Reggie Jackson and the cost of health care

Former New York Yankees player Reggie Jackson responds to questions during a news conference Saturday, July 17, 2010, in New York. (AP Photo/Frank Franklin II)

When Reggie Jackson’s five-year, $2.9 million contract with the New York Yankees kicked off baseball’s free-agent era in 1976, a box seat at Yankee Stadium — the best in the house — would run you $5.50. Thirty-eight years later, the minimum salary for a major leaguer is just below Jackson’s then-record amount. The biggest stars earn more for four games than Jackson did for an entire 162-game season. Now, tickets to a Yankees game range from $18 for the bleachers to $300 for the best seats. The connection seems obvious: The extraordinary run-up in player salaries has driven an outrageous rise in ticket prices.

But as any student of the baseball industry — or any industry, for that matter — knows, the relationship is exactly the opposite. As more people spend more money on baseball-related entertainment, baseball raises prices. Even so, game attendance has more than doubled since Jackson signed his big contract. Ticket prices, broadcast contracts, concessions and in-stadium advertising have exploded. And those are just baseball’s old-fashioned revenue streams. Today, there’s also pay television, luxury boxes and “VIP” experiences, high-end restaurants, logo licensing and collectibles. All of this comprises what economists call “raising the demand curve” for baseball.