Vastly Inflated?

Dave Paisley

No, I'm not talking about Tony Gwynn's waistline here, I'm talking baseball salaries. With the signing of the $252 million dollar man (for which you could buy 42 six million dollar men!) everyone seems to think that baseball salaries have gone nuts. And yet people (i.e., media pundits and baseball management) have been saying this for decades and the world hasn't ended yet.

So it's time to inject a round of sanity into the proceedings. First, some facts.

Fact #1. The average baseball player's salary has increased at a relatively steady 15% per year since at least 1967, when the average was a measly $19,000.

Fact #2. Global gross domestic product (GDP), i.e. all the goods and services produced by people around the world typically increases by a very small amount. In a climate like today's the combination of real growth and inflation is averaging about 3% a year at best.

Fact #3. There are some nations in the world whose GDP is barely larger than the combined salaries of major league ballplayers.

Based on those facts, we can surmise that, at a 15% growth rate, major league ball players will soon be able to club together to buy their own small nation -- pretty soon, even a mid-sized nation.

So, to give you as much in the way of facts and data as possible, I pulled some GDP figures from the United Nations website, updated them to current dollars and then projected national GDP in five-year increments based on a 3% annual growth rate. Here's the first batch (the smallest nations by GDP.) A red number in the chart means that for that year Major League Baseball salaries are higher than that country's GDP. Blue means the country is safe from an MLBPA buyout -- for now.

GDP $Billions	2000	2005	2010	2015	2020	2025
Major League Baseball	1.5	3.0	6.1	12.2	24.5	49.4
Swaziland	2.4	2.8	3.2	3.7	4.3	5.0
Sierra Leone	3.5	4.1	4.7	5.5	6.4	7.4
Botswana	4.5	5.3	6.1	7.1	8.2	9.5
Mali	4.7	5.4	6.3	7.3	8.4	9.8
Rwanda	6.4	7.4	8.6	10.0	11.5	13.4
Malawi	6.9	8.0	9.3	10.8	12.5	14.5
Congo	6.9	8.0	9.3	10.8	12.5	14.5
Luxembourg	7.6	8.9	10.3	11.9	13.8	16.0
Benin	8.2	9.5	11.0	12.7	14.7	17.1
Mauritius	9.1	10.5	12.2	14.1	16.4	19.0
Zambia	9.7	11.3	13.1	15.2	17.6	20.4
Madagascar	9.8	11.4	13.2	15.3	17.7	20.5
Senegal	13.4	15.5	18.0	20.9	24.2	28.0
Tanzania	14.2	16.4	19.0	22.0	25.6	29.6
Ethiopia	20.4	23.6	27.4	31.7	36.8	42.6
Zimbabwe	22.0	25.5	29.5	34.3	39.7	46.0
Ivory Coast	26.1	30.3	35.1	40.7	47.2	54.7

So it turns out that Swaziland is the first takeover candidate by 2005, when MLB players will be earning $3 billion and Swaziland's only turning out $2.8 billion. However, if the players want to wait until 2010 they can have Swaziland, Sierra Leone or Botswana. If they opt for the latter, I'd suggest a name change, though.

By 2015 the shopping list grows considerably and includes the small but superbly located Duchy of Luxembourg. For a mere $11.9 billion dollars (mostly based on the specialty stamp economy) it's a real bargain. After that a whole bunch more of Africa comes into play, with the Ivory Coast just out of reach by 2025.

From 2030 to 2050 a whole lot more of the world comes into play. Here are the numbers:

GDP $Billions	2030	2035	2040	2045	2050
Major League Baseball	99.3	199.8	401.8	808.2	1625.5
Zimbabwe	53.4	61.9	71.7	83.1	96.4
Ivory Coast	63.4	73.5	85.2	98.8	114.6
Kenya	76.5	88.7	102.8	119.2	138.2
New Zealand	89.6	103.9	120.4	139.6	161.8
Ireland	90.2	104.6	121.3	140.6	163.0
Tunisia	94.6	109.7	127.2	147.4	170.9
Cameroon	104.9	121.7	141.0	163.5	189.5
Sri Lanka	110.9	128.6	149.1	172.8	200.3
Morocco	196.7	228.0	264.4	306.5	355.3
Portugal	203.2	235.5	273.0	316.5	366.9
Hungary	207.0	240.0	278.2	322.5	373.9
Hong Kong	210.7	244.2	283.2	328.3	380.5
Finland	212.5	246.3	285.5	331.0	383.7
Norway	218.2	253.0	293.3	340.0	394.2
Greece	221.4	256.6	297.5	344.9	399.8
Denmark	236.6	274.3	318.0	368.6	427.3
Bangladesh	309.7	359.1	416.2	482.5	559.4
Austria	311.3	360.8	418.3	484.9	562.2
Nigeria	353.0	409.2	474.4	550.0	637.6
Philippines	370.4	429.3	497.7	577.0	668.9
Belgium	397.8	461.2	534.6	619.8	718.5
Sweden	400.4	464.1	538.1	623.8	723.1
Yugoslavia	406.8	471.6	546.7	633.7	734.7
Pakistan	495.7	574.6	666.1	772.2	895.2
Thailand	512.3	593.9	688.5	798.1	925.2
Egypt	512.5	594.1	688.7	798.4	925.6
Poland	568.2	658.7	763.7	885.3	1026.3
Netherlands	616.7	714.9	828.7	960.7	1113.8
Korea	620.1	718.8	833.3	966.0	1119.9
Turkey	678.7	786.8	912.1	1057.4	1225.8
Australia	698.3	809.6	938.5	1088.0	1261.3
Iran	835.2	968.3	1122.5	1301.3	1508.5
Spain	1107.8	1284.2	1488.8	1725.9	2000.8

In 2030 the MLBPA could acquire Ireland if they wished. It would certainly be a nice little place to retire to. Maybe they could set up a MLBPA retirement home next the Guinness plant on the Liffey? Or there's New Zealand, but that seems a bit remote.

By 2035, when the total salaries have grown to around $200 million, Cameroon and Sri Lanka come into play, while by 2040 some major European countries are up for grabs. Portugal, Hungary, Finland, Norway, Greece -- there's something for everybody!

By 2050 salaries will be around $1.6 trillion, allowing the players to buy such nations as Poland, the Netherlands, Korea, Australia and Iran. Although I don't see any easy way to acquire Iran, even with the money. Then again, who would want to? On the other hand, Australia could probably be had at a discount if Donald Fehr was to spend a few billion dollars on Foster's lager and distribute it free to key decision makers, like Paul Hogan.

Finally, after 2050, the Players are quickly making inroads into the trillions in compensation. By 2055 they could buy Canada for a cool (very cool) $3 billion as shown in the final table here:

GDP $Billions	2055	2060	2065	2070	2075
Major League Baseball	3269.4	6576.0	13226.7	26603.6	53509.3
Iran	1748.8	2027.3	2350.2	2724.6	3158.5
Spain	2319.5	2688.9	3117.2	3613.7	4189.3
Canada	3066.1	3554.4	4120.6	4776.9	5537.7
India	4480.1	5193.7	6020.9	6979.9	8091.6
Italy	4859.0	5632.9	6530.1	7570.2	8775.9
UK	4888.5	5667.1	6569.7	7616.1	8829.1
France	4994.8	5790.4	6712.6	7781.8	9021.2
Germany	5879.6	6816.1	7901.7	9160.2	10619.2
Japan	11277.6	13073.8	15156.2	17570.1	20368.6
US	31248.6	36225.7	41995.5	48684.3	56438.4

By 2060, with their $6.5 trillion they could buy the United Kingdom or France (or wait five years and buy both! Think of the fun they could have playing with England and France...) By 2065 Germany is on the table and by 2070 they could buy Japan. My table stops there, but in another year or so they could afford to buy the richest nation in the world -- the United States.

Now this is all very well and good, you might be asking yourself, "surely this is all nonsense?" And you would be correct. Baseball salaries have grown at a 15% clip for over thirty years due to several factors. It would take a lot more time than I have to isolate them and study them in more detail, but here's a shot.

1. Discretionary income for the average Joe has gone up considerably in the post-WW2 boom, freeing up more dollars for entertainment -- like baseball, for instance.
2. The TV boom. More revenue that didn't exist before.
3. Free agency and the MLBPA. In the past the owners could get away with whatever they liked. With player mobility, the owners have to cough up more of their revenues to the players.
4. Luxury boxes, etc. With more and more ways to part fans from their $$$, teams can spend more on players to attract more revenue, etc...

That's only a sample. The one thing we learned from the global economy lesson above is that 15% raises every year can't be sustained forever, though. There will come a point when the revenue streams are saturated. What happens then? Who knows?

Note that none of what I've said has anything to do with greedy players. Player salaries follow from baseball revenues. If there were no revenues or potential new revenue streams, teams wouldn't be spending $252 million for the likes of Alex Rodriguez. Whether he's right or not, Tom Hicks truly believes that he will make money from signing A-Rod. He may have been smoking something funny to get to a state where he believed it, but it's true nevertheless.

So next offseason when Sammy Sosa signs for $500M with the Braves, don't cry for him, cry for poor Swaziland.

about the author

Dave Paisley is taking up a collection to purchase the Baltic republics. If the Expos are looking for somewhere to move the team they might get in touch at drdjp@strikethree.com.