Without a doubt, Major League Baseball needs a Salary Cap. Presently, the talent distribution within the league is greatly altered with Small-Mkts having 1 option: rely on the MLB Draft and blossom prospects. On the other end, large-market clubs receive tremendous revenue figures via television networks, merchandise and ticket sales, facilitating the ability to remain aggressive during Free Agency periods. Thus, there is no downside to FA acquisition for large clubs with 3/4 large-mkts clubs repeatedly mentioned as the only suitors. Until a Salary Cap/Floor is implemented this trend will continue to occur. Small-Clubs will rely on prospects to win and the Large-Teams will abuse their market location in acquiring the talent of the league. Small-Mkts are presently accountable for every move made while the Large-Clubs can make mistakes disappear with money. The Yankees have made many Free Agent mistakes in the past, only to get it right in 2009 with Teixeira and CC. Previous examples include Vazquez, Giambi, Pavano, RJohnson, KBrown, Wright, Farnesworth, Abreu, Clemens, Sheffield, JWweaver, Igawa - all known names guaranteeing a winning record/playoffs though no World Championship. On the other hand, the Toronto Blue Jays went all in in 2005 - investing in Lyle Overbay, AJ Burnett and BJ Ryan. As a result of the regrettable acquisitions, the Jays are presently feeling the consequences of the players underachieving and their hands tied when it comes to FA acquisition. A good example is their decision to sell All Star pitcher Roy Halladay for prospects a couple weeks ago.

the Luxury Tax is not working in its present form - not deterring the Yankees from gobbling talent & each team makes only 800K. what will that buy you in the face of the Yanks getting CC, AJ, Tex?? a new model for the MLB should be in the following form: Salary Cap (prevent large mkts from abusing their geographical location), Salary Floor (require Small-Mkts to spend $$, negate notion Owners are Monsters, only interested in pocketing money), Spread Revenue Sharing evenly among all clubs. to answer the question, "how would you account for revenues increasing/decreasing" - a deposit would be presented every yr as to the amount required for each owner to $$$ into the team. the remaining balance would be redirected to improvements surrounding the team, such as stadium maintenance etc. i would be happy to provide a more in-depth cap figure estimate/scientific method. if i am presented with all the numbers/background i can accumulate a more comprehensive solution.

Here is our fundamental difference of opinion - Revenue Sharing should be equally shared amongst all clubs, no matter the Market size.

The current system is not working, Small-Mkts are suffering. Why allow Small-Mkts into a sport when they have a pre-existing disadvantage?? This is why we have weight cla*ses in boxing. This is why we have handicap in golf. It is not like clubs are competing against each other for revenue dollars. In the end, every club represents MLB, MLB doesnt work for the largest. If Small-Mkts are not provided with the opportunity to receive $$$, we will see the same old - All Stars stacked amongst 3/4 teams, rest AAAA

...but I'd really need to see a realistic model in order to change my mind on the cap/floor system specifically. You need to have virtually equal revenue across the board in order for it to work, and even in the NFL, where the distribution is much tighter than it is in MLB but getting wider by the year, the system has more or less been broken. It's easy to say we'll just share all revenue equally, but that would be disastrous in too many ways to even count. (What incentive would there be to win? To provide good service to the fans?)

The NHL is a better apples-to-smaller-apples comparison here. The cap has certainly helped competitive balance, and the league has been doing pretty well in terms of revenue growth since the lockout ended. But they also have a team coming out of bankruptcy court, and probably 4-5 other teams that are hemorrhaging money. Imagine if 4 NHL teams were up for sale at the same time, what that does to franchise values across the board. The cap/floor system is killing small market teams, with the only exceptions being those that literally sell out every game (i.e. Pittsburgh).

What incentive is there to win??? First its the Small-Mkt Owners who are greedy, now its the players only interested in making money?? These are professional baseball players, training their whole lives to get to this level. Is it all about the paychecks??? I'd say love, pa*sion for the game. I am unfamiliar with the salary cap system in Hockey, though I contend the league is presently damaged and the Smll-Mkt clubs are bankrupt talent-wise. How worse can it get?? 20/32 clubs have AAAA rosters, 3/4 have All Stars. Hmmm I wonder why... this is a huge flaw and currently ruining our National Pastime

I have to give Maury and Shawn credit for putting up with Andrew. If ever there was a case for the saying, "There's nothing scarier than someone that knows a little, but thinks they know it all," it's in these comments by him.

Using just the "give them all the same amount" commentary. Let's say everyone gets $20 million in revenue sharing. The Rockies would move from $75,201,000 to $95,201,000, while the Marlins would move from $36,834,000 to $56,834,000. So, all you've done, Andrew, is skew everyone. No one at the bottom gains any advantage in this system. This is textbook high school stuff we're talking. Can't believe that you're not seeing how incredibly flawed your model is.

Now, with that out of the way. Maury and Shawn, the NBA's system has flaws, but I could see a soft cap that is tied to league revenues. Yes, this creates problems, such as what will happen next year when suddenly a bunch of teams move over the cap because league-wide revenues dropped, and therefore, the cap figure moves down. And yes, Maury, it's all academic. The players union is never going for a cap. Just want to get into some better conceptual conversation beyond where this thread has been.

-- Tom

Maury,

You KNOW I love this discussion... you keep pulling me back in!

So here's a condensed view of a yet-to-be-written manifesto:

1) Lower the Lux Tax threshold
2) Increase the penalty for those going over the lux tax threshold
3) Increase the penalty for repeat offenders. 40% isn't "painful" enough, obviously. What about "third time offenders pay 100% of every dollar over the threshold"?
4) For those teams TAKING moneys from MLB in any way, they must submit audited financial statements to detail the sources and uses of their funds. If they cannot adequately prove that the 'welfare checks' aren't being used to improve the team (not a 1 year view, but a 3 year view would be needed), then they don't get their next year's checks.


Make the penalties harsher but also make the smallest spenders accountable.

Gets around the dreaded "cap" and "floor" issues.

Crazy?

Give you props on this idea, Maury. The salary cap is like give people Rubik's cubes and saying "solve this." I wonder if we took a true capitalists approach, how would that turn out: First, sure it's unfair for the Yankees to buy everyone, but why shouldn't they be allowed to? They make the most money, why shouldn't they get the Mustang instead of the Honda Civic? Second, how about some responsibility for owners of small market teams? If the Pirates ownership wants to spend no money and draw nothing and suck, then isn't that digging your own grave? I understand its an historic team and city, but they have the option to spend money, draw and sell merchandise just like everybody else. Small market teams have had some level of success including the Rockies and Rays, why can't the Pirates do it? Or Royals? If the fans really want their team to win, isn't it their responsibility to pressure ownership?

Figured I'd offer another point of view, though it's not exactly one I share, I wanted to put it out there.

enjoy the cube

matt

I am inclined to agree with Maury because Maury is smart.

I am opposed to a hard cap, just because I look at teams in other sports that end up with big salaries that they can't move. Having a team like the Yankees that is willing to take on big money allows for some flexibility and, in theory, makes it easier for teams to rebuild. But there's still a big gap between the haves (the Yankees, especially) and the have-nots. But rather than push for a hard cap, I'd like to see a strengthening of the luxury tax so that it's a true deterrent, along with the institution of things like a worldwide draft, hard rookie salary scale, more centralization of local revenue.

Firstly, every sports league has large-, medium-, and small-market teams. Every league has revenue disparity. Fretting over the plight of the small-market club is not specific to baseball.

Secondly, the luxury tax is a soft cap that works to an extent, but not well enough. I would be in favor of increasing its penalties. Also, albeit this is not a popular notion, it might benefit small-market teams to further expand Type A & B draft compensation schemes.

Thirdly, the remedies most beneficial to medium- and small-market clubs are to implement an international draft with hard slotted/capped 'rookie' bonuses and salaries. Like most unions, the MLBPA would be more likely to throw new members under the bus in order to preserve or procure more favorable terms for their current membership at time of CBA renegotiation. An equitable distribution of international talent coupled with the ability to draft solely on talent (and not fears of bonus demands) would greatly benefit teams operating under tighter budgetary constraints.

I agree that a hard cap will be difficult/impossible to implement. Not only will there be Players Union objections but how to tie it to revenues when MLB is filled with "sweetheart" broadcast deals that mask the team revenue and put the monies in local or regional networks (often partially owned by the club owners).

My thoughts...

1. institute a floor for MLB salaries, activated over 3-4 years and go to about $70 M per team. No complaint here from the Union. Also teams such as the Marlins should be forced to sell if they refuse to support this. MLB will never achieve any local fan base with their type of ownership.

2. have the rule 4 player draft become worldwide and introduce hard slotting for the draftees. Also allow the trading of draft choices. The Union would complain but these players are not yet their members and theoretically this money would in part go to MLB salaries.

3. eliminate draft choice compensation for Free Agents. No complaint about this from the Players Union and this could make any concerns from item 2 moot.

4. eliminate "super two" arbitration category. This concession from the Union would allow their members promotion to MLB based on readiness, rather than calendar time.

5. raise the minimum wage from $400K to perhaps $600 K. This would lessen the consequences of item 4 and still keep young players affordable.

best wishes for a happy new year

Maury,

That's pretty much it.

There's a fine line and a tough job in reading financials to ascertain which funds were used for which committments. Proving it would and will be prickly, but I'm not a forensic accountant either.

I think that if the beneficiaries can do a reasonable job of "proving" what they are using their lux tax receipts for, then they continue receiving them. Those who cannot (be it for whatever reason, including witnessing a significant/accelerated debt pay-down) will either not receive any payments the following year, or a decreased amount.

I'm a Yanks fan and I know that a lower tax threshold and greater penalties will make it tougher for them to spend at will. I also know that the Union might view it as a soft cap and blanch at the idea.

However, it's not a hard cap and therefore might be more palatable.

And I maintain that if a team wants handouts, they should be forced to share (at least with MLB) their financials. If the net operating margin for the average MLB team is (making up a number) 12% and one or two of the lowest spenders are posting a 20% margin (3-year average), well, someone needs to be held accountable for outsized profits while receiving "child support".

/end ramble

But that won't stop me from joining in. I think the fundamental problem I have with a salary cap is that salaries paid remains largely irrelevant to a team's success.

Okay, stay with me.

The Yankees won this year by throwing money at three very good free agents. Sure, but Tampa came very close the previous year the exact opposite way.

The Yankees have been dominant since the mid-90s, but only one of their titles (this most recent one) came with a payroll north of $200 million.

The Yankees are themselves slowly decreasing their spending, by pursuing more reasonable options, such as Granderson a bargain for 2010, or Johnson, relatively cheap, or Vazquez on a short deal for significantly less than the Red Sox gave John Lackey.

The solution is not to hamstring New York. The solution is to get better at player development. I think that's already happening. Except say with the Mets. Who as Jason and I have discussed are effectively hopeless.

The clubs who make smart personnel decisions will succeed. Look at Seattle. That entire franchise has been turned around and the biggest free agent signing, Chone Figgins. Likewise in Denver, despite a poor contract for Todd Helton, Dan O'Dowd has been able to a*semble a fine group of young dynamic players. A salary floor would only encourage foolish deals like the Helton deal, or any that Ed Wade has conceived, because, hey you gotta spend the money, let's all be like Omar!

The best solution would in my opinion remove development restrictions. End the rule iv draft, making all collegiate and high school players once eligible to be signed free agents. Teams that prefer not spending on veteran talent can find and sign kids and develop them into big leaguers. And because young talent is a crap shoot, it would encourage teams to put more effort into finding the best possible players and putting them into a system that teaches fundamental skills and mechanics.

Relying on a salary cap to restrain the Yankees (or Red Sox) is lazy.

Stepping back and returning to the world in which we live, I tend to think status quo will reign supreme. I do not believe that a salary cap/floor scheme or a luxury tax with revenue sharing salary requirements will ever work to maintain a competitive balance. Likewise, I cannot imagine major league baseball tinkering with player development to prevent players from dropping due to signability concerns. The easiest way to do that is to make draft picks tradeable, a decision that would easily benefit smaller market clubs. Rather than paying slot money for a signable player that has little upside a team could deal the pick to a team unconcerned with signability and get that teams draft pick and a player to be named.

I see regulations on the system as impediments to competition, rather than facilitators of it.

No Tim, this is what I'm proposing: Rockies @ $75,201,000, Marlins @ $36,834,000, depending where cap level lies + revenue sharing amt distributed per team, Rockies receive drastically less rev than Marlins. Possibly very little to none at all. Same with NYY. Each team will have their own unique amt.

Feel free to conclude I know little on the subject, and to be honest, you may be right. I try to remain as simple as possible, and the flaws of this issue is very basic. The main objective for Major League Baseball should be based on Fair Competition, shrewd trades and well-renowned scouting. Right now, these rules do not apply to the largest 3/4 Markets. They can acquire at-will, have mistakes erase with money spent & play for a championship every yr. They sit pretty on the top while the rest lie scrambling for Yankees scraps. When you look at the NY Yankees roster, there is a reason why they have All Stars in every position. System is flawed and needs to be fixed now

"Having a team like the Yankees that is willing to take on big money allows for some flexibility and, in theory, makes it easier for teams to rebuild."

Tim, you make it seem like the Yankees are doing everyone a favor by gobbling their All Stars....

"Don't worry, we'll take your players once you've invested time and effort blossoming them. Spend a couple yrs getting them ready, then give us a call and we'll sign them to multi-yr deals because we have money bleeding out of out pockets from the YES Network, Merchandise Sales, Tickets, remaining 6 Networks, etc. Since we're a role-model club, we'll give you prospects in return. How does that sound?!?!? Have a wonderful September."

good news, thx for the clarification.