Weekly Roundup: From Hot Hands to Sunk Costs
January 24, 2015Two Words That Tell Us All We Need To Know About Oil
January 26, 2015With 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.
714-511-4256
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: