Another Major League Baseball season started this week with the featured series between the $206 million dollar Yankees and the $162 million Red Sox. The American Pastime has blossomed in all its red, white and blue glory. Actually, the games were quite entertaining, but the team salaries appeared far more important to the press. Once again, the question is asked: "How can these guys earn so much money?"
I have been asked this very question for 25 years, ever since I first served as a baseball salary arbitrator. My response has never been very satisfying for the die-hard baseball fan: I usually explain that they earn this much money because their employers are willing to pay them these amounts. There are a lot of terrific young athletes in the minor leagues who would be pleased to play for less, but general managers want major league performers, even with their high salaries. Billy Wagner, now pitching for the Braves, explained it simply: "If owners are crazy enough to pay you, what are you going to do? Turn it down?"
The average salary for MLB players edged up 1.8% in 2010. (There had been a mess-up with the USA Today's reporting, which had the salaries falling, but that was soon cleared up.) While others are experiencing the terrible recession, our role-model baseball players are making out just fine, with an average salary of $3.3 million. At the same time, average ticket prices rose 1.5%.
The Players Association proposed before the 1994-95 strike that baseball use a tax system, and not a salary cap, as the method to accommodate the owners' demand to hold down player salaries. It seems apparent that the strategy did not work. Average salaries have tripled since the start of the 1995 season. The demand for star players among a significant cohort of the owners has not been price elastic.
Once again, we have to worry about competitive imbalance on the playing field. The Yankees' 2010 payroll for its 25 players is almost six times the Pirates' payroll. It is likely the Pinstripers will make it to the post season, but the Pittsburgh faithful will have to be content waiting for the return of the football Steelers next door to PNC Park. That is certainly regrettable. Some clubs, however, have made considerable investments in their personnel - Minnesota, playing in a new park, increased its payroll by $32 million. Philadelphia, a likely participant once again in the Fall Classic, upped its total salaries by $28 million.
The new Executive Director of the MLB Players Association, Mike Weiner, continues to advise that the Union is investigating the possibility that owners violated the Basic Agreement in dealing with free agents. Since the early 1970s, both the owners and players have agreed they would not "collude." The owners were caught doing that in the 1980s and paid the price in arbitration. (The price was a settlement payment of $280 million to the Union, which distributed the money to the affected players.) The evidence of collusion presented in the three labor arbitrations was blatant. At first, no owners made offers to a free agent until the player's club indicated it was not going to sign him. In future years, the owners' methods became more sophisticated, but still the arbitrators found repeated violations of the contract promise.
Weiner is a no-nonsense guy and a careful lawyer. He has been part of the Players Association legal juggernaut for many years and knows Central Baseball -- as Commissioner Selig has called the Commissioner's Office -- quite well. Rob Manfred, his counterpart at MLB, is of the same caliber with the same extensive experience. They know and respect each other. The parties will not make the mistake of taking each other too lightly, something that might have happened on the owners' side in the early days of the collective relationship. We have long passed that time.
If the Players Association files a grievance claiming collusion, it will have plenty of evidence. Whether that evidence will be sufficient to satisfy arbitrator Shyam Das, the parties' long-time neutral, is uncertain. What will be certain is that a renewal of the arbitration tug-of-war between the parties will remind us that this wondrous game is also a very profitable business. No one will waive the white flag of surrender. No one will accuse the other of being "red" traitors to the game. And every distraction from the play on the field will just make us a bit more "blue."