You don't have to understand sports to understand money. But you do have to understand money to understand sports. I will be the first to admit that basically what I know about money is that I don't have tons of it. I do, however, know a bit about baseball and because of that I now know a lot about money. I am talking ridiculous amounts of money, figures that can make even the most cynical sit up and take note. Since the baseball season ended in early November, no less than four players signed contracts that will pay them well over US$100 million (HK$$778m). I don't want to numb you with numbers here but this past season alone the New York Yankees paid their four starting infielders salaries totalling US$81 million. Again, that's four guys making US$81 million in annual salaries on a team with 25 players.
Look, huge money in sports is not news anymore. But what is noteworthy is that these guys are playing a game that pundits long ago declared was dying and they are earning these salaries in a country that apparently is in the midst of its worst economic funk since the Great Depression some 80 years ago. These salaries are not being paid here in Hong Kong, where we often lose perspective on money issues affecting the real world. Here in the land of tycoons, a multi-million dollar contract might make you a junior partner at a decent law firm. We're flossing with hundred dollar bills and lighting up pricey Cohibas with thousand dollar notes, don't you know?
The Hong Kong government is expected to record a budget surplus of about US$9 billion this financial year. I'm not sure what they are going to do with all that money, but buying a major league baseball team is probably not high on the list. Maybe it's just as well because the way things are going in baseball US$9 billion might not be enough.
If I am the besieged president of the United States trying to fend off critics from every angle, I would make my message simple. Ignore all the conventional financial indices and the doom and gloom because in the country I am president of, four baseball players were awarded contracts totalling US$527 million in the past two weeks. Does this sound like an economy in decline? I don't mean to make light of the situation in the US because there is some real pain with unemployment and banks foreclosing on homes. But somebody is paying these absurd salaries. More than 73 million people paid to go watch a professional baseball game this past year and tickets are far from cheap.
Field level seats at a Yankees game in New York will cost you over US$300. You want to sit up in the nosebleed section in the terrace seats then you need to shell out US$80. Yet, close to four million people attended games at Yankee Stadium this year and I can assure you not all of them are running the Private Equity Division at Goldman Sachs.
America is apparently broke but it seems they can still find some money for baseball. How ironic that in a time of economic turmoil a faded heirloom will not only survive but it can prosper to the point of lavishing ungodly sums on its practitioners. I have been hearing for years how baseball is dying. Well apparently death ain't cheap. At one time baseball was referred to as the great American pastime but I hear those days are gone. The game was deemed of little interest to a younger generation who demanded action, blood and gore. I have friends who tell me that Ultimate Fighting Competition (UFC) and Mixed Martial Arts (MMA) are far more popular these days than baseball. That might be true but last weekend in Montreal there was a record crowd of 23,000 on hand for a UFC title fight featuring the peerless Georges St-Pierre.
It was a raucous and entertaining event but 22 baseball teams averaged more than 23,000 fans per game 81 times this year. And as great as St-Pierre is, he is pulling down nowhere near US$25 million a year in salary.
It's all relative of course but somebody is still watching the old man's game and, for those who were watching, this was a monumental week. The most coveted free agent pitcher in baseball turned down the Yankees' enormous offer to take a slightly less enormous offer from the Philadelphia Phillies and in the process shocked the world of sports. The Yankees offered Cliff Lee US$150 million but he decided to sign with the Phillies for US$120 million. Lee became the first man to be elevated to national hero status by signing a nine figure contract because not only did he leave US$30 million on the table, it was the hated Yankees' money he left on the table. Yeah, I know what you are thinking because it is the same thing I am. In a bad economy like this, how in the world is Lee going to get by on 120 million?
Be that as it may, Lee will only get in to the Baseball Hall of Fame the same way I will and that is by paying for admission. He is a very good pitcher but hardly an all time star. And remember, baseball owners have been crying poverty for years now. Still I haven't read of any of the owners being held at gunpoint and forced to hand over a couple of billion dollars in salary for the upcoming season. Again, I am no financial wizard but I always believed you can't spend money you don't have because that is what doomed the US in the first place. Maybe baseball is still very much America's game.