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Home Matthew Coller Extended Musings on Whether MLB Needs a Salary Cap

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Extended Musings on Whether MLB Needs a Salary Cap PDF Print E-mail
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Matthew Coller Articles Archive
Written by Matthew Coller   
Monday, 09 November 2009 13:29

In 1995 the New York Yankees payroll was $58 million…..

Maury Brown’s piece “Reasons for Not Having a Salary Cap in MLB are Numerous” delved into the complicated issue of the mighty salary cap. Which, after a Yankee 27th World Series, has somehow become an all-knowing, all-powerful and omnipotent force. I can’t help but agree with Brown’s assertion that the problem is well diagnosed, but solutions have been virtually non-existent. Brown’s solution is to implement a cap floor and a dollar-for-dollar revenue-sharing. Both viable suggestions, but neither is without flaw.

The cap floor, in theory, would force franchises like the Florida Marlins or Pittsburgh Pirates to spend luxury tax dollars on players rather than on, well, yachts. But, as Pete Toms outlined in his piece “Does the NFL Salary Cap Still Work?” there are ways around salary cap floors. Toms cites a Wall Street Journal article by Reed Albergotti, which uses the Tampa Bay Buccaneers as an example. According to Albergotti, the team signed two free agents for a total of $25 million in order to meet the cap floor. Good, right? Well, you would think spending $25 million would undoubtedly improve the team, but, since each player needed to block six punts in order to actually make that money, and neither player has made it into a game so far this season, we must stand in question of our savior, the salary cap floor.

Maybe I’m in the group of diagnosers, but, wouldn’t forcing teams to put more money into payroll cause the Yankees and Red Sox to spend more money? Suppose the Toronto Blue Jays, who are around the middle in salary, needed to up their payroll by $10 million to reach the cap floor. They decide to over pay for a free agent, let’s just say Adam LaRoche, but the Yankees want the left-handed bat, so they offer LaRoche $12 million. Now, Adam LaRoche isn’t worth $12 million, but he gets $12 million because the Yankees had to spend more to get their man. So, now that Toronto lost LaRoche, they either have to far overpay one free agent to meet the floor or they have to spread the payroll amongst two or three lower tier free agents.

Trust me, I’d love to see the Pittsburgh Pirates spend a few dollars and make it to the playoffs, but it appears even if they reached $80 million they still couldn’t compete, especially if there were no salary cap. If all the lower payroll teams were reaching around $80 million, the Yankees could just spend $250 or $300 million and Major League Baseball would be in the same position it is now.

Enter: the dollar-for-dollar revenue-sharing. I’m all for searching for a way to limit how high Yankee payroll can go, but I see two glaring issues with the dollar-for-dollar revenue-sharing. One, it seems unfair to the Yankees. Yes, blasphemy. But, the Yankees signed C.C. Sabathia and Mark Teixeira to long-term contracts under the assumption they’d only be paying 50 cents on the dollar. The Yankees would be paying a penalty for something they never could have foreseen when the long-term deals were struck. The league would either have to allow the Yankees the option to void contracts, which would make things really messy, or allow the contracts to be grandfathered in. In that case, the Yankees would still have stars Alex Rodriguez, Mark Teixeira and C.C. Sabathia .

The other problem is that the “weak” revenue-sharing already has had zero affect on the Yankees spending. Dollar-for-dollar would end up just like it does with real expenses in government - on the taxpayer…or in this case, on the fan. Likely Yankee solution to the revenue-sharing: raise A-Rod jersey prices.

What is most likely, in my opinion, is that those lost in the frustration of upper-echelon payroll teams’ dominance will have to look to the capitalism Gods and hope that pressure from fans will push teams like the Pirates to spend and win. Look at it this way: the bottom five teams in payroll, the Oakland A’s, Washington Nationals, Pittsburgh Pirates, San Diego Padres and Florida Marlins ranked 30th, 24th, 28th, 21st and 29th respectively in attendance. Spend money to make money…Someday they’ll get it.

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Matthew Coller is staff member of  the Business of Sports Network and is a freelance writer. He can be followed on Twitter

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