Why Baseball Players Are Actually Underpaid

From The Atlantic:

Salaries have skyrocketed the past few decades. Revenues have skyrocketed even higher. Here’s a plan to make things fair for baseball’s 99%.


Americans share two national pastimes each spring. The first is baseball. The second is complaining about how overpaid baseball players are.

Players like Barry Zito and Alex Rodriguez are the stars of the second pastime. Their $20-million salaries shock their nemeses, and their performance too often disappoints their fans. But even moving beyond the litany of bad contracts and small sample sizes that fans ritualistically commit to memory, it’s easy to understand why it looks like ballplayers have been making off like bandits. The below chart compares the growth of salaries, television revenue and ticket prices, indexed to 1964. Salaries have boomed.

Case closed? Not so fast. Player salaries have incontestably grown faster than other prices have the past half-century. But aside from a brief window during the steroids era, baseball players have mostly been underpaid. They lag their professional athlete peers in the metric that matters: average payroll as a percentage of revenue. Here are the relevant figures for baseball over the past 80 or so years. (Note: These numbers, courtesy of Michael Haupert from the University of Wisconsin isn’t uniformly distributed. Most of the data is from the past twenty years. I constructed the numbers for 2010 myself).

There are three big stories here. First came the rise of radio and television riches. Revenues soared, but this extra money mostly made its way into owners’ pockets because players had so little legal leverage. For example, they couldn’t change teams, and contract negotiations mostly consisted of owners telling them what they’d get paid.

Continue reading the rest of the story at The Atlantic.