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  Pro Baseball:  Hard Data On Revenues, Salaries, And Wins

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January 5, 2001 -- Are the staggering contracts signed this month by Alex Rodriguez, Manny Ramirez, Mike Hampton, and Mike Mussina (deals worth a combined $624.3 million), a sign of pro baseball's health, or of the imminent doom of many teams and a major crisis for baseball?

Rodriguez's 10-year, $252 million deal incredibly represents $2 million more than Rangers owner Tom Hicks paid for the entire club, its stadium, and the surrounding land when he purchased it all in 1998.  While Major League Baseball's Executive Vice President, Sandy Alderson, labeled the Rodriguez contract as proof that baseball is in "crisis", owner Tom Hicks confidently maintained that the signing "was within our budget.... " and that, "We will make money this year."

Owners, players, and fans are fearful of another work stoppage (the ninth since 1972) when the current contract runs out at the end of October of this year.  The last contract dispute in 1994 led to a players' strike, and the cancellation of the World Series.  Fans felt betrayed, and were slow in returning to the ranks.

Underneath it all, however, there is a method to this madness.  "There is a strong correlation between spending and getting to the World Series," says University of Delaware economics professor Charles Link, a leading authority on baseball economics.  Here are the statistics between revenues, salaries, and winning it all:


Revenue(1) Payroll
In 1999, the most recent year for which budget figures are available, four of the ten teams with the least revenue managed winning records.  However, six of the ten teams with the most revenue had winning records:
In the same season, just one of the ten teams with the smallest payrolls had a winning record.  However, eight of the ten teams with the highest payrolls had winning records:
The Top Ten The Top Ten
 Club 1999 Revenue Win-Loss
 N.Y. Yankees $177,937,346 98-64
 N.Y. Mets $140,589,295 96-66
 Cleveland $136,783,057 97-65
 Atlanta $128,274,969 103-59 
 Baltimore $123,606,398 78-84
 Boston $117,105,417 94-68
 Colorado $115,996,020 72-90
 Seattle $114,229,183 79-83
 Los Angeles $114,150,740 77-85
 Texas $109,294,685 95-67
 Club 1999 Payroll Win-Loss
 N.Y. Yankees $92,440,955 98-64
 Texas $81,676,598 95-65
 Atlanta $79,831,599 103-59 
 Baltimore $78,948,641 78-84
 Los Angeles $76,607,247 77-85
 Boston $75,260,656 94-68
 Cleveland $73,341,692 97-65
 N.Y. Mets $72,503,334 96-66
 Arizona $70,196,818 100-62 
 Houston $58,064,000 97-65
The Bottom Ten The Bottom Ten
 Club 1999 Revenue Win-Loss
 San Francisco $74,681,794 86-76
 Toronto $73,838,214 84-78
 Florida $72,949,579 64-98
 Cincinnati $68,405,518 96-66
 Milwaukee $63,574,858 74-87
 Kansas City $63,552,162 64-97
 Pittsburgh $63,185,292 78-83
 Oakland $62,584,712 87-75
 Minnesota $52,635,426 63-97
 Montreal $48,798,479 68-94
 Club 1999 Payroll Win-Loss
 Tampa Bay $37,865,451 69-93
 Detroit $36,979,666 69-92
 Philadelphia $32,116,500 77-85 
 Oakland $24,562,547 87-75
 Chicago White Sox $24,535,000 75-86
 Pittsburgh $24,532,420 78-83
 Montreal $18,140,250 68-94
 Kansas City $17,442,000 64-97
 Florida $16,435,000 64-98 
 Minnesota $15,795,000 63-97
Top Salaries
  Player Club Years Average Salary
  Alex Rodriguez Texas 10 $25.2 million
  Manny Ramirez Boston 8 $20.0 million
  Carlos Delgado Toronto 4 $17.0 million
  Roger Clemens New York 2 $15.5 million
  Mike Hampton Colorado 8 $15.1 million
  Kevin Brown Los Angeles 7 $15.0 million
  Chipper Jones Atlanta 6 $15.0 million
  Mike Mussina New York 6 $14.8 million

(1)  The largest components of Revenue are: gate receipts; TV, radio, and cable rights
fees; ballpark concessions; advertising in publications; parking; suite rentals.  

The bottom line:  the salaries ARE stupendous, but that is what it costs to buy the best players, which in turn makes the winningest teams who capture the World Series, which, in turn again, brings the highest revenues, which, in the end, far exceed the payroll costs.

Reference:  "Baseball's Squeeze Play",  Dave Sheinin.  The Washington Post National Weekly,  December 25, 2000 - January 1, 2001,  pp. 10-11.



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Created: 01-03-01 ©       Revised: 08-22-02       Current: 12-27-02