The Recession Hits Baseball Players -- Except for Cliff Lee

Cliff Lee, who was considered the hottest free agent in baseball, has joined the Phillies for a cool $120 million -- and actually turned down a higher offer from the Yankees.Is Cliff Lee worth big bucks the Philadelphia Phillies plan to pay him? So far, the answer seems to be a resounding "yes."

According to local media reports, news of the pitcher's signing has sent Phillies tickets sales soaring. Sales of Cliff Lee jerseys and other merchandise should do well too, considering he was a fan favorite when he played with the team during its unsuccessful World Series appearance in 2009.

Lee's grand return to the City of Brotherly Love -- after a bizarre exit that sent him to the Seattle Mariners and finally to the Texas Rangers -- almost seems too good to be true. He was considered baseball's hottest free agent, and he reportedly turned down an offer worth $30 million more from the hated New York Yankees to rejoin the Phillies.

Not that his salary is anything to sniff at. Even with the lower salary, Lee is set to earn $120 million over the next five seasons. The average salary for starting pitchers with 16 starts -- like Lee -- is $4.9 million, according to the Major League Baseball Players Association. Phillies players earned an average of $5.7 million last season.

But fans, who already regularly sell out Citizens Bank Park, will likely drive ticket prices higher to see Lee's comeback in person. Lee is now part of one of the most formidable pitching staffs in baseball history, playing with stars Roy Halladay, Roy Oswalt and Cole Hamels.

The Value of Talent

Forbes magazine
estimates that the Phillies are worth $537 million, making it the sixth-most valuable team in baseball. If the Phillies make the World Series, as many fans hope, that number could get hit out of the park. But Ranjit S. Dighe, chair of the economics department at State University of New York at Oswego, says the Phillies are still taking a gamble given the potential for injury and the state of the economy.

Whether the Phillies recoup their investment will depend on one thing -- winning. "If he does not get run support, they are not going to win," he says, adding that most teams remain cautious about signing big contracts.

Figuring out which players are overpaid and which ones are underpaid is the subject of endless debate in the sports media. It's really more of an art than a science. Many successful teams, such as the Tampa Bay Rays, have made the post season with relatively modest salary budgets, while others -- such as the New York Mets -- flounder.

Few Raises for Baseball Salaries

Lee, 32, is luckier than many baseball players, who have seen their salaries get squeezed by the Great Recession.

The average Major League Baseball salary topped $3 million for the first time in the 2010 season, according to data from the Major League Players Association. Even so, salaries before the rosters expanded in September rose only 0.6% from 2009, representing the smallest increase since players' salaries fell 2.5% in 2004. The guaranteed minimum salary for players next season will be $414,000.

Smith College Professor of Economics Andrew Zimblast says major-league salaries are beginning to reflect the game's economic reality. "MLB revenues have roughly been flat since 2008," he writes in an email. "Since many salaries are set by long-term contract, it can take a few years for the trend in salaries to adjust to the trend in revenues."

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I am really saddened to hear baseball players are suffering due to the economy, when the average baseball player's salary is $3 million per year. What baseball player is contributing money to a US citizen that has an everyday job?

December 15 2010 at 11:18 PM Report abuse +1 rate up rate down Reply