The Economics of Baseball
The economics of baseball has grown since the beginning and has become more complicated every year. Baseball players are now making millions of dollars to do something that they love and enjoy. It's not their fault the money they can receive has reached the million mark, even for some of the less talent of ball players. This has happened to all sports, but especially to the American pastime. Baseball is more of a business than just a game and many things have made it this way. A lot of reasons have contributed to the rising salaries there is today and it will not stop there. The amount of baseball contracts will keep rising each year.
One of the most notable people to receive an unbelievable contract was Alex Rodriguez. He singed the biggest contract in baseball history with Texas Rangers for an estimated 252 million dollars over ten years. The owner of the Rangers, Tom Hicks, believes that even by paying the superstar 25 million a year, there will still be a big profit. A surprising point here is that even though the Rangers have to pay that much money to just one player, ticket prices have not been raised. The team is one of the few that didn't raise ticket prices. A lot of the revenue for the Rangers, as well as every other team, will come from TV contracts, media coverage, endorsements, and by selling out every night of the season.
Tom Hicks knows that just playing good baseball and winning won't have the biggest profit. He is in the process of developing 227 acres near the Ranger's ballpark and by having a high priced player like Rodriguez many people will pass this on the way to the stadium(Rangers). This increases the possibilities for his non-baseball venture. Hicks' believes the team revenue will top 150 million dollars after the first year. Also, Major League Baseball's new television contract with the team will add 14 million and another 25 million will come from the team's new cable deal with Fox Sports(Rangers). Many people believed he was crazy to spend this much money on one player, but Tom Schieffer stated that "Hicks has a good understanding of the economics of sports"(Rangers).
Alex Rodriguez is just one example of this growing business and many other ball players are getting paid an unreasonable amount. Most teams to take care of this have raised ticket prices. Two-thirds of the thirty teams in MLB have raised the cost of a ticket for the 2001 season. Baseball tickets are the cheapest among professional sports, but they're catching up(MLB). The average ticket in 2000 was 16.65 dollars, according to Team Marketing Report(MLB). Now, it costs a fan twenty dollars for a bleacher seat at Wrigley Field , 31 dollars to watch the Yankees from the cheap seats, and forty to sit in the grandstands at Fenway Park(MLB).
The rise in ticket prices has contributed to...