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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 here to 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 here. 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

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