Rising Major League Baseball Sallaries and its affect on Competition
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Rising Major League Baseball Salaries And Its Affect On Competition
Major League Baseball has now become a business more than ever imagined
Before free agency baseball owners controlled the players salary and where they played
Players were bound to their team by the Reserve Clause which was in effect for more then 100 years
In 1975 two players didn't sign contracts and claimed that they were free agents
In 1976 the Reserve Clause was broken and the era of free agency began
In the 1950's before free agency, there were 16 teams while it currently now has 30
In 1994 owners went to war with the Major League Players Association to pursue a hard salary cap to hold down the rising tide of player's salaries
The collective bargaining stalemate resulted in a players strike in 1994 canceling the final two months and the World Series
A weak luxury tax was put in place but did nothing to close the gap between the richest and poorest teams
The all-time attendance record for baseball was set in 2000 with 72.7 million fans attending a ballpark
In 2000 also a $2.5 billion TV contract was signed with Fox Sports
Despite the record set for total attendance and the huge TV contracts, half of all Major League teams actually saw a decline in attendance in 2000
Each year ticket prices increase for more than a dozen teams which threaten to further diminish attendance in the future for losing ball clubs
A salary cap is a limit on the amount teams can spend on player contracts, which helps to maintain competitive balance in the league. Without a salary cap, teams with deeper pockets can simply outspend the remaining teams for the better free agents. The basic idea is that a team can only sign a free agent if the total payroll for the team will not exceed the salary cap. So a team with deep pockets is playing on a level playing field with every other team.
Player Salaries
The average MLB salary in 1967 was $19,000 and now in 2004 the average has risen to roughly $2.5 million
There are currently over 20 players who are making more then $10 million per year
In 1990 the highest paid player made $3.75 million per year while now the highest paid makes $25.2 million per year
In 2000, Alex Rodriguez signed the biggest sporting contract in history with a ten year $252 million contract
This contract is $2 million more then the Texas Rangers owner paid for the entire franchise 3 years prior
The $252 million contract is also worth more then the value of 18 franchises, twice the value of 4 and three times of one
Team Payroll
In 1988, the New York Yankees had the highest payroll at $21...