A History Of Baseball Economics

By Derek Simon | June 18, 2010 AAA
A History Of Baseball Economics

"Say it ain't so, Joe."
Those words, supposedly uttered by a young boy as "Shoeless" Joe Jackson left the courthouse following his confession to a Grand Jury that he helped fix the 1919 World Series, are as well-known to baseball fans as the statement "Yes, Virginia, there is a Santa Claus" is familiar to fans of mistletoe and holly.

Although Jackson later recanted his Grand Jury testimony and called Charley Owens story about the disillusioned youth that appeared in the Chicago Daily News, "the biggest joke of all," there is little doubt that the 1919 World Series forever changed the game of baseball. Ironically, by focusing attention on the woeful wages that made buying off players possible during that era, the "Black Sox Scandal" may have been the primary impetus behind the sport's transformation from a sidelight activity to America's pastime.

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Consider that when Eddie Cicotte, another implicated in the fix, led the American League in innings pitched (346-2/3), wins (28) and ERA (1.53), while helping the Sox capture the World Series in 1917, he was paid just $6,000 a year - the same amount as Jackson. That is equal to about $100,000 today, or about a quarter of the league minimum salary of $400,000 per annum. Even the total payoff offered (it was never received in full) to throw the series was considerably less than the average paycheck (in real dollars) taken home by MLB ballplayers of the modern era. (Keep the kids out of your hair and wallet by saving on summer camps, sports leagues, day trips and more. Find out how, in Budget-Friendly Summer Fun.)

Humble Beginnings
Of course, like most professional sports, baseball wasn't always a cash cow. In fact, the first organized baseball league, the National Association of Base Ball Players, was formed in 1857 and consisted solely of amateur athletes. As the league grew in popularity, however, so did the cost of playing and teams soon started seeking financial sponsors and began charging admission.

In 1869, brothers Harry and George Wright created the first professional team, the Cincinnati Red Stockings, which traveled around the country and took on all challengers, reputedly with great success. Naturally, this led to more professional teams, as clubs were forced to pay their best players in order to remain competitive. By 1871, the National Association, a collection of nine pro baseball teams, had emerged; four years later, amidst allegations of gambling and corruption, the National Association gave way to the National League.

Unlike years past, the National League was not run by the teams themselves but, rather, by business executives who set ticket prices, established various league operating procedures, scheduled games and negotiated player contracts. The American League began play in 1901. (People often compare stocks to gambling, but how close are they really? Find out, in Going All-In: Comparing Investing And Gambling.)

The Media Catalyst
But baseball didn't reach its present state of prominence until radio and television entered the scene. While games had been covered in newspapers and via telegraph since the mid-1800s - in 1913, Western Union paid each team $17,000 a year for the right to broadcast their games - clearly the "new media" was a boon to baseball. Faster than one could say "Tinker to Evers to Chance," a double-play trio comprised of Chicago Cubs shortstop Joe Tinker, second baseman Johnny Evers and first baseman Frank Chance, made famous by a 1910 poem penned by Franklin Pierce Adams, league revenues skyrocketed and player salaries followed in their vortex.

The Bottom Line
As TV revenues climbed from $21.3 million in 1964 to $1.3 billion in 2001, the average MLB player salary shot from $14,863 to $2.3 million over that same time period. Franchises that were worth a few million dollars when Shoeless Joe played are now going for a quarter of a billion bucks. Is it any wonder that Gary Matthews Jr., a player with a career batting average of .257 - nearly 100 points south of Jackson's lifetime mark of .356 - recently signed a five-year, $50 million contract to play for the Anaheim Angels?

Say it ain't so.

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