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Why it costs so much to see your favorite team play

In 1972 I was serving as Executive Vice-President of the United States Ski Association, in charge, among other things, of licensing and merchandising for the US Ski Team. In a meeting in Cleveland with our sports marketing agent, International Marketing Group, trying to develop a commercial program for uniforms, I was having a hard time keeping the attention of our account executive, Ed Keating.

Keating was interrupted by a non-stop stream of phone calls from NFL team owners clamoring to sign another one of Keating’s clients, a defensive end for named Jack Gregory. With each phone call, Keating, a skillful negotiator, upped the ante like an auctioneer building on a bidding frenzy. Looking to collect a huge commission on a whopping payday for Gregory, Keating clearly didn’t have time to devote to a small peanuts client like the ski team.

Gregory went on to sign a robust contract with the New York Giants. But Keating was just warming up. Two years later he negotiated a $3.86 million package for Miami Dolphins stars Larry Csonka, Mercury Morris and Jim Kiick with the newly-formed World Football League. In 1975 he engineered a $1.875 M package with the Atlanta Braves for outfielder Gary Matthews, light years more than the $46,000 he earned the year before with the San Francisco Giants.

Keating and his clients were cashing in on a new age in professional sports salaries, freed of the onerous reserve clause that bound athletes in perpetual indenture to one team. After a long and bitter fight, professional athletes had earned the right to sell their services to the highest bidder after their original contract expired. In this new age, athletes owned and controlled their own brand, like rock stars, and their brand superseded any loyalty or obligation to their original owner.

We now find ourselves in the age of Labron James and Peyton Manning, where megadeals and stupefyingly astronomical salaries are the rule. In major league baseball the average 2012 salary for each player is $3,440,000, and even light-hitting utility infielders make over a million dollars. That’s light years away from 1958, when Stan Musial, a Hall of Famer and one of the greatest players of all time, broke the $100,000 salary barrier.

Three forces drive the never-ending escalation in salaries:

• Parity Power. Every time an enterprising agent succeeds in getting a door buster deal for a client, it raises the bar for all other athletes of comparable skills. This leads to the renegotiated contract phenomenon, where owners tear up a sulking athlete’s current contract so he can make as much as his counterpart on another team.
• Marketing Mania. Athletes are now as hyped as rock stars, making them not only larger than life but more pervasive. It’s called their brand, and it’s moved light years beyond bubble gum cards to Twitter, Fathead and retro replica jerseys.
• Ego. For all it flies in the face of their collective self-interest, owners are not immune to the urge to have the prettiest toys on the block, and they allow themselves to be drawn into deadly bidding wars, hoping that they can have the next mega press conference on ESPN.

And here’s the catch: somebody’s got to pay for those salaries. For a rough idea what today’s tab is, multiply $3,440,000 by 25 (players on a roster) and divide that by 82 (the number of home games in a season.) That’s what the fans are on the hook for every time they go to a ball game.

It’s no mystery what happened to the $.25 bleacher seats.

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