Jesse Wolfersberger at FanGraphs discusses two models for predicting salary inflation in baseball. The two models are highly divergent for 2011:
With several high-dollar, multi-year deals being signed this offseason, salary inflation will be a huge factor in how we remember these deals 10 years from now. One model suggests that teams reasonably predicted the future salary landscape. The other model suggests that the contracts signed this offeason will be untradeable albatrosses in the near future.
I like the graph at the post very much. Throughout most of the free agent era, salary inflation increased fast enough that almost every deal signed worked out in the long run. Someone would set a contract record, and it was often broken quickly, sometimes in days instead of years. That ended with the Alex Rodriguez contract of 2001, and you can see the big inflation at that time on the graph, and how it leveled out afterward. Because Major League Baseball continues to grow revenue, I believe we are moving into an era of record breaking salaries once again, starting with Albert Pujols.
Pujols is a unique case–I suspect it will be at least another decade before another contract beats the total amount of whatever he signs for in the next year. Arguably, there has *never* been a player who has been this consistent at a ridiculously high level of performance every single year for the first decade of his career (though he has yet to reach the peaks that a Ruth, Williams, or Bonds has managed). Given how many big contracts prove to be bad investments due to lack of consistency, this is a priceless asset that some team will pay through the nose for.