Why the World’s First Billion-Dollar Athlete Is Just a Few Years Away
Just as TV economics are transforming college football and creating new winners and losers, they are about to do the same in baseball, further widening the payroll gap between high and low-spending teams. Sometime in the next few years, it produce something astounding: The first billion-dollar player.
Reports surfaced on Monday that the Los Angeles Dodgers are close to signing a 25-year television deal with Fox worth between $6 and $7 billion, paying the Dodgers $280 million a year, up from the current level of $40 million. This follows a deal Fox signed with the Los Angeles Angels in December that will pay them nearly $150 million a year, and a deal that the YES Network has with the Yankees that will grow to $350 million a year by 2042.
One thing we know about professional sports teams is that as revenues grow, payrolls increase commensurately. Unsurprisingly, Dodgers President Stan Kasten recently said, “I am focusing on building the best team we can be…and where exactly the payroll will be, we’ll worry about that later.” Their 2013 salary commitments are already double the team’s opening day payroll from this past year.
What does this mean for the free agent market? For the time being, baseball’s free agent market is thin. Teams adopted “Moneyball” approaches to contracts based on the economic landscape of the past decade, with small market teams signing their promising young players before they could become free agents. The Tampa Bay Rays signed Evan Longoria to a six-year contract 6 days after calling him up from the minor leagues in 2008. Young players and their agents had an understanding of what free agents in their late 20’s could make. Fearing that they might not turn out to be great MLB players, they were willing to trade some future opportunity in exchange for a more certain payoff.