Major League Baseball Salaries Growing Unchecked

June 26, 2008

By Jeff Ritter, guest blogger on sports salaries for The Salary Reporter

Major League Baseball has always enjoyed its own unique narrative.

From the singular greatness of stars like Babe Ruth, Willie Mays and Ken Griffey Jr., to the troubling scandals of the Chicago Black Sox, Pete Rose and performance-enhancing drugs, the national pastime has carved a unique place not only in America’s sporting consciousness, but also in history.

Part of that history includes Major League Baseball salaries, which differ from the other major professional sports leagues — the NFL, NBA and NHL — in one significant area: The complete lack of a salary cap.

Do You Know What You're Worth?

Thanks to arguably the most powerful player’s union in all of sports, the MLB’s 30 franchise owners have never been able to add a salary cap to the league’s Collective Bargaining Agreement, the contract that defines basic arrangements between owners and baseball players. The only "penalty" currently in place to control salaries is a luxury tax, a fee a franchise must pay directly to the league if total baseball salaries exceed a predetermined figure. If a team is willing to shell out that extra tax, they are free to spend, spend, and spend some more.

In fact, one franchise willingly paid $24 million in luxury tax alone last year, thanks to a total payroll of $208 million.

That franchise is The New York Yankees.

Love ’em or hate ’em (and for most baseball fans, it’s clearly one or the other), the Yankees spare no expense in their effort to throttle the competition. Ironically, their bloated baseball salaries haven’t necessarily translated into recent glory; the Yanks last won a World Series in 2000. Regardless, their total baseball salaries and luxury tax totals for this season are again staggering.

Top Five MLB Payrolls for 2008 – Baseball Salaries

1) New York Yankees: $209,081,577
2) New York Mets: $137,793,376
3) Detroit Tigers: $137,685,196
4) Boston Red Sox: $133,390,035
5) Chicago White Sox: $121,189,332

When it comes to the Yankees, it’s hard to come up with proper perspective on their payroll. After they pay another luxury tax at season’s end (this season’s threshold is $155 million), the total they pay for baseball salaries will exceed the entire GDP for the Kingdom of Tonga ($218 million in 2007). Clearly Yankee ownership, headed by the ubiquitous George Steinbrenner — a man who made much of his billions in the shipping business — has no qualms about doing whatever it takes to field the best team money can buy. Other franchise owners often say they simply can’t, or won’t, match New York’s bloated baseball salaries and luxury tax payments.

As for baseball’s most highly compensated individuals for 2008, there are, of course, some stunning salary figures. There are also a lot of Yankees.

MLB Top 10 Salaries for 2008

1) Alex Rodriguez, Yankees: $28,000,000
2) Jason Giambi, Yankees: $23,428,571
3) Derek Jeter, Yankees: $21,600,000
4) Manny Ramirez, Red Sox: $18,929,923
5) Carlos Beltran, Mets: $18,622,809
6) Ichiro Suzuki, Mariners: $17,102,149
7) Johan Santana, Mets: $16,984,216
8) Todd Helton, Rockies: $16,600,000
9) Torii Hunter, Angels: $16,500,000
10) Bobby Abreu, Yankees: $16,000,000

Some perspective on Alex Rodriguez & salary. Rodriguez’s yearly salary is higher than many prominent CEOs, including August A. Busch of Anheuser-Busch, ($14,123,339 in 2007), Richard T. Clark of Merck & Co., Inc. ($19,891,862), and James A. Skinner of McDonald’s ($12,709,492). Alex Rodriguez’s salary is higher than the entire U.S. Senate (100 members, each with an average salary close to $170,000). He also makes more than 100 surgeons (average salary $178,000). His figure is higher than the GDP of the Pacific island nation of Tuvalu (approximately $15 million). That’s right, if Rodriguez is interested in owning Tuvalu and its nine small islands, it would appear he’d have to do little more than cut a check.

We didn’t show the bottom half of the chart for total salaries per franchise, but the entire Florida Marlins’ payroll for 2008 is $21.8 million, by far the lowest in baseball. Wonder if any of those Florida players harbor secret hopes of performing well and one day signing a contract somewhere else.

Like New York.

A Michigan native and lifelong sports fan, Jeff Ritter is an unbiased writer on any topic in sports — except when it comes to his beloved Wolverines. He is a graduate of Northwestern University’s Medill School of Journalism and currently works as a producer for si.com.

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