COLA vs MLB
COLA is an acronym for Cost Of Living Adjustment and one web site that does a great
year to year comparison is provided by the American Institute of
Economic Research (AIER). Click
compare any two years from 1913 to 2013.
I wanted to see how major league baseball (MLB) salaries stacked up from my youth to
today. I knew they had increased faster than the cost of living, but I
was interested to find out by how much. For my base year, I chose the
bicentennial and according to COLA, $100 then is worth $407.62 today – a
little over a 400% increase.
The baseball almanac for the 1976 Pittsburgh Pirates lists the 22 primary players
The total is $962,500 and adding Willie Stargell’s 189,000 (which
required additional digging) takes us to $1,151,500. Add some more money
to cover the bit players and we can guess that the total payroll for
that year would be near $1,250,000. Incorporating the COLA factor, the
Pirates team salary should be a little over $5 million. But it’s nearly
$80 million – 16x more than the COLA factor would indicate.
As a comparative, I took the largest payroll in MLB today – the Dodgers are
currently at $220 million. Their $1.6 million x COLA equates to a 34x
increase during the same period.
Data doesn’t lie. Inflated salaries are not a function of the ‘desire to win’.
Everyone wants to win. The source of inflated salaries has shifted from
competitive owners (who built their own stadiums) to the
taxpayer-subsidized stadiums ‘needed’ to support baseball. This may
sound confusing until you take a step back and follow the money.
Mark Schuster, Partner
August 11, 2013