the Yankees, who own a 34% share of the YES network.

Enjoy the new MLB season, and we wish you and your favorite team the best of luck. However, if you find that you have been priced out of major league games this year, you can subscribe to an out-of-market TV broadcast package, or consider seeing baseball in a purer form. College and minor league baseball games offer a great and more intimate fan-friendly experience for a fraction of the cost… and if you are lucky, you may be able to get the autograph of a future superstar before he signs a billion-dollar contract.

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Martin | 08.22.15 @ 15:26
The Dodgers' payroll has gotten absurd. Independent of that, I think there's an interesting trend to watch going forward. I feel like some of the monster contracts that have been signed recently are partly influenced by steroid-era thinking, when players were regularly very productive into their mid- and late-thirties. I don't think it makes sense to sign a thirty-year-old to a 10-year contract worth $250M when half of those years are going to be after he's 35. Not if the guy's not juicing. Those contracts stand to become huge albatrosses in a post-steroid MLB. (The caveat there being that I think steroids/PEDs are now coming back into the game after the late-aughts ebb.)
Chelsey | 08.22.15 @ 21:37
I think it is insane how much money sports generate. The amount of money that players make and coaches. The NFL itself doesn't even have to pay taxes. The players do but the profit from the NFL is tax free...gee I think there is something wrong with that picture
Donnie | 08.23.15 @ 01:28
The sports generate so much money for there city's. But why charge so much at a game.
$commenter.renderDisplayableName() | 04.23.17 @ 18:01
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