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PLAYER SALARIES.
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Addresses the high increase in sports salaries.... More...
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Paper Abstract:
Addresses the high increase in sports salaries. Focus on professional baseball. Lack of a salary cap in major league baseball. Lack of parity among teams. Impact of TV rights, size of the market. Management. Idea of revenue sharing. Proposals to level the playing field. Owner greed.

Paper Introduction:
Professional Sports Player Salaries The past decade has witnessed a staggering increase in professional sports player salaries. Baseball appears to be the sport where these increases have come closest to ruining the game. Unlike the parity between teams that exists in the NFL, the lack of a salary cap in major league baseball (MLB) equates to a wildly uneven playing field. Rising salaries and payrolls are cited as a major reason teams like the New York Yankees, Los Angeles Dodgers and other high-end teams are perennial post-season darlings while low-end teams like the Minnesota Twins and the Montreal Expos seldom make post-season play. As Minnesota General Manager Terry Ryan notes about rising payrolls: “Ten years ago we were in the middle of the pack with a $27 million payroll and today we ar

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Others argue that poor managementand bad personnel decisions are responsible for the lack of parity amongteams. Therefore,owners are determined to institute economic reforms that might lend greaterparity to teams but also increase franchise value. As Reid(2 2) explains: "The basic concept of revenue sharing is that the entiresport benefits if high-revenue clubs share their profits to enable low-endteams to spend more money on players, increasing competitive balance" (D5). As Minnesota General Manager TerryRyan notes about rising payrolls: "Ten years ago we were in the middle ofthe pack with a $27 million payroll and today we are in the bottom three at$41 million" (Weir and Antonen, 2 2, C 3). USA Today, C 3. Baseball: Giants live in fear of mad Angeles as underdogs fight over World Series. Despite which side of this debate one chooses to adopt, BaseballCommissioner Bud Selig negotiated with owners to propose resolutions toprovide more parity among teams. A's stretch dollar furthest. Insteadof blaming skyrocketing salaries on poor performance and a lack of paritybetween teams, some managers and experts on sports argue that badmanagement is to blame for poor use of available revenues. Professional Sports Player Salaries The past decade has witnessed a staggering increase in professionalsports player salaries. Rather, it is the size of the market, TV rights, and managementthat account for a team's ability to win or lose games. It is likely player salaries will not diminish any time soon.Players and players unions are radically opposed to salary caps or othersalary limits in baseball. There are also critics of sports economics and finance who arguethat player salaries are only a symptom of owner greed. (Jul 24, 2 2). While player salaries are not likely to diminish, it isapparent that owners and league commissioners will continue to work onfinding resolutions that attempt to achieve parity among teams in sportsthat do not set salary limits. Oakland A's general manager Billy Beane says his team's No. Such teams would face a penalty tax to bedispersed "under the league's discretion" (Walker, 2 2, B1). The Yankees will earn $55.12 million in local rightsand about $14 million for national rights this season. It is because of the lack of limits on player salariesthat owners view this source of revenue as causing the disparity. Revenue sharing is only one of the intended proposals devised bySelig and owners to increase franchise value and level the playing fieldamong rich and poor teams and big and small markets. Look what happened to the big boys. 3 million and $14 million respectively" (12C). Revenue sharing levels field: It won't close gap completely, but it is expected to make teams in small markets much more competitive. This resolution was proposed because the biggestand richest clubs often have established organizations in foreign countrieslike the Dominican Republic that enable them to get an inside handle onpotential draftees before poorer clubs. A luxury tax was alsoproposed as a means of achieving greater parity. Owners derive much of the disproportionalrevenues from regional television contracts. Proving their point, these individuals argue that theArizona Diamondbacks who won last year's World Series, the New York Yankeesand the Atlanta Braves have fallen to the wayside, despite enormouspayrolls. Many owners are ableto hold cities hostage in the construction of new stadiums by threateningto move their franchise to another city. Baseball appears to be the sport where theseincreases have come closest to ruining the game. (Oct 19, 2 2). Thisdraft would allow the present baseball draft to include players fromoutside North America. Likewise, Jason Giambi will become a $121 milliondesignated hitter if the Yankees decide to let Nick Johnson play first basemore often (Rosenthal, 2 2, 48). and Antonen, M. There are others who are opposed to this line of reasoning. Because of such discrepancies, many argue that it is not risingplayer salaries that result in the disparity among professional baseballteams. In other words, disparities betweenlocal revenue generation and in management skill cause losses for baseballfranchises, not escalating player salaries. New stadiums offer owners thechance to charge higher prices, particularly from the inclusion of luxuryboxes and other features that appeal to the wealthy. Even though the Minnesota Twins are 27th out of3 th on the payroll table and the Oakland A's are 25th, both teamsqualified for post-season play in contrast to five of the eight biggestspenders who failed to do likewise like the Texas Rangers and New York Mets(Steen, 2 2, 14). Sporting News, 226(41), 47-48.Steen, R. How else, theywonder, can it be explained that the $135 million payroll of the Yankeeswas not enough to get them to the World Series, even though the payrollfigure "matches the combined salaries of the Giants and Angels" who didmake the World Series (Steen, 2 2, 14). As such, they made abad management decision. The Los Angeles Times, D5.Rosenthal, K. Rising debts, soaring labor costs (the averagebaseball salary is $2 million annually), lower attendance figures, and asluggish economy have cut into owner wealth (Walker, 2 2, B1). 1ranking "isn't the product of office genius but rather the simple abilityto stare fiscal reality in the eye and react accordingly" (Weir et al,2 2, C 3). Yet economic realities are making many ownersseek resolutions like those discussed above in order to achieve greaterparity among franchises. This would eliminate suchdisparities. Chicago Sun-Times, 142.Walker, S. Whenthe Texas Rangers paid an astronomical sum to hire Alex Rodriguez, theyfailed to back the move up by hiring good pitchers. ReferencesBrady, E. USA Today, 12C.Reid, J. In the barely averted work stoppage of this past season, ownersdemanded increased revenue sharing because they feel the disparity in localrevenue sharing is responsible for the competitive gap between teams in bigand small markets. Unlike the parity betweenteams that exists in the NFL, the lack of a salary cap in major leaguebaseball (MLB) equates to a wildly uneven playing field. Others argue that thedisparity is due as much to poor management and salary decisions as it isto local TV revenues and market size. A lesson in marketing: MLB's owners, players need a business plan that doesn't ruin the sport. Many agreewith them. Those who feel this way point to thepast season in baseball. (Apr 2, 1999). However, local rightsaccrue to the local team. For example, theYankees generated local income of $218 million last year in comparison tothe Minnesota Twins who collected $1 million (Telander, 2 2, 1452). As Erik Brady (1999) notes: "TV rights are the biggest singlereason for the disparity in revenue between teams at the top and bottom ofthe revenue ledger. It is these revenues that many owners feelprovide advantage to some teams while disadvantaging others. Local TV revenues separate rich teams from poor. National television rightsare shared equally by all baseball franchises. Critics of the alleged lack ofparity among professional baseball teams argue that those teams who do thebest are those whose managers are adept at squeezing the most wins out ofavailable dollars. (Oct 17, 2 2). When Bud Selig worked with owners to find resolution to the allegeddisparity among baseball teams, owners were fond of his plan for revenuesharing. The Guardian, 14.Telander, R. Revenuesharing includes a plan to boost income for struggling franchises. Owners would neverpay such exorbitant salaries if they were not more than offset by revenuesgenerated from a variety of sources. Another proposedresolution put on the table was the institution of an amateur draft. Players andthe player's union are opposed to such resolutions because they considerthem tantamount to a cap on player salaries. Rising salariesand payrolls are cited as a major reason teams like the New York Yankees,Los Angeles Dodgers and other high-end teams are perennial post-seasondarlings while low-end teams like the Minnesota Twins and the MontrealExpos seldom make post-season play. Wall Street Journal, B1.Weir, T. As strike looms, few new baseball buyers step up to plate. (Aug 31, 2 2). (Oct 14, 2 2). These sources include merchandising,licensing, TV rights, and stadium revenues. Owners of low-budget andsmaller market franchises argue that a tax should be levied on teams whosepayroll exceeds a set amount. (Aug 29, 2 2). The Montreal Exposwill earn $1.

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