And you know this…how?
Because if they could increase their revenue by raising ticket prices, they’d do so regardless of what their payroll was.
Instead of regurgitating what Hawkeye and Rick have already stated, and run the risk of being redundant, may I suggest this little FAQ list from David Grabiner, a Princeton Mathematician, to help you understand that high salaries are NOT a factor in the price of tickets:
Er, there’s no relationship between the two, yet high ticket prices are an important part of the reason for high salaries?
No, they would not. They’re already charging as much as they can without causing attendance to fall to the point that the increased prices will be outweighed by lower attendance. Why would they be charging less? If they charge more, they’ll just lose customers.
If players were suddenly making $5 million a game, MLB would simply go bankrupt, they’d just declare bankruptcy the next day, since not even the Yankees could afford that for more than three days. They can’t charge enough to pay for that.
I mean, it should be pretty obvious that you can’t just raise prices every time you want more money, or else Hershey could rule the world by raising the price of a chocolate bar to a million bucks a pop.
Again, it’s not that there’s no relationship between the two, it’s that you have the relationship reversed. High ticket prices cause high salaries (sort of.) High salaries do not cause high ticket prices.
I don’t know how many different ways this can be explained. Baseball teams will charge whatever price will make the most money. They maximize their revenue no matter what the player make; why would they do anything but? If the optimum price for a given class of ticket is $40, they’ll charge $40. It doesn’t matter if the average player makes $100,000, $1,000,000, or $10,000,000; if the market maximizes revenue at $40 a ticket, then $40 it shall be.
Jas09:
I can’t speak with any certainty to the Mateo/Miller thing, as I don’t know exactly what each player’s strengths are. I’m sure competition for Mateo’s services did bring his price up, but that doesn’t guarantee that in a talent pool as deep as “all American amateur baseball players” that Miller would necessarily have been able to demand more for his services.
As for Washington…I don’t think they knew full well what Strassburg’s cost would be. They knew it would take a record signing, but not that much.
Hawkeyeop:
I disagree. You’ll find isolated foreign teenagers, generally regarded as the creme de la creme of their local talent pool, who receive better contracts than some lower-1st round draft picks, but they don’t receive anywhere near what the top draft picks get. And what American player that somehow made his way to the major leagues through an avenue other than the draft got anywhere near a draft-like signing bonus?
As a drafted amateur, he did just that and for much less.
Of course, it is true that Burnett is guaranteed the entire amount of his contract, and not just this year’s salary. If that’s the reason you don’t like my mention of Burnett, there have been recent stars who have signed one-year deals. In 2007, Andy Pettitte signed a one-year deal with the Yankees for $16M, not much more than Strassburg’s signing bonus.
I suppose that depends on your definition of “risky.” I meant it in the sense that the amateur is a decision based on fewer known factors. With the vet, there might be a high likelihood that he’ll break down, but this risk is taken with known factors.
Well, what Hershey actually does is decrease the size of its product, so that a smaller candy bar sells for the same price as was charged for the old size, and to outsource its manufacturing to someplace with cheaper labor costs, but that’s not really relevant to this discussion. 
Yeah, they did. All the sources I saw claimed that the Nats were aiming at a deal in the $15-19 million range with a “drop dead” number of $20 mill. Here’s one from the Chicago Tribune. Money quote:
It sounds to me like the deal they ended up striking was pretty much exactly what the expected when they drafted him (maybe even a bit lower than they feared). And they wouldn’t have drafted him if they didn’t think he was worth it. And I have zero doubt that there is at least one other team that would have paid him more if they had the chance.
That’s really the only debate here, IAmNotSpartacus’s silliness aside.
They are the best of international free agents, but they still don’t compare to the home grown kind. A lot of times teams aren’t even sure if the player is the age or even the idenity they claim. And yet they make as much or more as first round picks in a lot cases. And yes sometimes more than top ten draft picks too. Americans who opted out of the draft would make a lot more money than these players. We don’t need to theorize, we can just look at the players who became free agents. For example, how did becoming a free agent work out for Travis Lee or the others of the class of '96.
Of course, it is true that Burnett is guaranteed the entire amount of his contract, and not just this year’s salary. If that’s the reason you don’t like my mention of Burnett, there have been recent stars who have signed one-year deals. In 2007, Andy Pettitte signed a one-year deal with the Yankees for $16M, not much more than Strassburg’s signing bonus.
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No I have a problem with you considering Strasberg contract a 1 year deal. It isn’t. It is 4 year deal, so we are talking more like 4 million a year. That isn’t Burnett or Pettitte money, that is Tim Redding money. Not only that, the Nats will still control him past then. So if he develops anything close to what he is expected to, he will be severly underpaid for at least a couple years beyond that.
All players have risk. You have to balance it against upside and likelyhood. You seem to be only willing to consider risk with amateurs and ignoring the other factors.
IF being the critical word there. That’s the risk both sides take with a sports contract; the player may end up woefully underpaid, or ridiculously overpaid.
Given Strasburg’s never thrown a major league pitch, $4 million a year is a reasonable midline salary. Sure, he might dominate the NL right out of the gate, and then $4M a year will be wildly cheap. But he might also spend a few years learning to get big league batters out and post records like 5-12 and high ERAs, doing no better than you could get some journeyman to do at the major league minimum. Washington might be paying for an ace, or they might be paying for the right to give painful learning time to a guy who’ll end up being an ace for some other team in 2018.
Let’s be honest; a lot of these guys flame out. Remember Matt White?
We can speculate the upside. What do you think the likelihood is?
Additionally, there is a LOT of value in giving Tim Redding $4 million, because he can pitch today, and has proven that. His upside is shit, but his likelihood is guaranteed, and the risk pretty minimal. Strasburg has only one of your three components at the moment.
There is no value in Tim Redding. He is pretty much the definition of replacement level. You can certainly find a player on waivers capable of having an era of 6 and a half at the league minimum.
We don’t even really need to speculate on how good top draft picks are going to be. There are plenty of studies out there that examine the value that draftees provide to the teams that drafted them. A lot of them are based on data that is a little bit older, but I don’t thing anyone would argue teams have gotten worse at scouting and developing talent in recent years. I can provide some if you like. They all say that drafted players are the greatest bargain available to an organization. #1 picks in particular have an excellent return on investment, far higher than even #2’s. We all remember some spectalular failures, but on average, draft piks are extremely valuable. One developed superstar is worth years of duds.
And that still isn’t quite the point. I don’t think anyone really thought Oliver Perez was worth 12 million a year, but that is what he got because one team would pay it. Manny got 20+ million a year, because one team thought that was his value. Baseball players or any employees for that matter don’t get paid based on an objective value, but rather based on what someone is willing to pay. My argument is less that Strasberg is worth 50 million (although I do think he is), but rather that if you removed constraints, someone would give him it.