In light of Derek Jeter’s rumored $51 million dollar deal, I got to thinking again on a subject I’ve had numerous conversations about – are player salaries worth it?
To me, there are two ways of looking at the issue.
- These are just athletes. Not teachers or police or doctors. Of course there salaries aren’t worth it. How could they be? They get paid more in a season than a normal person could ever hope to make in a lifetime – all to play a game.
- Salaries should be considered in terms of Return on Investment.
Let’s explore #2 a little further. Let’s use Jeter for our example – a guy I like even though I’m not a huge Yankees fan, but I digress.
So, let’s say Jeter gets paid $17 million a year, which seems like a boatload of money, especially for a 36-year old shortstop. Some quick Googling leads to estimates of around $200 million a year in ticket sales – JUST ticket sales. Granted, the Yankees pay a lot of other guys a lot of money also, but you can most certainly make the case that the $17 million is well worth it – purely from a business point of view.
Granted, the largest payroll in baseball doesn’t always lead to a championship. According to CBS Sports, the San Francisco Giants 2010 payroll was less than half that of the Yankees, and they walked away with the hardware in the end.
So, are players salaries worth it? From a business point of view, of course they are.