03:14 PM EDT on Tuesday, April 12, 2005

Frank the Moderator: The Sox-Yankees rivalry makes for great baseball. But at what price? The Boston and New York organizations have more than $300 million in baseball talent on the field and in the dugouts.
Journal Deputy Business Editor David McPherson wrote about baseball salaries on Sunday and today will field your quetsions and comments about baseball salaries.
Swing away and post your questions now. McPherson will log in at 2 p.m. to share some thoughts.

APanciera: Dave, we here at projo.com added an online survey to go with your story that let readers vote on whether they thought players' salaries were too high. Is it a surprise to you that 82 percent said yes? (And if any of you would like to vote/add your comments, go here: http://projo.com/baseballpaysurvey)
David McPherson: Given that most people make far less money than baseball players, that is not surprising. But many of those who say baseball salaries are too high also love the game and contribute to the high salaries by watching the games on TV, buying tickets, listening to the radio or buying a T-shirt with a Red Sox logo. All of that contributes to team revenue, which is then used to pay players. It's our dollars that help pay the high salaries.

Frank the Moderator: Lots of people seem to believe that ticket prices are directly related to the teams' payroll, but aren't ticket prices are just a small part of the equation? In general terms what is the relation between Fenway ticket prices and Red Sox player salaries.
David McPherson: Ticket prices are part of the equation, but they represent only one slice of the team's revenue. More important than ticket revenue is the money baseball teams receive from television rights. According to a pair of sports economists I spoke with, a major reason for the high salaries is TV money. Without it, players would be paid less. That's why teams with bigger TV deals - like the Yankees and Red Sox - can pay more than a team from a small media market like Milwaukee.

Frank the Moderator: Dave -- were you able to talk to anyone in the Red Sox organization about the salaries?
David McPherson: I'm sure I could have, but did not attempt to do so. I was more interested in speaking with baseball outsiders who could talk about the fundamental reasons why baseball players and other professional athletes make so much money. There's a small group of economists around the country who specialize in sports. They're an interesting group to talk with.

Frank the Moderator: What were the economists like. Are they sports fans that are also economists? Does MLB use them?
David McPherson: They definitely struck me as sports fans. As economists, I think they find sports to be a way to make economics fun and accessible to the average person. I'm not sure if MLB uses them, but some of the economists who work in the area have been retained as consultants by various prof teams. Through my conversations with them, I came to realize the fundamental economic forces at work in baseball are just like those in any other business.

FatJack: Dave, Do you see any ceiling for these salaries, or are they likely to continue increasing to the point where bench warmers are earning $10 million per year and fans are paying $200 for a seat in the bleachers, $20 for a beer?
David McPherson: It's up to the fans. If they ever revolt, then a limit may be reached. But as long as Fenway Park keeps selling out, the ticket prices will keep going up. Collectively, the fans will decide how much is too much to pay. I never thought I would see bleacher seats going for $20 or more, but they do. And they're always full, except maybe on a rainy day.

Frank the Moderator: Personally, do you think professional players are worth their salaries?
David McPherson: I think professional athletes deserve to be paid well for their talents, but the salaries at the high end, of course, seem excessive to me. What I find interesting is the way teams with less money to pay look for bargain talent, the players who are better than their salaries indicate. The New England Patriots, for instance, seem to have perfected that process. They seem to make the most of the money they have to spend under the NFL's salary cap. One thing to remember about athletes is that they are paid for performance. If they stop performing well, then eventually their salaries go down. That's not always the case with corporate CEOs.

FatJack: What role do you think the big salaries play in the steroid scandal?
David McPherson: The allure of a big paycheck is one more reason for a ball player to seek a competitive edge through steroids. I'm not sure that's the sole factor. Some of the top players now accused of taking steroids would probably still be making a lot of money without them.

Frank the Moderator: Do professional player care that their salaries are all over the news?
David McPherson: I'm sure on one level they would prefer not to publicize their pay, but I think their agents would tell them it works to their advantage by creating a competitive bidding environment. In a sport so dependent on statistics, it's easy to argue you should be making more when other less productive players are better paid. I once read that the NHL was able to keep hockey salaries down by keeping players in the dark about what other players paid.

Frank the Moderator: Any thoughts of trying out for the PawSox next season. How much do competitive runners make a year?
David McPherson: Not me, I'd be the oldest player still in the minors. But you will find me in the stands at McCoy enjoying the reasonable prices.

nofan: So, if the players are making this much money, how much must the owners be raking in? Is there a way to calculate their profits?
David McPherson: It is extremely difficult to know. Unlike a public company like GE or Tyco, baseball teams are private businesses that are not required to disclose their finances to the investing public. A number of small market teams have claimed to be losing money, but some outside analysts have questioned these claims. The best estimates on a team's value and profitability are done annually by Forbes magazine. They rank the teams in all the major pro sports in terms of value. Not surprisingly, the Red Sox are ranked second in value to the Yankess in baseball. In football, Forbes estimates the New England Patriots as one of the most valuable franchises. I'd love to see the real numbers for myself, but it's unlikely to happen unless a team goes public.

Frank the Moderator: Thanks Dave for sitting down for an hour with us. Look forward to your next sports-business story.