Today, sources say that the New York Yankees signed free agent first baseman Mark Teixeira to a whopping eight-year contract totaling $180 million. Teixeira is arguably the best non-pitcher free agent on the market (one could make an argument for Manny Ramirez, but it seems the market has focused more on Teixeira first). This signing comes on the heels of the Yankees signing CC Sabathia to a seven-year contract worth $161 million and A.J. Burnett to a five-year contract worth $82.5 million. Sabathia was hands-down the elite free agent pitcher, and Burnett was considered the second- or third-best free agent pitcher (depending on whether you ranked Derek Lowe above or below Burnett). That’s an extraordinary $423.5 million on three guys, all in the last month. And the Yankees got all three of them — three of the top five free agents on the market.
Now, just because the Yankees are spending money like drunken sailors does not mean they will win. Indeed, even with these signings, it appears that the Yankees may wind up with a smaller payroll than last year (when they failed to make the playoffs), when it stood at $222.2 million. In fact, the Yankees’ payroll may wind up south of $200 million. But this situation still strikes me as problematic for the longevity of Major League Baseball (MLB), especially in small- or mid-size markets.
It leads to a debate which may be worth revisiting: That is, should MLB adopt a salary cap?
The NBA has a soft salary cap — where teams can only sign players under limited conditions and for limited salaries if they exceed the salary cap. The NFL has a hard salary cap, where teams cannot exceed the salary cap (and thus must shed contracts to get under the threshold).
The NFL model is more difficult, as MLB contracts are guaranteed for the most part, while NFL contracts are not. However, the NBA model may hold more promise. The NBA model has arguably led to more parity in the league and created a situation where — or at least the perception that — even small market teams (see San Antonio) can compete consistently for the playoffs and even championships.
Or is the solution a different revenue-sharing approach for MLB to enable smaller market teams to spend more on their payrolls? Or should we leave things as they are and let the market sort it all out, even if that leads to smaller market teams moving to greener pastures or, more likely, some contraction in the market with the result being fewer MLB clubs?
I doubt anything will change, as the MLB Players Union has made it clear it will not agree to a salary cap. And while there have been positive changes in the revenue sharing in MLB, one wonders how much further the MLB Players Union or the more successful teams’ owners will be willing to go. But it strikes me that MLB cannot continue to have a handful of teams scooping up all of the elite free agents because they can afford to spend with near reckless abandon and thus price most other teams out of the market (see the Milwaukee Brewers’ seemingly competitive offer to Sabathia of five years for $100 million).
It is true that smaller market teams like the Florida Marlins have won championships recently (and the Tampa Bay Rays almost did this year) and teams like the Oakland A’s seem to compete for divisional championships and/or the playoffs pretty consistently. But these tend to be the exceptions, while the Yankees, the Boston Red Sox, and the Anaheim Angels (I refuse to call them L.A., they’re 50 miles south of L.A.) seem to be in contention every year because of their ability to outspend other teams. To be sure, spending money does not always lead to success — see the Yankees and the Detroit Tigers last year, the teams with the two highest payrolls this past season — but it seems to disproportionately tip the scales in favor of those handful of teams.
It is the perhaps the magical essence of baseball that fans think that their team can win every year. But if parity cannot be maintained, will this hopefulness cease? And if so, what result?
What do you think?
Salary cap is necessary.
Action lies in the hands of the fans.
Baseball Union
They are protecting their interest by not wanting a salary cap. I understand that.
Baseball Fans
I’m protecting my interest too. Baseball is entertainment. An unlevel playing field makes baseball not entertaining. I spend my entertainment dollars elsewhere now.
Baseball’s Future
Baseball is short-sighted. Just because fans are coming in record numbers, doesn’t mean it will last. When there are battered women, some leave right away, some will leave after a short time, some longer, but eventually she will leave or worse. I see baseball fans in the same way.
Derek
Baseball absolutely needs a salary cap. When the Yankees can commit over $420 million to three players in the current economic climate, they become an easy target for what’s wrong with MLB’s current economic structure. However, the reasons MLB needs a salary cap extend beyond New York. MLB’s division between the haves and have nots is blatantly clear. This division is crippling to those teams falling in the latter category.
The primary reason baseball needs a salary cap is the fact that half of MLB teams begin the season knowing they have absolutely no chance to make the playoffs – let alone win the World Series. (And don’t point to the Tampa Bay Rays as proof against this argument. They won the AL pennant because of exceptional scouting and player development. Those inside baseball knew the Rays would soon emerge as a legitimate contender).
One of Commissioner Bud Selig’s favorite phrases is “hope and faith.” He provides a simple job description for all of MLB: “Our job is to provide hope and faith — hope and faith that your team has a chance to win.” Unfortunately, if they are honest with themselves, teams like Pittsburgh, Washington, Kansas City and Baltimore know they have no chance to compete for a World Series championship simply because of their economic situation relative to other teams in their division. Clearly, Selig’s “hope and faith” mantra is not being met in these cities.
From MLB’s perspective, this becomes a monetary problem. When fans know their team has no chance to win, they will not spend the same amount of money in support of those teams. Next time you get a chance, take a look in the stands for midweek home game for a team out of the playoff picture. The empty seats typically outnumber those that are occupied. Clearly, there is nothing even remotely close to profit maximization occurring in these cities. This subsequently affects all of MLB.
Those against a cap argue that it is simply a redistribution of wealth from the players to the already wealthy owners. This is true to some extent. However, it can be overcome via the adoption of certain practices detailed below.
The implementation of a salary cap would have to come via the collective bargaining process between the players and owners. This would be no easy task. The Major League Baseball Players Association (MLBPA) has been called the strongest workers union in America. As such, the owners would seemingly need to make some serious concessions in other areas. An increase in minimum salary (which sat at $390,000 for the 2008 season), extended no-trade protections, increased roster size (from the current 25 man active roster) and decreased season length would likely be discussed in those negotiations.
Simply put, adopting a salary cap structure similar to that of the NFL (one which increases every year and is based upon percentage of total revenue) would be beneficial for baseball. Look at what it has done for the NFL. Teams have the opportunity to rebound quickly from poor seasons, parity becomes prevalent throughout the league, and Bud Selig’s hope for “hope and faith” may just come to fruition.
BTW – regarding the Yankees’ seemingly endless revenue stream, Baseball Prospectus’ Joe Sheehan made a great comment: “The Yankees don’t play in a stadium. They play in an ATM with foul poles.”
Baseball does not need a salary cap. Nor does it need to do anything about the Yankees. In fact, the history of baseball has been greatly enhanced by the economically-fueled dominance of the New York Yankees.
I have long subscribed to the view that nothing enriches our times more than great teams and that ultimately nothing is less interesting than a professional sports league where a different team wins each year. Allowing teams to take advantage of their superior financial position enhances the chances that great teams will appear.
There is also nothing new about the phenomenon of New York Yankee financial dominance. Babe Ruth became a Yankee because the New York team was willing to pay more than the market rate for his services when his previous team (or at least its owner) got into a financial jam. Joe DiMaggio became a Yankee because the Yankees were the only team in baseball willing to pay $60,000 in the middle of the Great Depression to purchase him from the minor league San Francisco Seals of the Pacific Coast League. (Everyone in 1935 knew that DiMaggio was going to be the next great player, but no one could match the Yankee offer.) Mickey Mantle became a Yankee because the Yankees spent extravagent sums in the post-World War II era to develop a national scouting network and an elaborate minor league system, and they were usually willing to outbid other major league teams for unproven amateur talent. The phrase “The best team money can buy” was coined to describe the Yankees of the last 1970’s and early 1980’s.
If we really want to take away the Yankees financial advantage, we should force Major League Baseball to abolish its territoriality restrictions which prevent teams from entering metropolitan areas already occupied by other teams. This blatant restraint of trade is actually a US and Canadian anomoly. In other countries the number of teams in a metropolitan area is not restricted by monopolistic rules. For most of the past sixty years, six of the twelve major league baseball teams in Japan played in metropolitan Tokyo, and in the British Premier (Soccer) League, in any given year five or six of the twenty teams play in metropolitan London. Abolishing the territoriality rules wouldn’t necessarily eliminate great teams–the Yomuri Giants, Manchester United, and Arsenal have thrived inspite of unlimited local competition–but it would force them to rely on something other than a territorial monopoly to maintain their dominance.
I was a Yankee fan as a kid, but I haven’t actually rooted for them since #7 retired in 1968. Nevertheless, their presence as the 800-pound gorilla of major league baseball over the past three decades has made the entire sport much more interesting. “Can anyone beat the Yankees?” is a much more interesting story line than “Which one of the 32 essentially-equal teams will roll a 12 this time around?”
Also, I haven’t noticed anyone blogging here about the Kansas City Royals.
I’m glad you mentioned Kansas City, J. Gordon (must be fate). I live in California now, but I’m originally from Kansas City.
Baseball has changed its financial situation from years ago and changed big time. No way would George Brett have stayed in KC his entire career in today’s financial climate. He would have been gone as soon as his first contract was up.
George Brett came up through the KC farm system, just like Johnny Damon, Carlos Beltran, and Jermaine Dye, only to have them picked clean by larger markets. Name me some good KC players from the 70’s and 80’s who left KC. That’s right you can’t name any. George Brett, Frank White, Willie Wilson, etc. would have been long gone and similar players from small market teams would have been long gone from their teams. Yankees would have had their entire crew with Brett, Schmidt, etc. How fun is that???
By the way, in 1993 Kansas City had the highest payroll in the MLB by a slim margin. And we know that KC now spends $150 million (+/-) less than the Yankees now. Like I said, the financial situation has changed and changed big time.
Salary cap needed big time.
A salary cap keeps money in the pockets of the owners, not in the pockets of the fans or players. I can’t understand why fans feel alienated from “greedy” players looking to maximize their salary as free agents, but the same fans have no problems with multi-millionaire owners trying to save some of their own money under the guise of a “fan-friendly” salary cap. CC was getting well more than $100 million guaranteed this winter from a baseball owner, whether it was Hal Steinbrenner, Mark Anatanasio, or Arte Moreno. If baseball had a salary cap, CC probably wouldn’t have been able to go to the Yankees, he probably wouldn’t have got as much guaranteed money as he did, and MLB owners as a whole would have kept more of their money. I don’t see how the little guys (the fans or the players) win with a salary cap.
Seriously? We need a salary cap? For what reason, exactly?
Look, I’m a born and bred Red Sox fan, which means I hate the Yankees with a passion. But please explain to me why it’s such a crime for the Steinbrenners to put the profits they make from the YES network, from jersey sales, from ticket sales, from everything back into the team. They spent almost half a billion dollars in free agency? Well, they made all that. If this wasn’t a sport — if this was, say, Miller hiring away top executives from other companies with promises of perks and salaries — nobody would object to it (except, perhaps, the companies from which these employees are being poached.) It’s certainly not the players’ fault either; heck, as a 3L it’s practically preached to us not to leave money on the table in my salary negotiations with private firms.
People want to reject the Rays and Athletics as outliers, and in fact they are. But since we brought up the Royals in an earlier response, let’s bring them up again: Kansas City represents why the whole “inequality” argument is a weak one. The Royals didn’t get where they were because their players were poached; they got where they were because they are TERRIBLE at talent evaluation. When they spend money, they spend it terribly (Doug Mientkiewicz, Mark Grudzielanek, Joe Mays, Scott Elarton). They’ve gotten some decent drafts over the last couple of years, but they’ve had some really bad ones prior to 2005. Teams like the Twins — who deliberately keep their salaries low so as to collect the tax refund from the league — ring hollow in my mind as well.
If we want a salary cap, I would advocate one like the NBAs; that is to say, a soft cap (with a grace period to get under the cap, of course). There would need to be a minimum salary threshold that all teams must pass, and a maximum number at which they pay a dollar-for-dollar tax. If an owner wants to pay a tax bill, it’s a free country; let them do it. If they stay underneath the soft cap number, they get a cut of the profits. It’s not like it doesn’t work for the NBA.
The Royals knew Beltran, Damon, Dye all were good players. They didn’t “spend” money on Doug Mientkiewicz, Mark Grudzielanek, Joe Mays, and Scott Elarton because it was baseball talent evaluation and they thought these guys were good players. These are players they signed to fill roster spots.
During the years they signed the players you mentioned the total payroll was $30 million or so. Top players make $10 – $20 million. Do you think the Royals were like, Beltran, Damon, and Dye, aren’t good. We’ll let them go and bring in Doug Mientkiewicz, Mark Grudzielanek, Joe Mays, and Scott Elarton because they’re better? Excuse me, but that’s downright idiotic to think the Royals used that line of thinking. The line of thinking they were using is that we have $30 million to spend and we have to fill out a roster so we can’t afford top ball players with out payroll.
The Royals could afford Dye, Damon, and Beltran’s rookie contracts, but could not afford their first free agent contracts after the entire league knows they are now good players.
Geez, is this concept that difficult to understand?
A cap is not about hating a team. I don’t hate the Yankees for spending money in the current system. They are doing what they’re supposed to do. The system is just bad. If someone here doesn’t think it’s bad, and thinks it’s fair, put your money where you mouth is.
I’ll create a fantasy baseball league. Everyone will get “play money” to spend on draft day. I get $200 million to bid on players. Everyone else gets $30 million to bid on players. Then, we’ll all put in $5000 “real money” and winner takes all the real money. If you all are interested, let me know and I’ll arrange it.
To be fair, I feel alienated from BOTH “greedy” players looking to maximize their salary AND multi-millionaire owners trying to save some of their own cash. But that’s probably because both groups have more money than me.
I will continue to enjoy the game of baseball. You have to understand that the Yankees latest spending spree is just another page in a sport with a rich history of inequality among teams.
Good conversation! I am a born Reds fan and really feel that some sort of a salary cap is needed in the game to level the playing field. I don’t fault the Yankees, Red Sox, and other large market teams for signing the players they can under the existing system. What bothers me, as a fan, is that my team must be perfect at drafting, perfect at mid-level free agent signings, and perfect at developing talent. Then what you get is a 1-year shot at the title and then you go to rebuild for another 4+ years. I think the A’s are a perfect example of a well run franchise that has made the playoffs in multiple years, but simply hasn’t the had the luck and the payroll to keep up and win a pennant, let alone a World Series title.
So needless to say, I am a big proponent of a salary cap or whatever it takes to level the playing field and given all teams a decent chance at the title and playoffs. I don’t think the existing revenue sharing method works as it allows owners to just keep the money and not invest in the team. I cite the Marlins as a perfect example. They had a payroll of roughly A-rod’s salary last year. Granted they did make a great run at the playoffs, but we all knew that they had no chance if they would have made the playoffs.
I’m just getting tired of the David vs. Goliath scenario every year with the big spenders in the playoffs and the one-year wonders getting pounded by the big spenders. I don’t quite get how a salary cap wouldn’t work if you made the cap large enough.
Statistically, small market teams just cannot sustain long term success. Anybody think they’ll see another Brewers play-off team in the next decade? Didn’t think so. As an alternative to a salary cap, baseball could fairly seamlessly implement less drastic — and – given the obstinate nature of the player’s association – more practical solutions. Such solutions include eliminating the posting system for Japanese players, realigning divisions so similar size markets compete intra-divisionally (i.e. a division of the Yankees, Red Sox, Mets, Phillies, and Nationals), and creating a “slot” salary cap with a high ceiling and, more importantly, an increasingly high floor so that low market teams just don’t sit on revenue sharing.
Of course, this discussion is meaningless if the Rangers and Rockies of the world continue to sign fly-ball pitchers…
There’s an interesting article over at SI.com discussing why a straight salary cap just wouldn’t work in MLB:
http://sportsillustrated.cnn.com/2009/baseball/mlb/01/15/bp.salarycap/index.html
I dont think a salary cap would solve the problem of fairness, I think you need to add 2 teams to make it 32 teams. Add 2 playoff spots so there are 12 of 32 teams who can make the playoffs, and, instead of restricting a players earnings, realign teams based on payroll spent. Example:
Yanks, Red Soxs, Mets, and Phils in one division and Teams like the Pirates, Nationals, Indians, and Reds in another. This would ensure teams with lower payrolls can be represented in the playoffs. As you spend more you change divisions. This would keep the schedule fresh and teams like the Pirates and Royals would have a chance to play in October.
check out the plan at:
http://thefairball.com/mlb-realignment-plan/
As fans, we naively think that the point of owning a major league sports franchise is to win as many games as possible.
As critical thinkers, however, we realize that the point of owning a team is to earn as large a profit as possible.
Generally, the greater the number of wins, the greater the profits, but that is not always so. According to Forbes Magazine, the 2008 Washington Nationals were the second most profitable team in Major League Baseball even though they were a pathetic 59-102 on the field.
Somebody in Washington knows what they are doing.
That is true the Nationals made a ton of money last year. The people in Washington who seems to know what they are doing are going to kill the Nationals in the long run. The Nationals charge an average $25.00 per ticket, which is 13th in MLB. Local revenues drive baseball, unlike football, and I dont see the ticket price staying this high when they play so badly. With only 12,000 fans a night, I don’t see them getting a good tv deal. Performance on the field always wins in the long run over relocation and expansion. That is why I think when you expand you have to put the team in a division they can compete in. Look at the attendance numbers for the Diamondbacks, Marlins, Rockies, and Rays. They all started out higher and now are sub par.
Thanks for your comments on this issue