Piazza Delivery

Dave Paisley

Ninety One Million Dollars. Many baseball fans are already shaking their heads and rolling their eyes. After all, that's ninety million dollars more than Dr. Evil wanted as ransom for not blowing up the world.

But who really gets the best of this deal? Thirteen million a year is a lot of money, but long-term contracts usually end up undervalued by their end. How can that happen this time?

Very easily -- allow me to demonstrate.

The salary leaders going into this year were Albert Belle and Gary Sheffield at $10M each. Piazza's deal nets him the following amounts:

Year	1999	2000	2001	2002	2003	2004	2005	Total
Salary + Bonus ($M)	10.0	11.0	12.5	13.0	14.5	15.0	15.0	91.0

So even with the signing bonus, he's only matching this season's high.

Another significant factor is that baseball salaries have been escalating at about 15% a year for the past thirty years. The minimum has bumped along at a little less than that, but the average and maximum salaries have generally followed that trend. So Piazza's value as one of the best players in baseball can be expected to follow that trend. So here's how Piazza's deal stacks up with the expected top baseball salaries over the life of the contract:
 

Year	Baseball Inflation Factor	Top Salary ($M)	Piazza  Salary ($M)	Piazza Ratio
1999	1.15	11.5	10.0	87%
2000	1.32	13.2	11.0	83%
2001	1.52	15.2	12.5	82%
2002	1.75	17.5	13.0	74%
2003	2.01	20.1	14.5	72%
2004	2.31	23.1	15.0	65%
2005	2.66	26.6	15.0	56%
Total		127.3	91.0	72%

Assuming that someone gets $11.5M next year (Kevin Brown, Randy Johnson?) Piazza will be starting far behind the salary curve, and he'll never catch up. By the end of the contract, he'll be almost down to half of the league high.

I can hear some of you protesting that those salaries are ridiculous -- that we'll never get there, that the limit to sports salaries is just over the horizon. You may be right, but people have been saying that for decades, and the growth has been steady...nay, relentless.

An interesting side effect of this underestimated salary growth is that the decline in the player's performance with age typically matches the natural decay of his salary with respect to the rest of the game. A 37 year-old Mike Piazza will probably be worth about 60% of the league maximum salary.

So maybe this is actually a pretty good deal for both sides. Mike gets the proverbial barrowful of cash, and the Mets get one of the best players in the game relatively cheap.

And if there are any of you players out there with math-o-phobic agents, have your people call my people. Maybe we can do lunch. You can buy.

 

about the author

Dave Paisley is still working for the Strikethree.com minimum, and since we gave his agent a wedgie and kicked him out the door, that doesn't look to change soon. Sympathize at drdjp@strikethree.com.