Professional sports have become big business, and baseball is king. In 2017, Major League Baseball (MLB) had revenues of over $10 billion. With the development of mass media, increased leisure time and expansive marketing campaigns, baseball has grown to the point where even untested rookies garner multi-million dollar salaries. Athletes also have lucrative sponsorship deals, sell their own lines of sports apparel and grace the covers of video games.
This wasn't always the case. In baseball's heyday, players sometimes had to scrape by on meager salaries or take second jobs to make ends meet. Team owners didn't offer multi-year contracts because player contracts contained a reserve clause which allowed a team to retain rights to a player even after the contract expired. Even when baseball's popularity led to teams becoming lucrative businesses, players were at a big disadvantage because they were not free agency.
Low salaries were even cited as a potential reason for the infamous Black Sox Scandal, in which players from the Chicago White Sox sought to throw the 1919 World Series. (If you had placed these wagers, you would be very rich in 2010. Don't miss Sports Bets That Would Have Made You Rich In 2009.)
The Move To Big Bucks
What prompted the change? The "reserve clause" was nullified in 1975, opening the door for players to collectively bargain for higher salaries. What did that do to players' wallets? In 1920, the average salary was $5,000 a year. It took 50 years for salaries to reach $30,000, but with the reserve clause out of the picture, the average salary was $143,000 by 1980. Today's average baseball salary is $4 million.
The business of baseball has also changed a lot over the years, allowing teams to spend big bucks their players. Games were first televised in 1939, and by 1966 games were being sold as a national television package. Baseball teams went from being valued at less than $800,000 on average in 1920 to $286 million in 2001. The New York Yankees are worth an estimated $3.7 billion today. (We look at the financial repercussions of five sports stars' dishonorable moments, and whether they were able to rebuild their brand. Check out Stupid Athletes' Moves That Threatened Their Fortunes.)
Babe Ruth, considered by many to be the greatest baseball player of all time, made $80,000 as a member of the New York Yankees in 1930. At the time this was an incredible sum (he earned more than then-President Hoover), but compared to today's baseball player his salary looks like chump change. Here's how some of baseball's most-beloved players would have stacked up if their salaries were updated to 2018 dollars, according to the Bureau of Labor Statistics CPI Inflation Calculator:
The left fielder was a 19-time All-Star player with 521 career home runs and a .344 lifetime batting average. He had a total of 2,654 hits and an impressive 1,839 runs batted in (RBIs).
Highest salary: $125,000 (1959)
Adjusted salary (2018): $1,084,431
"Hammerin' Hank was a 25-time All-Star. He set the MLB record for the most career home runs with 755 and had a .305 lifetime batting average. The outfielder's career RBIs were 2,297.
Highest salary: $250,000 (1976)
Adjusted salary (2018): $1,131,241
Considered by many to be the greatest all-around player of any era, Mays was a 24-time All-Star who knocked out 660 home runs. He earned a .302 lifetime batting average, a whopping 3,283 hits, and 1,903 RBIs.
Highest salary: $180,000 (1971)
Adjusted salary (2018): $1,137,835
The New York Yankee center fielder was a13-time All-Star, the only player to play in the All-Star Game in every season he played. His career stats include 361 home runs, a .325 lifetime batting average, 2,214 hits and 1,537 RBIs.
Highest salary: $100,000 (1949)
Adjusted salary (2018): $1,048,283
Legendary National Baseball Hall of Famer Mickey Mantle was a 20-time All-Star who can boast 536 home runs, a.298 lifetime batting average, 2,415 hits and 1,509 RBIs.
Highest salary: $100,000 (1963)
Adjusted salary (2018): $827,592
"The Bambino" scored 714 home runs and finished with a .342 lifetime batting average. Arguably the most famous player to have ever played the game, Ruth brought in 2,873 hits and 2,217 RBIs.
Highest salary: $80,000 (1930)
Adjusted salary (2018): $1,177,019
Adjusted for inflation, Ruth's salary would be over $1 million. By comparison, the top five baseball salaries in 2017 were held by Clayton Kershaw ($33 million), David Price ($30 million), Miguel Cabrera ($28 million), Justin Verlander ($28 million) and Felix Hernandez ($26.9 million). (For more, see Top 5 Most Hair-Raising Contracts.)
The Bottom Line
Professional athletes are revered in every sport, but it seems nowadays if the top paychecks are the sport to play is baseball. (These rookies started out as nobodies and were paid accordingly - but their results were extraordinary. Read Financial Pro Sports Steals.)
Feeling uninformed? Check out the financial news highlights in Water Cooler Finance: Greece Attacks And Google Hacks.