Major League Baseball Salaries and the Economic Effect Competition and

Major League Baseball Salaries and the Economic Effect Competition and the Consumer As long has there has been business, Management and Labor have warred against each other for a bigger piece of the pie. Major League Baseball is no different. In the early years of professional baseball the owners controlled the salaries of the players and decided where they could play and what they would be paid. The players were bound to their team by the Reserve Clause that stated, the services of a player will be reserved exclusively for that team for the next season. This resulted in keeping the player’s salaries artificially low because the players were not allowed to offer their services to any other team. The Reserve Clause was in effect for more than One Hundred years of baseball history. It was challenged several times but the owners had won every time, until in 1970 when the St. Louis Cardinals traded outfielder Curt Flood to the Philadelphia Phillies. Flood refused to play for the Phillies and sued to become a free-agent. Flood’s case was in court for severa l years going all the way to the Supreme Court. He was never able to play in the Major League again. While he did not win his case, he laid the groundwork for a later case that involved two pitchers, Andy Messersmith and Dave McNally who filed a grievance against the league contending that, because they didn't sign contracts with their previous teams they were free agents. The owners and the Players Association agreed to submit to binding, impartial, arbitration in order to settle this case. On December 23, 1975 the arbitrator Peter Seitz ruled in favor of the players and the Reserve Clause was broken, and the era of free agency began in the Major Leagues. In 1976 when free agency began the average player salary was only $52 thousand dollars, but it has increased steadily ever since. By 1990 the average salary for a Major League Baseball player had risen to $589 thousand dollars. This Year baseball will start the 2001 season with an average player salary of more than $2 million, abo ut 40 times higher than the typical wage in 1976 when free agency began. Average Major League Player Salaries 1976-2000 Year Average Increase/decrease Median1976 $52,300 --- *1977 74,000 41.49% ... ... _ap/ 19. 2000 Major League Baseball Salaries: USA Today. May 1, 2000. Arlington, VA. 20. 1999-2000 Major League Baseball Team and Player Salaries: About.com. Aug 31, 2000. Chicago, IL. http://sportsbusiness.about.com/sports/sportsbusiness/library/salary/mlb/9900/ bl_teams_9900.htm 21. Final 2000 Payroll Figures: CNNSI.com. Nov 21, 2000. Atlanta, GA. http://sportsillustrated.cnn.com/baseball/mlb/news/2000/11/21/2000_payrolls/ 22. History of Highest Paid Players: ESPN.com. Jan 15, 1999. Bristol, CT. http://espn.go.com/mlb/s/mlbsalary.html 23. Highest Salaries: CNNSI.com. Dec 11, 2000. Atlanta, GA. http://sportsillustrated.cnn.com/baseball/mlb/news/2001/10/20/highest_salaries _ap/ 24. Franchise Values: The Hartford Courant. May 29, 2000. Hartford, CT. 25. 2000 MLB Team Payrolls: About.com. Aug 31, 2000. Chicago, IL.http://baseball.about.com/sports/baseball/library/weekly/blteamsalaries.htm 26. MLB Player Extend Collective Bargaining Agreement: About.com. Aug 29, 2000. Chicago IL. http://sportsbusiness.about.com/sports/sportsbusiness/library/n†¦/bl082900news.htm