Major League Baseball announced today that each team will receive a $50 million payment from the league in the first quarter of 2018 as a result of the sale of MLB Advanced Media last year. This is great news for the league owners and, therefore, the players, employees, agents, and fans.
By this time in the year, every organization presumably has its plans pretty well formulated for for 2018. There’s a general understanding of where the payroll should be and, as a result, each general manager knows what resources he has at his disposal and has a general plan for how much money he can offer a targeted free agent. Also, the GMs have an idea of how the pieces fit together on their given roster, where the holes are, and which available players would be the best fit.
As a result, it is self-evident that there are only two options for what teams can do with this windfall- increase the wages of their employees or make their product less expensive.
First, teams can give the money to the players (and other team employees). Since they already have figured out which players they want this winter, they can simply up the amount that they have offered each guy. For instance, after giving raises to each usher, concessionaire, ticket attendant, scout, and analyst, and paying all of their interns, a team like the Miami Marlins or San Diego Padres or Boston Red Sox could revise an existing offer they made to a free agent like JD Martinez from, say 8 years and $150 million up to $175 million. The teams could infuse the collective $1.5 billion they just got into the free agent market, allowing the money to trickle down to players, their agents, their union, and their families- and therefore into the broader economy through all the purchases that the players, agents, and family members make with all that extra cash.
Alternatively, another equally likely use for this unexpected new revenue is to simply lower ticket prices, thereby making the product, baseball in this case, cheaper. Since teams now have $50 million extra dollars, they don’t need all that cash from gates and concessions. Teams could, and almost certainly will, knock a few dollars off their upper deck seats or decrease the price of a beer and a hot dog in order to help less fortunate fans better afford to come to games.
Since teams and owners are already comfortable with their bottom lines, it is unthinkable that they would do anything but take this extra $50 million and spread it around as much as possible, helping to infuse the baseball economy and the have-nots with the additional cash.
This is the rock-solid tenant of trickle down economics – when you give the big organizations or companies extra money, they will invariably use that money to increase wages or reduce product prices, thereby benefiting all. If your initial reaction to the news that teams are each being given an extra $50 million is that payroll will likely not increase and that ticket prices will almost certainly not fall, well, then you’re very simply wrong. This is the tried and true economic doctrine that has successfully shaped the American economy for a generation and has lead to undeniably positive, equitable, and just outcomes; ensuring that capital in our society is efficiently distributed and not concentrated in the hands of the few to the detriment of the many. It has ensured a strong and consistently rising economic tide that, as we know, lifts all boats.
Don’t believe me? Ask
Hice, Jody B.
Rooney, Thomas J.