One of the many reasons I've heard to justify the insane contracts handed out this off season is that in a couple years, these will look like perfectly reasonable contracts. Apparently, in the year 2010, replacement level outfielders will be getting six year, 120 million dollar contracts, so we had better start appreciating Juan Pierre.
This claim never seemed right to me. If salaries continued to rise at a ridiculous rate year after year, then we'd be seeing players making exponentially more year after year. Logically, an explosion of salaries should lead to a relatively stable market in the following years.
But, why make assumptions when we have data. Thanks to Baseball Almanac, the average major league salary for every year since 1970 is available. I've turned this into graph form. Below is the percentage increase in the average major league salary from year to year.
The graph stays relatively stable until 1975, the advent of free agency. Interestingly, at this time there is a sustained boom in player salaries, with an over 20% increase in all but one year from 1977 to 1983. However, once the novelty of free agency wore off, baseballs economics have been relatively stable. Salaries go up, the owners say "dear God what have we done?" contracts stay relatively consistent, then in five or six years, baseball gets a case of the stupids, and we repeat the cycle. Mass salary inflation hasn't existed since the advent of free agency, and unless baseball is experiencing unprecedented economic growth, we'll be getting as much enjoyment out of the Gary Matthews Jr, and Gil Meche contracts in 2011 as we do today. While 11 million dollars a year for an average starter is a sad new reality, it shouldn't get worse anytime soon.