No Longer Just Ballpark Figures: Examining Modern Professional Sports Contracts
By Eric Bilach
The following article is featured in the January 2020 special edition of The Campus, The Beaverbeat.
It is safe to assume that no student of the City College of NewYork, past or present, would dare sneeze at the opportunity to land a $100,000salary within six years of graduating. In fact, for many, after years ofschooling and working up the employment hierarchy, such compensation would be adream come true.
Pretend you are in this position, and now imagine that salary hada chance of increasing by half, say, every six years you remain with thecompany. Assuming you manage your money correctly, does such a financialproposition not sound bountiful to you, as a City College student?
Now consider the following scenario: you graduated from CityCollege six years ago and after working for a couple of differentorganizations, you are presented with a guaranteed opportunity to become $324million richer. Would such an offer not be absolutely life-changing? Of course,it would be an amazing proposition for most everyone.
As far as the City College student body is concerned, acontractual offer of this magnitude is nothing more than a hypotheticalsituation -- a mere mental exercise in contemplating the “what-ifs.” For starMajor League Baseball (MLB) pitcher Gerrit Cole, however, thismulti-hundred-million-dollar fantasy is, as per his recent signing with the NewYork Yankees, a reality.
On December 10, Cole, with the simple stroke of a pen, enteredinto the fourth-largest contract in baseball history. The enormity of hissalary, which is valued at $36 million per year for nine years, as well asthose of fellow baseball stars Mike Trout ($35.8 million per year for 12years), Bryce Harper ($25.4 million per year for 13 years), and GiancarloStanton ($25 million per year for 13 years), has received some impassioneddisdain from disgruntled Americans across the nation. The exorbitance of thesesports contracts has even managed to seep into contemporary politicalconsciousness, with presidential candidate Senator Bernie Sanders tweeting, “Ifpitchers can make $324 million, we can pay every teacher in this country atleast $60,000.”
Between the years of 1999 (the decade in which the vast majorityof current City College students were born) and 2014, the average annual MLBsalary has effectively doubled from approximately $1.75 million to $3.5million. In 1999, the highest-paid player was pitcher Kevin Brown of the LosAngeles Dodgers, earning $15 million and in 2014; the highest-paid player wasthird baseman Alex Rodriguez of the Yankees, earning $27.5 million. Theremainder of the “Big Four” professional sports leagues, which include theNational Basketball Association (NBA), National Football League (NFL), andNational Hockey League (NHL), have all experienced increases in their averageannual salaries similar to, although perhaps not quite as dramatic, as that ofthe MLB in the period between 1999 and 2014.
It is important to note that, with the exception of the NFL, allBig Four sports contracts are guaranteed in full, regardless of the player’sperformance or injury status. That means for Cole, he could, hypotheticallyspeaking, lose his right arm tomorrow in some horrific accident and never throwa single pitch for the Yankees, yet still be owed every single cent of his $36million contract.
In discussing the driving force behind these lucrative deals withCity College senior Sadaab Rahman, Rahman claims that there has never been atime where owning a sports team has been more worthwhile than it currently is.According to Rahman,
“Each franchise has billion-dollar television deals in addition to the actual revenue they make throughout the season from ticket and jersey sales. For example, this year the Yankees made $800 million, which is quite the profit considering their payroll is not even half that. The way they see it with Cole is that they are paying him less than $40 million or, in other words, five percent [of their profits], which sounds like a pretty good deal for them and the player… MLB teams are basically hedge funds with the way they weigh their investments.”
This analysis of the rationale behind contracts asserts that theowners and front offices of these wealthy organizations know exactly, to quoteRahman, “what is best for their bottom line.” The fact of the matter is thatdeals such as Cole’s, while outrageous to the ordinary individual, compriseonly a fraction of each teams’ respective annual budget. Thus, a $324 millioninvestment into a single player has the potential to produce tremendous rewards,namely in the form of a championship. On the other hand, though a failedlong-term contract may deflate a team and their fan base’s expectations ofwinning, these investments are rarely ever costly enough to cause irreparabledamage to the organization.
Regarding the equity of modern sports contracts, senior and formercollegiate pitcher Christian Barletta claims that the idea of Cole earning,after some mathematical computations, approximately $10,000 per pitch for thenext nine years is “mind-boggling.” Despite this, Bartletta concedes that,“Cole has earned everything he has. He’s obviously proved himself. He’s atop-tier pitcher, which he has worked on since he was a kid. If the Yankees canafford [Cole’s contract], then why not?”
With a new decade underway, Big Four contracts are predicted tosoar to astronomical new heights. As such, the following three questions,regarding the gravity of these deals, have already begun to crop up in thenational discourse: 1) Just how lucrative will sports contracts become withinthe next 10 years? 2) Do we, as Americans, collectively believe that thesecontracts are fair, especially when considering the constantly expanding wagegap that exists within our current culture? 3) Assuming Rahman’s suppositionthat professional athletes are “entertainers,” do we reserve the right toexpress our dissatisfaction over their enormous contracts?
If sentiments toward athletes’ paydays continue to sour as thenext decade progresses, then perhaps it is time to reevaluate what our societyvalues.
