With inflation in the news, let’s look at baseball salaries.
Where are we going? To the value of a $210 million deal.
The Scherzer Deal
Signing with the Washington Nationals, pitcher Max Scherzer negotiated a whopping $15 million a year for the next 14 years. Some call it a $210 million deal. It is actually much more complicated because he gets some of the money as income, some as a bonus, some after he retires and some before.
Let’s just look at inflation though and assume that he is paid $15 million each year. If the inflation rate is close to two percent for each of the next 14 years, then $15 million in 2029 would have the same spending power as $11.5 million (or so) today.
Next, Mickey Mantle.
Mickey Mantle’s Salary
During each of the six years before he retired in 1968, the Yankee star center fielder was paid $100,000.
But it depends how you look at it.
According to the BLS inflation calculator, you needed $113,725.49 in 1968 to have the same purchasing power as $100,000 in 1963. So, that means he was really earning 13 percent less
A Baseball Quiz
And finally, a number I discovered that most of us will assume is a phone number except for our baseball friends.
The answer is after “Sources and more…” below.
Our Bottom Line: Inflation History
We cannot predict where the inflation rate will go. And we should remember this quote from economist Rudiger Dornbusch (1942-2002):
“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”
But still, in assessing the Scherzer deal, here is some inflation history: