A Weak Dollar Makes Salaries Appear Higher
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

As of today, each team in baseball is finally open to make free agents real offers. Thus ends the part of the off-season when nothing happens, and thus begins the part when lots happens and no one is happy about it. Every winter sees all manner of carping, griping, sniping, and grousing from fans, pundits, and baseball executives about the ever-rising financial demands of the modern player, who somehow manages to reach new depths of depravity every year in the public mind without ever affecting the sport’s popularity a jot. This year, we’re liable to hear more caterwauling than ever before.
To see why, you just have to look at the two deals that have already been inked. Yesterday, Detroit inked incumbent closer Todd Jones, whose K:BB ratio was 33:23 in 61.1 innings this year, to a one-year, $7 million contract. Saturday, left-handed reliever J.C. Romero, who ran up a 6.70 ERA in 2006 and was released by Boston on June 19 of this year before joining the Phillies, signed a three-year, $12 million deal to stay in Philadelphia.
The numbers involved here look ridiculous and seem to show that these players are regarded much more highly than they deserve to be. No one seriously begrudges J.C. Romero, a worthy journeyman, his payday, but there is something unseemly about paying him as if he were a top setup man. If Romero is getting paid like this, how rich are much better, but also completely uninspiring, pitchers like Livan Hernandez and Carlos Silva going to get? Excellent but not elite players such as Torii Hunter? What about future Hall of Famer Alex Rodriguez? This is the sort of deal that sends people into a tizzy about what the Daily News’ Bill Madden calls “the grotesque inflation of baseball salaries.”
Gisele Bundchen would probably have a better take on the subject. Before last week, the lissome Brazillian model was best known for her improbably high cheekbones and improbable income, estimated last year at $33 million. She is now best known for her alleged demand to be paid in euros rather than dollars. (“Supermodel Gisele Bundchen: ‘I won’t get out of bed for U.S. dollars'” was the headline in the always reliable Daily Mail.)
Whether or not the story is true, people believe it. In November 2002, according to the Federal Reserve, the dollar weighed in at 102.45 on the major currencies index; this month it is at 71.8. Imported goods and gasoline are more expensive; a dollar buys less than it once did, and so people want more of them in exchange for services.
Let’s return to Romero. Five years ago, the Mets signed left-handed setup man Mike Stanton to a three-year, $9 million deal. He was 36 at the time, and had lost the bite on his pitches, but he had done well for the Yankees for several years. He was paid the going rate for a decent reliever. Romero, 31, pitched badly last year, but very well the two years before that, and his ERA this year was 1.92, whether or not he was released. He, too, was paid the going rate for a decent reliever.
A dollar is worth a third less than what it was when Stanton signed. It is utterly unsurprising that the similar Romero signed for a third more dollars than Stanton did. The relative value of the two contracts is the same. Similarly, it is unsurprising that a passable closer like Jones is getting $7 million, as five years ago passable closer Ugueth Urbina got $4.5 million, not much less in real terms. Much of what looks like inflation in salaries is inflation in currency — something, there is no doubt, that a great many baseball pundits will ignore and outraged front office types will pretend not to be aware of as they chastise greedy players and agents. If a player signs a $111 million contract today, it’s the equivalent of having signed an $85 million contract five years ago. A failure to adjust for this is as silly as a failure to adjust the batting averages of Colorado hitters.
Inflation has at least one positive effect, which is that it could undermine the long-stable balance of power in the American League East. For its entire existence, Toronto has been plagued by a simple problem, which is that it takes in Canadian dollars and spends American ones. Five years ago, the loonie was worth 64 cents; right now, it’s worth $1.04, up from 86 cents in March. The implications of this are pretty obvious. The Blue Jays, who finished this year with a Pythagorean record of 87–75, just found an enormous wad of money on the street. Their purchasing power has gone up 20% with no effort on their part — and having spent $81 million on payroll this year, they had plenty of purchasing power to begin with. If exchange rates hold, they’ll be, at least in theory, about as rich as any team other than division rivals Boston and New York. Even if the dollar gains, a lot of unearned wealth will still be sloshing around in their accounts.
More important is that if anything is actually inflating baseball salaries in real terms, it’s an entirely positive development for which the sport gets far too little credit: Teams are retaining their homegrown stars. Among the players who could have been on the market this winter and instead signed contracts with their original teams are Albert Pujols, Jimmy Rollins, Roy Oswalt, Mark Buehrle, Carlos Zambrano, and C.C. Sabathia. Josh Beckett could have been a free agent as well. Isn’t this what everyone claims to want to see? It’s natural that with so many young stars staying on with their first team, dollars will chase lesser players such as Mike Lowell and Torii Hunter. Where else are they supposed to go?
One shouldn’t expect any of this to make any dent in the baseball consciousness; the one sure thing about the sport is that if it is possible for someone to pretend that the real world has no effect on it, he will. And anyway, we can at least be chippered up by the fact that our ballplayers will at least get out of bed for American dollars. Even if it takes more of them.
tmarchman@nysun.com