Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Rising Salaries Make MLB Attractive Path

As scary as it sounds, a large portion of us are probably going to be starting families within the next decade. Once you get over that shock, however, you should think about getting your future sons and daughters playing baseball.

Not only is it the safest of all major sports in America, but it is also the most lucrative, with more than 750 individuals earning in excess of $500,000 a year, with some of those gaining upwards of $20,000,000 per season.

Opening Day not only marks the beginning of the season but also tends to serve as the unofficial end of significant extension talks between players and teams, as the athletes usually want to remain focused on the grind of the season without the added anxiety that comes from negotiations. This year, however, many superstars signed lucrative extensions with their teams, with four players — Felix Hernandez, Justin Verlander, Buster Posey and Elvis Andrus — placing their John Hancock on offers that will earn them more than $100,000,000.

David Wright, Cole Hamels and Joey Votto each inked deals worth $138,000,000, $144,000,000 and a whopping $225,000,000 — the most ever for a player still under contract — respectively, in 2012.

Free agency also saw several winners as well, with Josh Hamilton earning $125,000,000 and Zack Greinke signing for $147,000,000. Clearly, it is a great time to be a major leaguer, and greater emphasis has been placed on locking up stars prior to free agency, even if it means paying a perceived premium. Elvis Andrus, a player known for speed and defense — attributes not usually heavily rewarded — received a puzzling eight-year, $120,000,000 extension April 4. However, because Andrus is just 24 years old, the Rangers’ are investing in the prime of a budding star with remaining untapped offensive potential. Instead of waiting two more years before his projected free agency where economic conditions could induce an even higher contract, Texas decided to take the gamble.

Why such a surge in lucrative deals? What in the world is a middle-market club like Cincinnati doing in investing $225,000,000 over 10 years to Joey Votto, a legitimate superstar but a hefty investment even for economic giants like the Yankees or Red Sox?

Teams, players and fans can ultimately thank the rapid development in entertainment technology for an infusion of cash into the national pastime. As television emerged as the leading form of entertainment for consumers within the past decade, advertisers naturally targeted viewers, and popular shows like “Grey’s Anatomy” and “CSI” were able to charge hundreds of thousands of dollars for just a 30-second commercial slot. Likewise, the NFL’s Super Bowl has been able to charge in excess of $3,000,000 for 30 seconds, with an expected audience of over 100,000,000.

Recently, however, with the advent of DVR, various on-demand functions and online streaming, advertisers have found it harder to hit as wide an audience given consumers’ greater access to programming independent of time constraints. Unlike traditional programming, however, there remains one avenue for marketers to consistently target with guaranteed live views: sports.

It remains impossible for fans to record contests with the immediate flow of information at everyone’s fingertips with the likes of Twitter and mobile technology. Fans simply must watch sports live.

As a result, money pours in from advertisers to television networks and from television networks to sports teams as they seek to maintain their massive earning potential. As controversial as it has been to college conference realignment, ESPN and the NCAA agreed to a 12-year, $5.64 billion deal for the new BCS playoff system. Back in baseball, former Los Angeles Dodgers owner (and Georgetown graduate) Frank McCourt was able to sell the team to a group led by NBA Hall-of-Famer Magic Johnson for a record $2 billion — the largest sale of a professional sports franchise in history, on the back of a proposed $6 billion television deal with Fox Sports.

With all of the money floating around, it has immediately trickled down to players, with the Dodgers inheriting the league’s largest payroll in 2013. After extending players such as Matt Kemp and Andre Ethier, they also traded for high-priced players like Hanley Ramirez —  as well as Adrian Gonzalez, Carl Crawford and Josh Beckett in the unprecedented swap with the Red Sox last August — before signing Zack Greinke this winter.

With other teams’ television deals expiring, ballclubs in 2013 are able to gain far more than they could under previous deals, allowing teams to heavily invest in their team. Lower- to middle-market clubs like the Reds now have the hope to re-sign their homegrown stars.

And ultimately, that’s what’s best for the game of baseball moving forward.


Preston Barclay is a junior in the McDonough School of Business. TURNING TWO IN THE 202 appears every Tuesday.

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