posted
Welcome to another episode to Baseball's Biggest Secrets FINALLY Revealed.
In the middle of the A-Rod controversy linking him to steroids, I thought it would be quite fitting if I debate wether he is overpaid. I will not address the steroid issue because I've put this piece together long before all of this unraveled. I will talk about steroids at another time, but first let's answer this question once in for all.
You're probably thinking, "Of COURSE he's overpaid." My question to you is this: How do you know for SURE? And if he is overpaid, do you know by how much? How do you go about finding that answer?
Don't worry. Luckly for you, you have me to doing all the dirty work for you. So relax, and enjoy.
One more thing: If I'm right about this, then how the hell can I be wrong about the salary cap issue?
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On December 10, 2000, Alex Rodriguez agreed to a ten-year contract with the Texas Rangers that guaranteed him $252 million in salary. Rodriguez's salary outstripped the $250 million that Rangers owner Tom Hicks had paid for the Texas franchise itself when he purchased it prior the 1997 season and the $91 million it cost to construct the Ballpark in Arlington. It represents the largest contract given to an individual athlete in sports history.
It also assured that Rodriguez would be associated forever with his hefty contract. Practically everyone cried treason.
There was little debating that Rodriguez, just twenty-five at the time he signed the contract, was one of the more talented free agents in the history of the sport. But his new contract seemed beyond the pale. Could a baseball player be worth that much?
For better or worse, however, our economy goes about assigning salaries based roughly on the value of the output that a worker is able to produce. In Rodriguez's case, the output is entertainment. It's fun to watch a baseball game, and millions of people are willing to invest their time and money to do so. It's more fun to watch to watch a baseball game involving a competitive local team, and there's ample example that people are more willing to pay a bit more to watch a good team play than a poor one. Rodriguez produces value because he's a supremely talented baseball player who makes his team more competitive and more fun to watch.
But how much value are we talking about? Could it be as much as $252 million worth
To start with, we should think about different ways that a baseball team makes money. This problem is more difficult than it otherwise might be because baseball teams do not publicly disclose their financials -- they are generally operated either as small, privately owned trusts or holding companies or as part of large conglomerates such as Time Warner (Atlanta Braves) or Anheuser-Busch (St. Louis Cardinals), for which the baseball club is just one tiny part of a huge business. One exception is the Cleveland Indians, who filed financial disclosures with the Securities and Exchange Commission (SEC) over the periods from 1998 to 2000 as part of a small public offering. The disclosures revealed precisely how much revenue the Indians received from various sources as well as the costs of operating the club.
The Indians reported income from eight primary sources: **Numbers in parenthesis were the revenues recorded in 1997, the year they made the World Series**
- Ticket sales ($49 million) - Local radio and television ($17 million) - Merchandise sales ($17 million) - Major League Baseball Central Fund ($16 million) - Concessions and catering ($14 million) - Postseason revenue ($13 million) - Private-suite and club-seat rental ($9 million) - Revenue sharing ($7 million loss provision)
Of these eight sources or revenue, seven are materially dependent on the Indians' success on the field. If the Indians are a good team, more people will attend their games, and consume food and beer while they're there. On a similar note, more people will buy Indians paraphernalia when the team fosters local pride. Networks will be willing to pay more to broadcast Indian games because they can anticipate higher ratings and attendant increases in advertising revenue when the team is playing well, and luxury boxes will become a hot property among Cleveland's wealthiest individuals and corporations. Postseason revenue, of course, can be obtained only if the team is good enough to reach the playoffs in the first place.
The Indian's revenue-sharing figure is also tied to the quality of the ballclub, although in an inverse way. If the Indians are a better team, they will generate more local revenue but must pay out more in revenue sharing as a result. The only source of revenue that ISN'T tied to the Indians' on-field performance is that received from the Major League Baseball Central Fund, the Indians' share of Major League Baseball's national television deal. This revenue is divided equally among MLB's thirty member franchises, without regard to how the individual teams perform.
Let's look at each of these sources of revenue in more detail.
TICKET SALES
Major League Baseball teams play eighty-one home games during the regular season and receive the largest share of their income from the ticket sales associated with these games. We can estimate revenue associated with these ticket sales by combining attendance figures, which are reported publicly, and ticket price information, which has been collected annually since 1993 by Team Marketing Report. In 2004, for example, the Yankees sold 3.78 million seats, at an average price of $27.34, for gate receipts of about $103 million. The Expos, on the other hand, sold fewer than 750,000 tickets in spite of charging $10.82 per seat, for gate receipts of about $8 million.
There are several factors that might potentially affect gate receipts, which broadly can be classified into three categories: team quality, stadium quality, and market quality. Our immediate concern is with differences in attendance revenue that result from the differences in team quality, but we also must evaluate the other two factors. Some of the reason the Yankees outdrew the Expos is because they were a much better ballclub, but some of it was also because New York is a much bigger market than Montreal and because Yankee Stadium is a much nicer place to watch a baseball game than (now-retired) Stadium Olympique.
We can accomplish this evaluation by means of a regression analysis, which is designed to isolate and quantify the impact of several independent variables (for example, games won or size market) on one dependent variable (in this case, home attendance revenue in 2005 US dollars). Specifically, I looked at all major league teams over the period of 1997-2004, accounting for the following independent variables:
Team Quality Variables
1. Number of games won in the current season 2. Number of games won in previous season 3. Playoff appearance in current season 4. Playoff appearance in previous season 5. Number of winning seasons in past ten years 6. Number of playoff appearance in past ten years
These measures should be largely self-explanatory. The first four are concerned with a team's success in the near term, while the last two evaluates success over the medium term. But the current and the previous season's performance need to be considered carefully since tickets are purchased in advance -- if the Arizona Diamondbacks win a lot of games this year, more people will buy next year's ticket as a result.
Although seating capacity should be familiar, the other two metrics require an introduction. Stadium quality rating is a numeric measure of the aesthetic experience associated with watching a baseball game at a particular ballpark. These ratings were obtained from a 2003 series of articles compiled by ESPN.com, which assigned ratings from 0 to 100 to each of the then-existing major league ballparks based on factors such as seat comfort, concession items, and interior and exterior beauty. The lowest rated park was Olympic Stadium, which received a score of 49, and the highest was PNC Park in Pittsburgh, which received a score of 95
The honeymoon effect is a well-documented phenomenon; a team can expect to receive a temporary boost in attendance as a result of opening a new stadium. Because so many teams opened new stadiums over the period of 1997-2004, it is important to account specifically for this effect. The honeymoon effect is thought to last for three seasons, so the honeymoon effect variable was set at 3 in the first year that a team opened a new ballpark, 2 in the year after it opened the ballpark, 1 in the third year, and 0 thereafter.
Market Quality Variables
1. Market Size 2. Per-capita income
Market size is based on an evaluation conducted be baseball researcher Mike Jones, who evaluated the top-fifty Nielsen TV markets (plus Toronto and Montreal) in order to determine the relative size of each baseball team's potential audience. Jones made educated guesses to assign markets outside the immediate metropolitan areas that the thirty teams occupy (for example, most of Providence, Rhode Island, was assigned to the Boston Red Sox) as well as to divide up those markets that more than one team occupies (for example, the Cubs were assigned a 70 percent share of Chicago and the White Sox 60 percent, providing for some number of Chicagoans who were fans of both clubs).
Per-capita income was determined based on the 2001 Bureau of Economic Analysis estimates.
Results: The regression analysis revealed that seven of these variables had statistically significant impact on attendance revenue. In declining order of significance, these variables were:
1. Stadium quality rating 2. Market size 3. Honeymoon effect 4. Games won in previous season 5. Playoff appearances in past ten years 6. Games won in current season 7. Per-capita income
Before proceeding, we should discuss the four variables that did not make the cut. Stadium capacity made no meaningful difference. A team such as the Boston Red Sox has a small stadium, but can still capture increased demand by increasing ticket prices -- Red Sox tickets, in fact, more than doubled in price between 1997 and 2004.
Playoff appearances in the current and previous seasons, number of winning seasons in the past ten years, also had no statistically significant effect after other, similar variables were accounted for. It appears that, in the near term, fans are able to adjust their behavior more precisely according to small changes in team quality (for example, fans prefer a team that wins 79 games to a team that wins 75), but over the longer term, they are more concerned with the team being competitive enough to make the playoffs.
Now for the variables that did drive attendance revenue.
Stadium Quality
Some analysis have speculated that stadium quality is overrated in determining attendance. The argument goes that novelty effect quickly wears off and that some fans are ultimately more concerned with the quality of the ballclub. My analysis suggests that stadium quality makes a tremendous difference. A state-of-the-art facility that scores an 85 in the ESPN ratings is associated with about $19 million in additional gate revenue per season as opposed to an outmoded ballpark that scores a 60. ESPN's ratings weren't compiled in a vacuum -- ESPN was unlikely to give a low rating to a stadium that sold out night after night or a high rating to one that was empty, regardless of the reasons why. Still, many other factors went into the study, and stadiums often sell out specifically because of their quality. As such, I'll let this finding stand.
Honeymoon Effect
The honeymoon effect is evaluated as producing a bump of about $17 million in revenue, spread out over the first three years in which a new ballpark is open. This figure, combined with the stadium quality effect, suggests that upgrading to a new ballpark is potentially a highly profitable endeavor.
Market Size
As anticipated, market size makes a significant difference in gate receipts. The largest number under this method belongs to the New York Yankees. It is evaluated as providing about $28.5 million in additional gate receipts per season as opposed to the smallest market, that belonging to the Kansas City Royals.
Per Capita Income
Per-capita income, although statically significant at the 90 percent level, makes relatively little difference once market size is accounted for. The wealthiest market, San Francisco/Oakland, is evaluated as providing about $7 million in additional gate receipts versus the poorest domestic market, Tampa Bay . In spite of price increases in recent year, baseball tickets are still a relatively affordable an should most likely not be considered a luxury good.
Team Quality Measures
While market quality and stadium quality are important determinants of a team's gate receipts, its on-field quality probably makes the largest difference. Specifically, the model suggests the following:
- Winning an additional game translates to about $700, 000 in additional gate receipts, before accounting for any effect of playoff appearances. This impact is distributed as about $300,000 in the current season -- mostly as a result of improved ticket sales.
- In addition, a team realizes slightly more than $1.9 million in additional ticket revenue per season for each playoff appearance in the past ten seasons. This implies that an additional playoff appearance is worth about $14.9 million in present value.
These two measures, when combined, provide a realistic portrayal of the behavior of baseball fans toward their local team. Fans are responsive to somewhat small changes in team quality over the near term, even if these changes do not result in a playoff appearance. The Detroit Tigers, for example, recognized about $27 million in gate receipts in 2003, a year in which they went 43-119, nearly breaking the all-time record for losses, but about $34 million in gate receipts in 2004, when they went 72-90, still far back from the playoff hunt but noticeably more lively.
Over the longer term, however, fans want a more tangible measure of success, and this success comes in the form of pennants and postseason appearances.
We'll revisit this bifurcated model of team success -- accounting for wins and playoff appearances separately -- in a moment. In the meantime, it might be worthwhile to focus on just one-half of team quality equation -- number of games won. We can say, for example, that Alex Rodriguez was worth about 11 wins in 2002, 10 wins in 2003, and 8 wins in 2004, as compared with a replacement-level player at his position who would have made league-minimum salary. Thus, we can compare Rodriguez's salary against an economic value of the extra wins he produces for his ballclub in order to determine whether he's overpaid. We'll call this the Linear Model of Player Valuation since it assumes that the revenue growth associated with additional wins takes the form of a straight line -- the seventieth game won in a season, which has no impact on a team's playoff hopes, is assumed to be just as important as the ninetieth game won, which very probably does.
Importantly, if we take playoff appearances out of the regression equation, the revenue associated with a regular season win increases, since a win then represents not only value in itself but also a proxy for the improved probability of reaching the playoffs. Specifically, an additional win turns out to be worth about $880,000 under this model, rather than $700,000.
Our next task is to figure out how an additional win affects the other sources of team revenue, above and beyond gate receipts.
Table 1 shows the Linear Model of Player Valuation:
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Table 1. Linear Model of Player Valuation1 additional win =
$880,000 in gate receipts + ___ in concessions revenue + ___ in luxury-suite and club-seat revenue + ___ in postseason revenue + ___ in merchandise revenue + ___ in local media broadcast revenue + ___ in revenue-sharing payments =
___ total
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CONCESSIONS
Concessions revenue -- consisting primarily of food, alcoholic and non-alcoholic beverages, and parking -- can be treated as a "multiplier" on gate receipts. This is, since a fan needs to have bought a game ticket in order to purchase concession items, we might say that for every X dollars the fan spends on tickets, he'll probably spend an additional Y dollars on food, beer, and parking.
We can get a sense of this multiplier by looking at the concessions revenue reported by the Cleveland Indians in their public financial statements. Between the 1996 and 1997 seasons, the Indians reported an average of $14.4 million in concessions and catering revenue versus $47.5 million in ticket sales, a ratio of about 30 percent.
Although we can't confirm this figure against data for other baseball teams, we can cross-check it against data in a related industry: movie theaters. Loews Cineplex is a large, publicly traded chain of movie theaters. Their reported profits on concessions items averaged a little more than $191 million -- versus profits on ticket sales of $621 million. This implies a multiplier of 31 percent, very similar to what we estimated for the Indians. Movie theaters are not a perfect economic match for baseball stadiums because movie tickets cost less than baseball tickets, and movie theaters do not generally sell beer or charge for parking. But Lowes data provide some confirmatory evidence that the 30 percent figure is reasonable. A 30 percent multiplier implies $267,000 in concessions revenue for each additional game won, above and beyond the cost of ticket themselves.
LUXURY SUITES AND CLUB SEATS
Another important source of stadium-related revenue comes from the sale of luxury suites and club seats. These premium items, which have become omnipresent at modern sports venues, are generally rented by large corporations or wealthy individuals for one season at a time. Their profitability is the primary motivations for building new sports stadiums, as older facilities, such as the Metrodome in Minneapolis, may not have adequate number of luxury boxes and club seats available.
Unfortunately, the economics of luxury suites and club seats are ambiguous. Teams do not report revenue information for luxury suites and club boxes, nor do they publicly disclose the price associated with renting such facilities (the price is high enough that the rental fees are probably subject to negotiation). Nor is it clear whether luxury suite and club-seat revenue is as sensitive to team quality as are regular gate receipts.
I do have a couple of data points, however, that should allow to make a reasonable approximation of the scope of luxury-suite revenue. Turning again to the Cleveland Indians' public financial disclosures, it is said that the Indians reported an average of $7.9 million in luxury-suite and club-seat revenue between 1996 and 1997, as compared with an average $47.5 million in gate receipts, a ration of about 16.5 percent.
There is also data on luxury suites and club seats available at the industry Web site sportsvenues.com. SportsVenues reports that:
- MLB stadiums have an average of seventy-seven luxury suites, with a median price of $133,829, implying average luxury-suite revenue of just over $10 million per season per team.
- In addition to, MLB stadiums have an average of 3,983 club seats, with the median price of $3,985, implying average club-seat revenue of about $16 million per season per team.
Thus, SportsVenues concludes that major league teams record an average of about $26 million in revenue per season from luxury boxes and club seats. This is compared with an average of about $52 million in gate receipts, for a ratio of about 50 percent.
The SportsVenues figures may be somewhat too generous; a few stadiums still lack much in the way of luxury suites or club seats, and a certain percentage of these probably go unsold. On the other hand, the Indians' figures may be too low for other teams. Cleveland is home to relatively few large corporations. Moreover, the luxury-box concept is a relatively new one, and it may have grown in currency since 1997. If we split the difference between luxury-suite/club-seat and regular attendance revenue of about 33 percent.
This does not resolve the question of how responsive luxury-suite and club-seat revenue is to changes in team quality. Luxury suites and club seats are bought before the season begins; you're stuck footing the bill even if the team is terrible. In addition, corporations may have incentives for purchasing luxury-suites and club boxes other than seeing a good ballgame -- entertaining clients, say, or providing a perk to executives. It seems probable that luxury-suite revenue is at least slightly less responsive to team quality than ordinary seats are. A reasonable guess is that I should reduce the 33 percent multiplier by about one-third to reflect these factors. This suggests that, for every additional $1.00 a team receives in gates receipts as a result of an improvement in team quality, it will also receive an additional $0.22 in luxury box revenue. One additional win, then, would be worth about $196,000 in additional luxury-suite and club-suite revenue.
POSTSEASON
As we've described, a team that receives a long-term benefit to its regular-season attendance as a result of reaching the postseason. In addition, making the playoffs brings the bonus of getting to play some number of additional games in front of a packed house at higher-then-normal ticket prices.
In the 2001 financials it presented to congress, Major League Baseball reported that teams had received a total of $45.5 million in postseason revenue in a season in which 35 postseason games were played. This implies that the host of a postseason game made around $1.3 million in additional income in 2001.
How many home games does a typical postseason team get to play? Since 1995, the first year MLB introduced the Wild Card, there have been an average of 33 postseason games per season, divided between the eight teams that make the playoffs. This works out to an average of 4.1 home games per team, for about $5.8 million in additional income per post season appearance.
If we were working with a model that differentiated between regular-season wins and playoff appearances, we could leave it at that: A team makes an extra $5.8 million from playoff gate receipts if it reaches the postseason and nothing if it doesn't. However, we're still working with the Linear Model, which evaluates everything in terms of regular-season wins. One way to translate postseason appearances back into regular-season wins is to turn the regression of regular season wins into playoff appearances. If we do this over the period 1996-2004, we find that each win total is "worth" about one-fortieth of a playoff appearance. This number flows from the fact that the typical range of regular-season win totals runs about 40-wide between 60 and 100 wins; a team that wins 60 games will never make the playoffs, whereas a team that wins 100 almost certainly does.
Thus, we divide the $5.8 million in revenue by 40 and come up with a figure of $154,000. This represents the "bonus" than an additional regular-season win provides by improving the probability that a team reaches the postseason and host additional home games as a result.
MERCHANDISE
Although sales of team-branded sports paraphernalia are big business, MLB clubs have only limited opportunities to capitalize on these sales directly. In particular, after the establishment of Major League Baseball Properties in 1966, MLB is responsible for marketing team-branded merchandise at a national level, such as in major chain stores or on the Internet. The revenue received from these sales is distributed equally to the thirty teams. Therefore, although a successful season can trigger a major upswing in merchandise sales, teams do not realize all of these profits.
Teams are permitted, however, to operate club-owned retail stores within a two hundred-mile radius of their home field, including within the ballpark itself, and recapture the revenue associated with these sales. Such club-operated stores are the source of merchandise income the Indians reported on their financial statements. Specifically, the Indians reported average profits of slightly less than $4 million per year on merchandise sales between 1996 and 1997, or about 8 percent of their gate receipts over the same period.
A substantial number of these merchandise sales take place in the ballpark itself, meaning they operate as a multiplier on gate receipts, much like concessions revenue do. In the absence of reliable data points to the contrary, we will apply the Indians' 8 percent multiplier to merchandise sales at team-operated stores. An additional win, then, is worth about $70,000 in extra caps, jerseys, and foam fingers sold.
LOCAL MEDIA
Excluding ticket sales, the most important source of local revenue is selling TV and radio rights within the home market. The amount earned by teams in exchange for licensing their games for broadcast can vary greatly depending on market size and team quality. In 2003, for example, the Yankees earned more then $60 million for their local broadcasts rights, while the Expos earned nothing.
Data on broadcast rights fees in notoriously hard to come by, and may be subject to manipulation. Reliable data on local media deals for the years 1998, 1999, 2000, 2001, and 2003, as reported by an industry publication, Broadcasting & Cable magazine. A regression analysis was performed on these local media revenues similar to the one conducted for gate receipts. The independent variables I initially considered in the regression analysis were:
1. Average number of games won in previous three seasons 2. Playoff appearance in previous season 3. Number of winning seasons in past ten years 4. Number of playoff appearance in past ten years 5. Market size 6. Per-capita income 7. Superstation dummy
Most of these variables are exactly the same as those included in the attendance revenue analysis. The exceptions are the first and last variables. After some experimentation, average number of games won in the previous three seasons proved to be more reliable than other direct measures of wins. "Superstation dummy" is a special variable created to apply to the cases of the Cubs and the Braves, which own their own national cable stations (WGN and TBS, respectively) and broadcast many of their teams' games to a national audience on these stations. The Cubs and Braves can expect to receive extra media revenue from these stations above and beyond what could normally be achieved based on team quality and local market characteristics.
The regression found that the vast bulk of differences in local broadcast revenue can be explained by evaluating just three variables: market size, number of playoff appearances in the past ten seasons, and Superstation dummy. Having a Superstation makes a huge difference to the Cubs and Braves, to the tune of about $35 million extra in broadcast revenue per season.
Market size is also a highly significant predictor of local media revenue. The annual difference in expected local broadcast revenue between the largest and smallest markets -- those belonging to the Yankees and the Royals, respectively -- was evaluated at about $30 million , or about $1.88 per annual citizen.
Playoff appearances are the final key factor in local media deals. One additional playoff appearance is estimated to produce an increase of $1.8 million in media rights fees per season for each of the next ten seasons, or a total of about $14 million in present-day value. Interestingly, none of the variables related to the number of games won were found to be significant once playoff appearances had been accounted for. That is, while both wins and playoff appearances have an independent impact on gate receipts, broadcasts revenue appears to be driven by playoff appearance alone. There are a couple of reasonable explanations for this phenomenon. First, media rights deals involve longer-term arrangements than the purchase of tickets, either explicitly in the form of multiyear contract or implicitly because baseball games can become an important part of local network's brand and programming schedule. Therefore, broadcasters are especially interested in tangible evidence of a team's longer-term competitiveness in the form of playoff appearances.
Second, in an era of three hundred-channel cable lineups, consumers have a lot of choices as to what to do with their TV-watching time, generally including several baseball games on a given evening. Although a citizen of Baltimore might find some aesthetic pleasure in taking in a "meaningless" Orioles-Royals game in person at Camden Yards, there is less to be gained from watching it on TV, especially if he could watch Red Sox-Yankees or Deal or No Deal instead.
The Linear Model is limited in a scope to number of games won. If the playoff appearances variable is removed, the number of wins does not become statistically significant in its place. The regression finds that an additional win is worth about $244,000 in additional local broadcast rights in present-day value once playoff appearances are removed.
REVENUE SHARING
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Table 1.2 Linear Model of Player Valuation (including variables)
1 additional win =
$880,000 in gate receipts+ $267,000 in concessions revenue+ $196,000 in luxury-suite and club-seat revenue+ $154,000 in postseason revenue+ $70,000 in merchandise revenue+ $244,000 in local media broadcasts revenue+
___ in revenue-sharing payments =
___ total
____________________
Table 1.2 shows the Linear Model of Player Valuation with most of the variables filled in. We find that between additional gate receipts, concessions revenue, luxury-suite rentals, postseason revenue, merchandise sales, and local broadcast revenue, an additional win adds up about $1,812,000 to a team's top line.
We have yet to account for the detrimental impact of revenue sharing on a winning team's finances. Under the revenue-sharing rules encoded in baseball's current Collective Bargaining Agreement, teams must contribute 34 percent of their locally earned revenue -- including all of the revenue sources described in this analysis -- to the central fund that is then redistributed evenly among the thirty MLB clubs. Teams earning greater-than-average local revenue, therefore, lose money as a result of revenue sharing, while teams earning below-average local revenue gain from it.
There is a second form of revenue sharing consisting of payments into and out of the Central Fund. Under this "split pool" system, additional moneys are taken from teams with above-average local revenue and given to the teams with below-average local revenue. Paradoxically, this causes the tax rate on revenue generation to be higher for the poorer clubs than for the richer ones. It was estimated that, in 2005, the Yankees contributed a total of 39 percent of their locally generated revenue to the revenue-sharing pool and the Royals 47 percent. We will use the average of these -- 43 percent -- in our model.
The local revenue streams affected by revenue sharing are exactly those that are included in our model, so we simply subtract 43 percent. Specifically, revenue-sharing payments of 43 percent on revenue of $1,812,000 --- our estimate of the gross amount earned from an additional win to $779,000. Thus the net increase in profits from winning an additional game is just slightly more than $1 million under our Linear Model (Table 1.3)
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Table 1.3 Linear Model of Valuation (including revenue sharing)
1 additional win =
$880,000 in gate receipts + $267,000 in concessions revenue + $196,000 in luxury-suite and club-seat revenue + $154,000 in postseason revenue + $70,000 in merchandise revenue + $244,000 in local media broadcast revenue -$616,000 in revenue-sharing payments =
$1,196,000 total
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FINAL WORDS;
With this estimate in hand, we can say, for example, that a player who produces 5 additional wins for his team is worth about $5.2 million, or a player who produces 8 additional wins is worth about $8.3 million. Alex Rodriguez, by this standard, is in fact GROSSLY overpaid. Before 2007, Rodriguez's best season according to the Wins Above Replacement Player (WARP) statistic was 2000, when he produced 12.4 extra wins for the Mariners. The Linear Model estimates that these wins were worth about $12.8 million in extra revenue, a healthy figure but NO MATCH for the $25 million or so that Rodriguez is paid annually. In fact, at this salary level, even Babe Ruth would be overpaid. The WARP system regards Ruth's best season as 1923, when he produced 18.1 wins for the Yankees. Ruth's season would be worth "only" $19.3 million according to the Linear Model.
--National
Stay tuned for a second part to this debate. Yes, I have a second part to this. It asks if Alex is overpaid relative to other players today?
posted
Wow National, yet again another great well put together article!
Now, my response will be a bit biased to a certain degree due to me hating baseball. But come on, you honestly can't sit there and try to reason with me and everyone else that one guy( a baseball player) is worth over 25 mil a season...to do what? Stand there and maybe swing a bat a few times a game?? I'm not a fan of football but I don't even see football players wandering around making 25 mil a season! And they certainly earn it more then a baseball player would!
I digress though, professional athletes shouldn't be paid millions upon millions a season to play, it hurts whatever league they are in, unless of course they happen to have a salary cap(although it doesn't seem to be working a great deal in the NHL). Feel free to rip apart my post National! I look forward to it
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quote:Originally posted by bluetoelover: Wow National, yet again another great well put together article!
Now, my response will be a bit biased to a certain degree due to me hating baseball. But come on, you honestly can't sit there and try to reason with me and everyone else that one guy( a baseball player) is worth over 25 mil a season...to do what? Stand there and maybe swing a bat a few times a game?? I'm not a fan of football but I don't even see football players wandering around making 25 mil a season! And they certainly earn it more then a baseball player would!
I'm a bit confused. I was actually saying that Alex is overpaid. However, I do think he deserves to be the highest player. $25 million a season? Not according to what I found. When I was diggind dirt for the answer to this question, I was hoping to find evidence that he was not overpaid because he is in my top three favorite baseball players (steroids or otherwise). I was disappointed to find that he's paid more than what he's actually worth.
Besides being a pro athlete take a tremendous toll on a person's body. It makes sense that they get paid in the millions for all the reasons I highlighted in this article. Basically, the whole world depends on you to speak for their city/state by demolishing the opposition.
In my other topic about the link between player salaries and ticket prices, I pointed out that if salaries remained relatively low (as the did in the 1960s and 70s) the average player today will make $650,000. I agree with a LOT with what The Player's Association stands for, and like them, I think that's WAY too low. They deserve more than that amount.
Baseball is one of the most difficult sports to master, and playing it for six or seven months out of the year is pain and hell for the body.
So again, Alex Rodriguez is overpaid by way too much. In fact, when the time comes when I post Part II of this topic, I'll try to give you some numbers to explain by how much.
Personally, I don't care if he's paid as much as he is. I just wanted the people here to know exactly how to argue against a person who tells you that A-Rod is NOT overpaid. You know know all the gory details on how one measures such an aspect.
posted
Ahhh I get ya now National! We could sit here for days about how 25 mil is too much for just one player or how it is not enough for one player but it all comes down to logic. What is wrong with capping it all to being the highest amount you can earn is 2 mil a season and then be able to opt into a profit sharing program with the team? As in, the better your team does,farther into the playoffs the more you'll make on your cheque. Or a big cheque at the end of the season so your still making huge dollars...provided you play your best ball, it would be a win for everyone, the players, the owners and most importantly the fans. Is this not a logical idea? The players would actually give a shit on how they and the teams do...I bet you wouldn't see a player having a slump for too long
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