Insight

Baseball players are not overpaid

 Stephen Carter

By Stephen Carter Bloomberg View

Published December 6, 2021

As Major League Baseball enters its first labor stoppage in almost 30 years, I have two pieces of advice for my fellow fans — one reassuring and one pleading. First, do not be unduly alarmed; the lockout is mainly theater. Second, do not fall for the canard that those who play the world's most beautiful and difficult sport are overpaid.

As to the theater: Owners locked out the players after declaring an impasse in the negotiation over a new collective bargaining agreement. Management and players are largely barred from contact until the lockout ends. But the first preseason games aren't scheduled until late February; the season that counts won't begin until late March.

In short, there's plenty of time to negotiate a new agreement before anything real is at stake. That both sides understand this aspect of the non-crisis helps explain why agents and owners rushed to finalize huge contracts for big stars in the days before the stoppage.

After all, whatever happens, it's unlikely that players will wind up on the losing end of the ultimate settlement. In general, whether interruptions have resulted from strikes by players or lockouts by owners, the results have been the same: In the words of the economist Michael Haupert, "The players won the concessions they demanded and fended off attempts by owners to reverse previous player gains.”

All of which brings us to the other issue: what the sportswriter Will Leitch has recently called "a strange contingent of fans” that sides with baseball's owners in the sport's labor disputes. Leitch puts this tendency down to the players' relative visibility. The owner isn't out there taking a called third strike in the eighth inning with the go-ahead run in scoring position.

I worry, however, that taking the side of baseball owners in labor disputes is a symptom, not a cause; the underlying problem is that millions of fans think that player salaries are too high. (Sportswriters in the past showed the same tendency to side with management. Recent work has even suggested that the negative media attention often garnered by players who are union activists reduces their chances at being voted into the Hall of Fame. Yes, the sample size is small.)

Decrying this sentiment nearly two decades ago, the economist Alan Sanderson pronounced himself puzzled by its persistence. Why don't we complain, he asked, about earnings of the top rock stars or actors or novelists?

Good question. Just before the shutdown, pitcher Max Scherzer signed a three-year contract with the New York Mets that will pay him an average of $40 million a year — the highest annual salary in the history of baseball. What a piker. According to Forbes, Kylie Jenner earned almost 15 times that amount in 2020. Kanye West more than tripled it. As for novelists, James Patterson took home $80 million; J.K. Rowling made $60 million. Overall, Forbes lists some 50 celebrities who took home more than Scherzer is going to earn.

All without raising the ire of their fans.

One reason often suggested for the distinction is that fans can observe the value of a great movie or song directly — by enjoying it — whereas the player is evaluated according to wins and losses. Another is that even now, fans see their relationships with players as more personal than those with a favorite author or actor.

A more intriguing possibility stems from the nature of contracts. In sports as elsewhere, it's tough for employers to get salaries right. A wage is based on an estimate of future productivity, but in baseball, a lot of information is hidden. A 2009 study found that stars peak an average of two years later than other players; once past their peaks, they deteriorate faster.

Management is perfectly aware of this trend, and compensates by signing stars but not other players to long-term contracts. Typically these deals are back-loaded — either explicitly, with a higher salary in the out years, or implicitly, through contracts that underpay stars near their peak and overpay them as they decline.

One reason such a structure makes sense is that the deteriorating star might remain for several years more valuable to the team than what sabermetricians call a replacement-level player. And even when this turns out not to be true, the contract could still have been a good bet, because stars typically bring value to a team beyond the result on the field. (For example, higher attendance.)

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Sitting up in the bleachers, an angry fan might miss this nuance. In a call to talk radio, he might complain that Mighty Casey is being paid $25 million a year even though he isn't hitting home runs the way he used to. What this fan might not remember is that Casey was earning the same amount or maybe less back when he was smashing round-trippers at a rate that was worth much more.

Further complicating the calculation is the fact that contending teams will pay a premium averaging about 40% for players they believe will get them into post-season play. This seeming contradiction makes sense. The superstar might add more wins to a weaker club, but the smaller number of wins he adds to a stronger club might be enough to get the team closer to the crown — and the crown adds enormous team value.

None of this is to say that fans who support management are wrong. It's merely to note that those who side with the owners should offer a better argument than the casual claim that the amazingly gifted men on the field earn too much money.

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Stephen L. Carter is the William Nelson Cromwell Professor of Law at Yale, where he has taught since 1982. Among his courses are law and religion, the ethics of war, contracts, evidence, and professional responsibility. .