Player Salaries and Other Expenses
Owners saw their profits plummet during the early years of the 1930s. It is certain that revenues fell in both nominal and real terms. Profits were sure to fall if owners did not reduce expenses commensurately. How quickly did owners adjust their player salaries and other expenses in response?
Owners and fans have traditionally blamed player salaries for decreased profits and higher ticket prices. Owners were floundering in red ink by 1933. Did they use their monopsony power to reduce player salaries quickly?
Player salaries were possibly the largest individual expense for owners during the 1930s, but today’s owners would envy them. According to information presented to Congress in 1951, player salaries, including managers’ and coaches’ salaries, comprised roughly a third of the total operating income or gross operating expenses in 1929, 1939, and 1943. The player salaries represented over 44 percent of total operating income and 36 percent of gross operating expenses in 1933, indicating a squeeze on the owners’ profit margins. After World War II, these ratios hovered around 20 percent but did not include managers’ and coaches’ salaries in most cases.1 As a comparison, modern owners provided a blue ribbon committee with payroll and revenue data