clock menu more-arrow no yes

Filed under:

No, cutting payroll won’t make MLB games more affordable

New, 93 comments

Despite being close to shipping out two giant contracts, the Red Sox won’t be passing those savings on.

Baltimore Orioles v Boston Red Sox Photo by Maddie Meyer/Getty Images

We’re still waiting for the deal to be finalized, but Mookie Betts is set to be shipped out west in a very obvious salary dump by the Red Sox. The Dodgers, the unexpected beneficiaries of both Betts and a still-useful David Price, will lose a top-50 prospect and swingman Kento Maeda, both of course immediately replaced by better options at the same position.

The Red Sox, as stated above, are attempting to do this to get two notable contracts off their payroll. The team is about $16 million below the competitive balance threshold, and crucially, only have three players making more than $20 million left on the roster. It’s a leaner, meaner, mostly cost-controlled entity, and since we’re bombarded with “baseball is a business” takes every winter, the business saving money should equal cost savings for consumers, right?

Wellll, no. Ticket prices at Fenway are going up in 2020, at roughly the same pace - 1.7% - as the last decade’s average, 1.8%. Payroll has dropped 19% since the free-spending, World Series-winning 2018 season, and yet the cost of going to a Red Sox game has only gone up. Weird, that.

We knew the Red Sox were looking to shed payroll, too. There were real conversations as far back as October that Boston could trade their superstar in order to clear CBT space - that is to say, the decision to raise ticket prices was made at the same time as the decision to make financial room on the roster.

The Yankees, meanwhile, are also raising ticket prices by a modest 1% this year, after two straight years of holding prices constant. This came after the team signed Gerrit Cole to a record-breaking deal, blowing past the CBT threshold and finally answering fans’ calls to spend like the Yankees of old.

A year ago I wrote about this exact phenomenon - the on-field cost of a baseball team has no correlation to the prices of tickets. This has been proven, yet again, by the opposite approaches taken by AL East rivals, while both raised prices. Ticket prices aren’t driven by team costs, or indeed cost at all. It’s a demand pull pricing system.

Teams no longer aim to sell out, but rather optimize gate revenues by demand. A team could sell all 50,000 seats if they charged $10 per, but if they charged $20, they might only sell 30,000 but still make more money. Perpetual demand for tickets, especially in markets like New York and Boston, will perpetually pull prices up.

Again, if you need further proof, the Miami Marlins have frozen ticket prices and lowered the cost of parking for 2020. They’re returning roughly the same payroll - 96% of last year’s total - but there is understandably no demand for Marlins tickets, regardless of the on-field cost of the team.

The moral here is pretty clear. Baseball is a business, but it doesn’t operate the way that so many fans think. Owners focus a lot more on capital appreciation than yearly profit or loss. Cost-cutting isn’t actually done to lower prices, since demand is so high and substitution is so unlikely.

More than anything, the moral is, root for your team to pay stars. Yankee fans and Red Sox fans alike will pay more to go to a ball game, but only one fanbase got to see their team improve this winter. If you actually want to see costs be passed along to the consumer, you might just have to become a Marlins fan.