Part of the current negotiations between Major League Baseball Owners and players is a discussion about their pension plan. So we’re presenting some information. The current plan participants include players, managers, coaches and trainers. All of these individuals are well paid–we think you know that. But one of the issues on the table was a discussion about removing the Cost of living adjustments to pensions after an individual retires. This is an important issue to normal people who earn lower salaries because inflation can seriously erode purchasing power and over time adversely impact the retirees’ standard of living. But, if you earn 15 to 50 times what the average individual makes the inflation adjustment is not a big deal. As an example: the average MLB player makes $4.1 million annually and has a career of 8 to 10 years. Since much of his living expenses are pad by the baseball club he has virtually no expenses for about 8 months of the year. So it is easy arithmetic that the average player can reasonably accumulate around $33 to $41 million during his playing days. If we add a little interest for investment growth he could easily amass another $5 to $8 million. And so at “retirement” from baseball our theoretical average player has an asset base of $38 to $50 million and at age 32 to 35 can pursue happiness any way he sees fit–including other employment. The players pension plan will “only” pay him $210,000/year for life after a 10 year career. (By the way, he gets a year of service if he works just 43 days in a year.) So we have a relatively healthy young man in his early thirties with $38 to $50 million in his pocket and a lifetime pension of $210,000/year who is concerned about inflation affecting his standard of living. Really???? FYI, Major League Baseball suggested that the inflation clause be eliminated, but the players union balked (pun intended) and MLB quickly withdrew its suggestion. Point to be made: there is so much money going into the owners pockets from advertising that they don’t even make a fight of taking the inflation clause from the pension plan. This is another example of income disparity compounded by the Owners indifference. If you wonder about the $210,000 amount–that is the maximum IRS allowed benefit under a tax qualified pension plan. Do you still wonder why ticket prices are what they are? There will come a time when baseball clubs will not want or need spectators because they can make handsome profits without the hassle and overhead of maintaining a stadium for fan in-person viewing. Ads will make that happen.
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