Manny Ramirez Suspension - How Much Did It Really Cost Him?

Written By: Terrance  J. O'Brien
May 12, 2009

By now you probably heard that Manny Ramirez, the super star outfielder for the Los Angeles Dodgers, was suspended 50 games for illegal drug use. He becomes another baseball star that is a willing participant in the steroids era.

He is suspended without pay. This costs him $7.6 million in salary or $152,000 per game.

What Did the Suspension Really Cost Him?

It is not just the $7.6 million, he lost in wages, but also what he could have earned on the $7.6 million, had he been able to invest it. This missed opportunity to invest his money often referred to as Lost Opportunity Cost.

Manny is probably in the 40% tax bracket. This bracket includes federal, state, and local income taxes. It could be higher, but for calculation purposes, we will use 40%. His take home pay is about $4.6 million or $92,000 per game. He probably doesn’t need this money for his basic living expenses. Most of the money could have been used for savings or investment.

The $4.6 million invested at 5% in a tax free environment would have yielded, over the next 25 years about $15.5 million. This is $310,000 per game not $152,000 per game as originally reported.

Manny is 36 years old. The current life expectancy for a person that age is another 48 years. The cost of the suspension, over his lifetime, when factoring in Lost Opportunity Cost, is a whopping $47.8 million or $956,000 per game.

Do the numbers on Michael Vick if you think a 50 game suspension is costly. He is the former quarterback for the Atlanta Falcons who was suspended from football, and jailed for sponsoring illegal dog fighting. It is reported he lost over $100 million in salary and endorsements. This is not including the missed opportunity to invest or Lost Opportunity Cost. This $100 million could easily be close to $1 billion when you start looking at the true cost.

The Lesson

These bonehead decisions by these star athletes carry huge costs. The costs are not only monetary. Their reputation and more importantly the perception as pillars of the community and role models will forever be tainted.

 
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