Ever since news broke of Juan Soto’s record-breaking $765 million, 15-year contract with the New York Mets, I’ve been fielding messages from fellow Mets fans that come down to “WOOOO SOTO!” and “Great, now ticket prices are going to be completely unaffordable.” To which I’ve answered 1) yep, Soto is the best young hitter of his generation and 2) yes maybe, but not because of the size of the Soto’s contract, I wrote a whole book chapter about this!
The book in question was Baseball Between the Numbers, which Baseball Prospectus published in 2006 and which I contributed three chapters to. One of those was titled “Do High Salaries Lead to High Ticket Prices?”, and the answer was a mostly unqualified “no”:
When costs of doing business go up, they can affect prices — witness, for example, debates in recent years over the impact of high oil prices on food and other goods that must be shipped by truck or plane. But it’s not always that simple. Let’s say, for example, you’re building an automobile. If the price of steering wheels goes up, you might rationally boost car prices to compensate, figuring that you’d rather have a bigger profit margin on fewer sales than sell more cars but make less money on each one.
Steering wheels, though, are a marginal cost: If you sell fewer cars, you have to buy fewer steering wheels to put in them. Player salaries, on the other hand, are a fixed cost: If you sell only ten thousand tickets for Tuesday night’s game, that doesn’t mean you can employ fewer outfielders. The price point you select for your tickets, then, shouldn’t change: If you’re already charging the price that will bring in the most money, then raising ticket prices in response to increased player costs would be foolish. Conversely, if you think you can get away with charging more for tickets, you’d be foolish not to do so, regardless of what you’re paying your players.
And that’s not just a theoretical economic construct. Look at actual average ticket prices (in inflation-adjusted dollars) during the leap in salaries in the wake of the introduction of baseball free agency in 1976, and you can see that there was no obvious correlation:
What changed in the early ’90s that ticket prices started rising along with team payroll? As I wrote at the time, one huge factor was the wave of new stadiums that opened at the time:
In the stadium mania that followed in the wake of SkyDome and its brethren, team execs discovered that fans would pay unprecedented prices to gawk at the new retractable roofs and sample the garlic fries. … Eight of the top-ten single-season price hikes—and ten of the top twelve, and eleven of the top fourteen — came when a team was moving into new digs.
The one qualification here is that ticket prices do rise when teams get better, since it’s hard to get away with charging top dollar to watch a team in last place. And, obviously, Juan Soto should make the Mets better, because of the aforementioned “best young hitter of his generation” thing. So Mets prices should go up some in the coming years if Soto helps make the Mets an annual contender, just as they already rose some for the 2025 season riding on the high of the Mets’ unexpected run to the National League Championship Series.
But, importantly, this has nothing to do with the size Soto’s contract. If Soto had lost his mind and given in to his love for lemon ices and signed for half that amount — or if some inexpensive Mets rookie unexpectedly turned out to be a Soto-level star — you can bet anything that team owner Steve Cohen would still raise ticket prices just as much, on the basis of the fact that his team was still good and popular, even if he had managed it without digging as deep into his own pocket. And, conversely, if Soto falls victim to a wild boar and doesn’t produce as hoped, Cohen won’t be able to hike prices by much, no matter how much in payroll he’s on the hook for.
The problem of soaring sports ticket prices, as I noted in the BP book, isn’t with greedy owners trying to cover their costs — greedy owners will charge as much as possible under any circumstance — but with broader changes in the sports world, starting with stadiums that are increasingly geared toward attracting fans who are willing to pay extra for a luxury experience. (The only demographic segment to attend more games in the 1990s than the ’80s was households earning more than $50,000 a year — that’s about $120,000 in today’s dollars.) And, in addition to the stadium boom, there have been economic changes since the 1980s that have created a much larger sports fan base for whom price is no object:
“Certainly people in the upper half of the income distribution the last twenty years have done quite well,” said [sports economist Allen] Sanderson. “Those in the lower ranks have not, but those are not the ones that are going to sporting events.”
Massive economic inequality is still in force, and it’s still helping to create that market where during winning times, team execs can raise ticket prices through the roof without worrying about running out of fans who can afford them. (The same goes for, say, Taylor Swift tickets.) And that would be the case even if Juan Soto and other players were playing for six-digit salaries instead of eight-digit ones. And the windfall profits from those new stadiums packed with luxury suites and clubs are making it possible for team owners to offer record-breaking salaries. It may be less satisfying to blame Reagan-era SEC rules about stock buybacks than greedy athletes, but the numbers don’t lie: Baseball isn’t broken, our economic structure is.
UPDATE: I spoke with Chris Isidore of CNN about this as well, in case you want to read me making the same arguments over there.
“… If you sell only ten thousand tickets for Tuesday night’s game, that doesn’t mean you can employ fewer outfielders…”
“…. it’s hard to get away with charging top dollar to watch a team in last place….”
My God. It’s like none of you have been watching as we implement our master plan.
Everyone who blames labor costs for higher prices – of just about anything – needs to read this.
But baseball is broken. By my calculation, the Mets’ payroll is about 2x the median for the league and around 5x the A’s payroll.
Regardless of whose fault it is that it’s like that, a competition that non-competitive is not worth caring about.
There may still be a need for structural changes to get things more in balance, but those payroll differences are at least somewhat due to the choices made by the owners of “small market” teams. Many of them are choosing to go with payrolls that are significantly less than what they can afford:
https://www.marcnormandin.com/2024/12/09/juan-soto-mets-free-agency-contract/
Totally agree, they’re two sides of the same coin. The owners will never agree to a mandatory salary floor without either a hard cap or NBA-style limits on individual contracts, both of which are blood issues for the MLBPA. Most of MLB ownership made the calculation a long time ago that they’d rather pocket the money and make marginally lower profits than invest and potentially increase their earnings.
Juan Soto won’t raise Met prices. The Mets were already going to raise those prices even before they pulled off the heist of the decade. You gotta remember that.
And here in Detroit…a stadium more than half paid for by taxpayers:
https://www.audacy.com/971theticket/sports/detroit-lions/detroit-lions-season-ticket-holders-sickened-by-price-hike?utm_campaign=www.audacy.com%252F971theticket&utm_content=1734094814&utm_medium=social&utm_source=facebook&utm_term=WXYT-FM&fbclid=IwY2xjawHJHGxleHRuA2FlbQIxMQABHXaOHnp4Hbk31a67Vqi6y8OUqUv4kgOZyWquQ7mu1H42BLeFWinAEI5yDQ_aem_o7UTwETxTg6-OgJBGFv_2A