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Are Baseball Players Overpaid?

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Are Baseball Players Overpaid?

Steven Burt FDENG201-49 7/19/2011 Sister Bradshaw

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Are Baseball Players Overpaid? Abstract This research abstract from Steven Burt looks at baseball players' salaries and asks whether or not they are the worth the salaries they receive. He disagrees that they are overpaid and looks at how salaries are formed through a value that figures out the players value to a team through the amount of wins they contribute throughout the season. He argues that players salaries are so high because of the free market in the MLB. He also argues because they are always training and improving while also playing the most games in one season, they earn the value they are being paid more so then other professional player. Introduction Known as America’s national pastime, the game of baseball has become one of the most popularized sports in history. From the little leagues to the big leagues, baseball has encompassed athletes of all ages with the same love of the game. A baseball player is paid an exorbitant amount of money to fail 7 times out of 10. So why do they earn as much as they do? Do they deserve the money they are being paid? The world that we live in today will always ask the hard questions in regards to payroll. Americans will always ask questions about earnings especially with how the payrolls have increased to absurd levels. The questions they ask are important as most everyone at one time or another has asked the question and hasn't gotten an answer. It's important for people to understand that the players are entertainers and as such deserve to be paid for the job they do. Background Baseball players in 2010 made more money than ever. Tom Singer, a reporter for mlb.com writes in his article “Players association says salaries are up” that, “According to MLBPA calculations, the average salary of 828 players on Opening Day rosters, including those on disabled lists, was

Are Baseball Players Overpaid? 3 $3,340,133 -- a slight increase over the 2009 average of 3,317,475”. Compare that to 1970 when the average salary was just $29,303 (Taylor, 2011). Taylor states in his article, “Booming Salaries”, that “The reason salaries then skyrocketed after that was a player by the name of Curt Flood. He challenged baseball's reserve clause which stated that one player was tied to only one organization until they were traded or released. ... The new rules allowed players to sell their services to the highest bidder, which caused salaries to skyrocket”. The new rules allowed for players to have control of their own destiny. They could basically choose where to play with the only limitation being whether or not that team wanted them. With players now able to ask for their own salaries, competition for certain players caused the highest bidder to win out most of the time. It has created a competitive environment in which the players have some control but ultimately the owners still have the complete control as they make the contract offers of which player and how much. Mickey Hepner, the dean of the College of Business Administration at the University of Central Oklahoma, gives a wonderful example of this environment in his article “Baseball teaches power to free markets”, ”Essentially in baseball, teams are more free to hire who they want, and compile the team they want while the players are more free to play where they want” The statement rings true, especially in today's times when certain teams have more money than others due to location, fan base, or ownership. While seemingly not fair, the old adage that money wins championships is true. As long as you can pay the salaries of the best players, you will generate revenue and more importantly wins. Lines of Argument Baseball players are not overpaid because their salaries are determined from the consumer and also because the players train, refine and are constantly improving while playing more games per season when compared against other sports. For these reasons, I believe that baseball players are deserving of the salaries they are given.

Are Baseball Players Overpaid? 4 A baseball player is a tricky individual to break down and analyze. Do you analyze the player as a whole or do you focus on all aspects of their skills? If you focus on the whole, you miss out on the intricacies that certain players have while if you focus on just little things and nit-pick every aspect of their game, you will never be satisfied as every player has flaws. The best players in the league contribute evenly on defense and offense while some players only focus on one side because that is where they know they can affect their team the most. Take for example David Ortiz. He is specifically a hitter by trade and does his job very well. He's hit over his career 350 home runs with a batting average of .282 (Ortiz, 2000), very good numbers for a batter. He is constantly on top of the leader board for hitting but rarely, if ever, does he play the field. Because of his keen ability to hit the baseball though, he is paid like a superstar. Baseball players can be judged on their ability to add wins to a team since that is the reason they are playing, to win ballgames. A stat has been created that calculates that amount of “wins” a certain player adds. That stat is called Wins Above Replacement (WAR). WAR takes into account everything a player can do on the baseball diamond and gives that player a simple value behind the many stats they accumulate. Steve Slowinski, the editor-in-chief of draysbay.com, has this to say about WAR in his article WAR, “WAR is an attempt by the sabermetric [the analysis of baseball through objective evidence such as statistics] community to summarize a player’s total contributions to their team in one statistic. You should always use more than one metric at a time when evaluating players, but WAR is pretty darn all-inclusive and provides a handy reference point. WAR basically looks at a player and asks the question, 'If this player got injured and their team had to replace them with a minor leaguer or someone from their bench, how much value would the team be losing?' This value is expressed in a wins format, so we could say that Player X is worth 6.3 wins to their team while Player Y is only worth 3.5 wins” (Slowinski, 2010). In this sense, WAR is very accurate at finding who is good and who is not. So how do we know

Are Baseball Players Overpaid? 5 what is good and what isn't? Why wouldn't one team just buy all of the best WAR players in the league? Well, the price of doing so would be astronomical. And unless you had the giant payrolls of the powerhouses like the Yankees or Red Sox, your payroll would severely limit your chances of income. Slowinski then goes on to give a rating system as to what values are good and what values aren't. “League-average WAR rates vary. An average full-time position player is worth 2 WAR, while average bench players contribute much less (typically less than 1 WAR). Average starting pitchers also are worth around 2 WAR, while relief pitchers are considered superb if they crack 1 WAR.” (Slowinski, 2010). So now that we know what WAR is, how do use that value in the context of monetary value? Dave Cameron, a co-founder of USSMariner.com and contributor to the Wall Street Journal, simply put says that you calculate the total value free agents earn and divide that total by the amount they all collectively earned. He found that a win is worth roughly 4.5 million dollars (Cameron, 2009). Using the value that Mr. Cameron found, we can calculate to the dollar what a certain player should earn based on past stats. So a player like David Ortiz, he of the WAR last year of 2.8 (Ortiz, 2000), should earn 12.6 million dollars if he continued to perform at a WAR value of 2.8. His employer must have expected this value, because his contract this season is worth 12.5 million. But why do players earn so much more than what they should based on WAR? Because the owners want to win and are willing to overpay to do so. A team of replacement players has a value of 48 wins per season (Cameron, 2009). Any owner would not want a record that bad so in order improve upon that, they need to offer contracts to free agents. In order to get a certain player, you must either offer more money than the other teams, or have some other factor that players would like such as weather, family in the area, or friends on the team. This is where the free market comes into play. One team may be missing that one player to put them over the top and will overpay to get his services. Some owners may believe that a hitter will rebound off of a bad season and give him a contract that

Are Baseball Players Overpaid? 6 reflects on what they think he will perform rather than giving him a contract based on his stats from the season previous. The preparation involved with a season is that they are on the job almost every day of the year. They get a 4 month break in winter where they relax and recover from the season. But in order to stay in tip-top shape, they can't take off more than 2 or 3 weeks during that break. They need to continue to work and hone those talents because if they forget to work or slack off in training, they lose all of the improvement they've made that season. The other reason that players deserve the salaries they receive is because they can play over 200 games in one year. They play almost every day during the regular season with breaks coming basically once a week. If you compared their salaries to those of other sports in regards to the amount of money they would be paid per game, the value is significantly lower. For example, 10 million dollars paid to an MLB player is worth about 50,000 dollars per game while the same 10 million dollar player in the NBA is worth about 100,000 dollars per game. The value of a MLB player is almost double than that of any other professional player due to the sheer amount of games they play.

Opposing View Its understandable that players deserve to get paid, but why is 1 win worth 4.5 million dollars? If the owners weren't so greedy with one another, they could keep the prices of players down. Most players don't deserve the contracts they receive. For example, Andruw Jones signed a 2-year, 36.2 million dollar contract with the Los Angeles Dodgers (Gurnick, 2007). He had just come off the worst season of his career and his WAR for that season was 1.5 (Jones, 2000). Only good enough to be worth almost 7 million dollars. He did have good seasons in the past but didn't perform well that last season. The next season he performed horribly. He had a WAR of -2.3 (Jones, 2000). What did he do that season to deserve the 18 million dollar contract? Nothing. It's absurd to think that a player could earn

Are Baseball Players Overpaid? 7 that much while not even performing. The problem is that players sign contracts for things they will do in the future, not things they have done in the past. We understand that it is a risk/reward factor for owners but when they inflate the market with plenty more of these contracts, mediocre players get more and more money for being bad players. And the cycle continues after that because other bad players look at those contracts and will always point out that such and such player earned this much for being worse then I am so I deserve more. Another reason why players are overpaid is because the greatest players in the league set the salary really high to begin with. Alex Rodriguez signed a 10 year, 275 million dollar contract (Press, 2007) and lived up to it for his first 5 seasons but the last couple he hasn't earned it. Albert Pujols has been the best player in baseball the past decade and even has played above his contract level his whole time. He is up for free agency and is expecting 300 million dollars over 10 years (Cherner, 2011). If we were to average his salary per year out, he would have 30 million per season which would mean a WAR of 6.7 per season from ages 32-42. Now, Pujols has achieved that WAR total every season of his career and probably will continue to achieve that total for at least 5 more years. But with his skills diminishing as he gets older, how will he keep up with that total? It is irresponsible and wrong to think he will continue to hit at the level he has while aging. Unfortunately, some owner will pay him that much because they will fight with money for a player of his caliber. Conclusion Baseball players' salary may seem like a huge amount, but with how wins are calculated today the value is actually pretty low compared with the different sports in the USA. The discovery of WAR has revolutionized the game and how salaries are calculated. With it, calculation can be found pretty easily and most of the time, it is correct. But without it, most owners would have to guess as to how much a certain player earns based on similar players and whether the value makes sense. Players work hard for everything they get and are never satisfied with their statistics. Especially with how statistic

Are Baseball Players Overpaid? 8 based baseball is, they can never stay in the same spot skill wise unless they don't want a job anymore. Salaries will always be an issue, but as long as the player is performing and contributing wins to the ball club, the fans will have no reason to gripe and every reason to come to the games and cheer on their favorite teams. (2505 words)

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References Cameron, D. (2009). Win Values Explained: Part Six. Fangraphs. Retrieved July 20, 2011, from h t t p : / / w w w. f a n g r a p h s . c o m / b l o g s / i n d e x . p h p / w i n - v a l u e s - e x p l a i n e d - p a r t - s i x Cherner, R. (2011, February 09). Eye-opener: is albert pujols a $300 million man?. USA Today, p. E3. Gurnick, K. (2007, December 06). Andruw, Dodgers reach agreement. Retrieved from http://mlb.mlb.com/news/article.jspymd=20071205&content_id=2319266&vkey=h otstove2007 Hepner, M. (2011, June 17). Baseball teaches power of free markets. The Edmond Sun. Jones, A. (2000). Baseball-reference. Retrieved July 20, 2011, from h t t p : / / w w w. b a s e b a l l - r e f e r e n c e . c o m / p l a y e r s / j / j o n e s a n 0 1 . s h t m l Ortiz, D. (2000). Baseball-reference. Retrieved July 20, 2011, from h t t p : / / w w w. b a s e b a l l - r e f e r e n c e . c o m / p l a y e r s / o / o r t i z d a 0 1 . s h t m l Press, A. (2007, December 13). Rodriguez finalizes $275m deal with yankees. Retrieved from http://sports.espn.go.com/mlb/news/story?id=3153171 Singer, T. (2010, April 06). Players association says salaries are up. Retrieved from http://mlb.mlb.com/news/article.jsp?ymd=20100406&content_id=9107538 Slowinski, S. (2010, February 15). WAR. Fangraphs. Retrieved July 20, 2011, from h t t p : / / w w w. f a n g r a p h s . c o m / l i b r a r y / i n d e x . p h p / m i s c / w a r / Taylor, B. (2011, May 23). Booming salaries. Sporting News, 235(11), 33.