Salary caps are usually tied to a percentage of league revenue. So the spending on players doesn't change, just the distribution.
Does MLB need a salary cap/floor?
- Thread starter Max Power
- Start date
The problem is the disparity in local revenues, which are only going to get greater. Hell, the Dodgers RSN deal gives them like 3x as much money (+$200M) per year as the Sox, and the Sox have a good deal!
Agreed --- these two contracts have (finally!) broken baseball's salary schematic(s).
The next CBA is '27 isn't it?
If the MLB is smart, they'll tell all owners to fiscally prepare (now) for a substantial stoppage.
MLB has to break (if not aggressively bend) the PA.
You won't have a relevant league if you fail to modify the current structure.
Instituting a cap with a linked percentage of revenue means the owners opening their books to the Player’s Union. That seems much less likely to me than a bunch of billionaires keeping their finances to themselves until the whining about one team spending a lot dies down.
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The NHL had to cancel an entire season for there to be a salary cap, and subsequently lost another half season from the fallout. The NFL had to endure two work stoppages, one of which took away a good chunk of the season. Instituting a salary cap will be a painful process, and will probably result in Congress pulling the league's antitrust exemption unless there is a salary floor to go along with it. Personally feel it's time for that anachronism to go away anyway, but league owners should be prepared to give it up in exchange for a cap.
One team isn't spending 50% more than the second highest payroll team -- the Dodgers don't even have the highest payroll in baseball today.
There is PLENTY of revenue sharing already. Every single team receives over $100 million in revenue sharing every year, before a single ticket is sold. This is to say nothing of the fact that capital infrastructure costs for the entire industry are almost entirely tax-payer funded, and that the owners have a legally protected monopoly.
I hate to be the one to shatter your innocence about this, but the money that all these poor owners of "small market" teams say they don't have? They have it.
The fact that people still say things like this despite the fact that things like college football and the Premier League exist and thrive astounds me. There is no evidence whatsoever that putting in market restrictions to reduce spending and enforce parity makes a league more popular.
It does at least feel like we'll enter an era of more deferred money accounting games for star free-agent players that are willing. Teams in high-income-tax states can essentially offer players a way around paying state taxes, thus putting their offers on equal economic footing with low-income-tax states without having to actually up the $ and the luxury tax hit, and the player and agent get the notoriety of the massive headline.
Yes, MLB won’t be relevant entertainment until we can figure out how to put even more money into the pockets of billionaire owners. Instead of working harder and investing in their teams so they can find a way to win, we need to enforce pairity from the top down so that even teams that don’t try have a chance to win.
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It's all insane I agree, we have to suspend reality a bit even talking about these $ figures.
My main point is that the current long term structure of these contracts is mostly a team choice to figure out how to meet a player's price while also taking advantage of the interest rate environment (with the added significant benefit of keeping AAV lower).
In a different economic situation, we might be seeing guys sign for 6/250 rather than 3/300. The team's aren't too concerned with those back end years honestly, its just a way to structure a contract and meet the current market price of the player.
They aren't really looking at being suck with a 30M albatross payment 10 years from now, it's built into their budget and they are choosing to do things this way. So as fans I don't think we need to be too concerned with the crazy length as much as it might seem.
This is so backwards. The UNION needs to break OWNERSHIP on a salary FLOOR.
The issue this sport has is somewhere between 5-8 teams actually try every year, ~5 teams actively try to LOSE every year and everyone else in the middle just goes "can I have my revenue sharing money now, Rob?".
The Dodgers and Yankees spending isn’t new. They’ve combined for two World Series titles in 23 years. The Dodgers title was in the covid shortened season. The Yankees title was 15 years ago. And Steve Cohen spent like crazy and missed the playoffs.
Put another way, there won't be any kind of salary cap without a prolonged strike.
Not even sure how that would do it, I don't think either a majority of the owners or a majority of the players want one.
And anyway, in terms of “parity” in lieu of a salary cap they’ve expanded the playoffs. So if the Dodgers (or Yankees or Mets) buy everyone and win 108 games, they are still only one of 14 teams in the more crap-shooty playoffs and still have to win three rounds for the title. So the Reds or Twins or whoever still has a shot.
edit - but the Dodgers will probably make the playoffs virtually every year. Even more sure than the Lakers.
edit - but the Dodgers will probably make the playoffs virtually every year. Even more sure than the Lakers.
I'm guessing a slim majority of owners would want one -- there are still more unambitious teams than ambitious ones. Totally making this up, but I'd guess:
ANTI-CAP (11): Mets, Yankees, Dodgers, Cubs, Phillies, Red Sox, Rangers, Astros, Blue Jays, Giants, Braves
???-CAP (5): Tigers, Mariners, Nationals, Cardinals, Padres (new ownership)
PRO-CAP (14): Orioles, Rays, Twins, Guardians, White Sox, Royals, Angels, A's, Marlins, Brewers, Reds, Pirates, Diamondbacks, Rockies
Of course the Anti-Cap owners are more powerful/influential than the Pro-Cap group, but if you're just counting noses...
But there would not be a cap without an accompanying floor, then who is still for that?
I don't think that's true because of the current post-season formulation. Yeah, it's not great that a small number of teams--or even just one team--can buy up all of the best players and all but guarantee being in the mix year in and year out. But it's not like it's the EPL where it's just one of four or five teams year in year out. Yeah, the broader, longer playoffs, let mediocre teams have a shot at winning it all, but that's a bug and a. feature.
I think we're agreeing.
I'd guess a bunch of the more radical Anti-Cap owners would be for a cap with no floor, or with at least with a floor that doesn't meaningfully affect how they conduct their business.
The players union would object (as they should), and if the owners tried to impose this in the next negotiation you can count on a strike.
Have it at --- bring on the floor and the ceiling.
We have been discussing the fundamentals of this for almost 30 years now (somewhat via the 'Costas book').
But we cannot have 2-3 teams gobble-up the entire regular season with 105+ wins and waltz into playoff spots because they have an army of $20-25 million dollar per season players --- and just think that the expansion (and randomness) of playoffs will cure the 162 game / 6-month snoozefest.
The interest in baseball across the entire landscape of the US is waning and sure to become a niche sport in the next 10-15 years --- if we continue on this current path. If you deny that, I don't know what to tell you.
I think your post nails it in terms of how you mitigate disparate spending without putting an elaborate set of caps and floors in place. Not only does it avoid a complicated system which, no matter how well designed, will likely lead to some form of arbitrage but it having David versus Goliath as part of your playoff structure might also generate marginal rooting interest.
One thing is for sure. Every Dodger loss this season, regular and of course postseason, will have some sort of price-tag associated with it.
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Orioles will change in 3-5 years
Maybe Dbacks and Nats too
Cardinals if they go back to scouting as well as they did in the 80’s could change too.
But yeah, right now, that seems right
I am with you here.
But OTOH it's a 162 game season so it can be ven more random than the famous "any given Sunday".
To go a bit further, the % of MLB revenue going to the players is lower than it was decades ago. The current system works very well for the owners.
The more interesting questions concern the MLBPA trying to get the draft and/or the six years of service time before free agency curtailed or even eliminated.
Why would the Rays want a cap? They have the second best record in the AL, 3rd in MLB, over the last FIFTEEN years. The current economic setup of MLB is incredibly friendly to smaller spending teams. If you’re smart, that is. A huge chunk of performance, or wins, or however you want to look at it, is tied up in incredibly cheap labor. It’s why you have these ridiculous contracts— the only way to get a real advantage from money is to get involved in auctions for elite talent—and it’s concentrated in a handful of players, who have highly volatile performance over time in a sport where one player doesn’t move the needle that much on team success. And if you get it wrong with these big contracts and haven’t built a solid foundation, then you’re the Angels.
The genius of Friedman was the restraint he showed when he first took over the Dodgers—not giving out long term deals, building the farm, creating a pipeline of cost-controlled talent. That long game has put them in the position to go crazy now, and importantly to be highly selective with who they throw the big deals at. No Devers or Bogaerts for $300m. They had the luxury of doing this in the NL West, of course, which made the “soft rebuild” much less painful than what the Sox tried to do in the AL East. Bloom tried to pull off the same thing and got chewed up and spit out.
Baseball should just get rid of the luxury tax since they have allowed the teams to game it and make it irrelevant now. It now only restricts teams that won't be able to get players to give them sweetheart deals that allow them to defer payments 10 years down the road to soften the tax hit.
Salary caps/ floor are DOA unless the owners open their books to make real revenue sharing a part of the deal. In this day and age where many of the teams are turning into real estate concerns or have other operations (Like FSG) then I think this gets a lot harder.
The other teams are all run by billionaires who could invest in their teams to improve the product they put on the field, why is that not an option?
Again --- a floor would work toward that.
But a solid structure, where financial advantages / runaway spending, aren't the primary reason for a franchise's post-season participation, is needed.
If we want to be stubborn on that point, then the regular season portion of this sport will become as relevant as the NHL's version.
The top three payroll teams all missed the expanded postseason this year (NYM, NYY, SD).
This has already happened, the two WS teams this year averaged 87 wins between them and both barely made it into the postseason.
Great --- one season where it was an anomaly.
In '22, the top 5 spenders ($220M or more) all made the post-season.
And make that 7 of the top 9 (only the Red Sox and White Sox failed).
Do you have a plan to instill competitive balance that doesn't rely on the players to foot the bill? A floor doesn't do anything unless it's tied to meaningful revenue sharing, which only happens if ownership opens it's books. I supposed we should just take the owner's word for it that they're not making that much?
I think the regular season does as well as can be expected of being relevant as long as we have expanded playoffs. I don't think the owners are all that serious about actually fixing competitive balance if it actually costs them money.
So you've got 1 year that you claim is an anomaly, as compared to the 1 year previous?
Show your work - can you provide an actual correlation between team payroll and playoff appearances?
A $125M salary floor would have forced 11 MLB teams to pony up some moulah to fill out their payroll.
BFD - that's pocket change based on payroll vs. franchise values (from Forbes):
Detroit, $122,235,500 (add $2,764,500, team valued at $1.45 Billion)
Milwaukee, $118,761,987 (add $6,238,013 team valued at $1.605 Billion)
Arizona, $116,471,292 (add $8,528,708 team valued at $1.38 Billion)
Washington, $ 101,190,153 (add $23,809,847 team valued at $2 Billion)
Kansas City, $92,468,100 (add $32,531,900 team valued at $1.2 Billion)
Miami, $91,700,000 (add $33,300,000 team valued at $1 Billion)
Cleveland, 89,424,629 (add $35,575,371 team valued at $1.3 Billion)
Cincinnati, $83,610,000 (add $41,390,000 team valued at $1.19 Billion)
Pittsburgh, $73,277,500 (add $51,722,500 team valued at $1.32 Billion)
Tampa Bay, $73,184,811 (add $51,815,189 team valued at $1.25 Billion)
Baltimore, $60,722,300 (add $64,277,700 team valued at $1.713 Billion)
Oakland, $56,895,000 (add $68,105,000 team valued at $1.18 Billion)
So this threshold for cheap teams has them adding $420,058,728 vs $16.588B in franchise values. That's these 11 teams adding ~ 2.35% of their franchise values. It's worth noting the following:
- No team saw their franchise value decline.
- Was, Az, Pitt, Clv, Cinci, and Oak were the only teams that didn't see their franchise values increase.
- Additionally only Mia saw an increase below that 2.35%
- From the 11 teams on the list the average franchise value increase was 7%
Show my work?!!! Are you kidding? Take a look at this sport the last 10-15 years.
We now have "players" that have annual salaries that exceed the entire payroll for some teams; you think that's balance?!
What more do you need?!!!
"You" need to disprove, show "your" work, etc.
I don't have to lift a finger...just look at recent history.
If anything, players make too *little*. Considering the value of the franchises and the value the labor of the players brings to the billionaire owners, they could all make more and it wouldn't matter to ownership in the end. The fact is that NBA / MLB / NFL athletes are probably all underpaid. If Jayson Tatum was on the open market and there was no salary cap, he could make 2-3x what he's making now. Same for most superstars. In MLB there's obviously no hard cap but considering the value someone like Mookie Betts brings to a team, he's basically underpaid even at his current salary.
The top paid players would make more on a year to year basis if they were free agents every year, but the top paid baseball players have traded maxing out yearly salaries for long term security. I don't think Trout would have gotten much more than his $400 million if there were no competitive balance tax. If someone wanted to bet on themselves and didn't care about constantly switching teams, they could take a series or 1 or 2 year contracts and easily get $50 million a season. But nobody seems to do that unless they're older and have no other choice.
That’s exactly my point, every time somebody gets their tighty whities in a twist over team spending, the idea of a salary cap comes up, but "competitive balance" is always just a measure to increase the profits of ownership by suppressing labor costs. The salary floor suggested by @lexrageorge is a pittance compared to the money involved (to say nothing of measuring the suppression effects limiting contracts to other players) - When literally every MLB franchise is valued at $1B you have to go pretty far to start substantially spending against that value.
AFAIK (and I don't follow other sports at all, so correct me if I'm wrong), the other salary cap leagues all have open books and tie the salary cap to league revenues, with the players getting a cut of those revenues. Now somthing like this could also solve the problem of the best young players trapped in pre-arb or arb making peanuts, because then they'd see that increase, but it requires all the MLB teams to open their books, and not suprisingly the only remaining monopoly in the country doesn't want to do that.
Luckily the math works out pretty well for everyone, so @Buck Showalter 's plan to break the union by having the owners lock out the players in '27 is probably not going to happen. MLB is raking in billions of dollars a year. I doubt all of the owners are looking at Cinnci or Oakland and thinking that they should interupt their revenue streams to make sure those guys feel like they also have a chance to win.
One of Charley Finley's ideas at the dawn of free agency in the 70s (which helped dismemeber his A's teams) was to have players become FA's every year. Even though the idea freaked out his fellow owners, Marvin Miller knew the real danger was to the players competing for money in a flooded market *every* off-season.
How is this relevant? Finley's suggestion was in the revenue environment of the 1970's, which the intervening 5 decades have changed. And unless this anecdote was also limiting reserve clause controls (ie pre-arb, arb for 6 years) then there's no reason it couldn't have stabilized after a few years of chaotic markets into players signing multi-year deals as they do now.
Thanks for breaking this out @Sille Skrub ; one point of detail to check on is this:
Are we really sure JWH and Sox ownership are actually anti-cap? JWH has been quoted as preferring leagues with capped expenditures on players, and some of his comments around the lock out made it seem like he'd definitely prefer a salary cap. It's also not like the team's current spending shows them blowing through CBT thresholds right now.
Again are they? The only real data point we have is when they set up Luchino as an alternate candidate for commissioner to Manfred, and they didn't win that one.
Its always fascinating to see who represents the owners viewpoint when this topic comes up. It really feels as if there are still fans out there clinging to the (water carrying local columnist) concept that players are demanding too much without considering what that actually means. Maybe you are a billionaire or plan to be one but it feels like a lot of those choosing the salary cap option forget what team *they* likely play for. People who have bosses should generally want all workers to get paid as much as possible for their output.
Furthermore, as has been noted, we know the players salaries but we never see the owners financials. I think some here might be shocked at how much money some of these teams make versus how much they pay out. Regardless, as all adults likely understand, you cannot have a good faith discussion about what level of labor cost is unsustainable unless you see all the economics.
How can anyone say we need a salary cap without this detail?
Finally, some fans really seem to let owners off the hook. We get caught up in the three card monty of the front office/CBO/GM/coach shuffle when people should be looking at ownership. Are they really trying to win? Or are they trying to string along the fanbase and hope to get lucky ("we are moving in a different direction with our front office and now things will be better!!")? Are they spending at the top of the market or have they ever? Etc etc.
Furthermore, as has been noted, we know the players salaries but we never see the owners financials. I think some here might be shocked at how much money some of these teams make versus how much they pay out. Regardless, as all adults likely understand, you cannot have a good faith discussion about what level of labor cost is unsustainable unless you see all the economics.
How can anyone say we need a salary cap without this detail?
Finally, some fans really seem to let owners off the hook. We get caught up in the three card monty of the front office/CBO/GM/coach shuffle when people should be looking at ownership. Are they really trying to win? Or are they trying to string along the fanbase and hope to get lucky ("we are moving in a different direction with our front office and now things will be better!!")? Are they spending at the top of the market or have they ever? Etc etc.
Salary Cap really doesn't make sense in the MLB where more revenue is generated from the teams than the league. The League's revenue also a large part generated from "non" baseball activities unlike the other leagues (MLBAM) and that wouldn't be considered in the cap. Right now the team pool less than half of their revenue and distribute it and then the team owners then get a cut from their "non" baseball activities that the union wouldn't see. There is also the issue of the RSNs which is a loophole that keeps the big market teams from lynching Oakland, Tampa, and Miami owners.
I think it bears repeating, available data show the % of MLB revenues that is going to the players is lower than it was decades ago. The owners love this trend.
As noted by OCD SS above, imposition of a floor/cap structure entails much more disclosure of team finances than owners would want, especially with expanding internet, gambling-related, and real estate revenues that murkily (at best) pass through to the players.
The MLBPA Has a Problem | FanGraphs Baseball
Also
The MLBPA Is Failing Its Players (deadspin.com)
As noted by OCD SS above, imposition of a floor/cap structure entails much more disclosure of team finances than owners would want, especially with expanding internet, gambling-related, and real estate revenues that murkily (at best) pass through to the players.
The MLBPA Has a Problem | FanGraphs Baseball
Also
The MLBPA Is Failing Its Players (deadspin.com)
Yeah, I wrote this in 2015 so the numbers may have changed a bit, but at that time it showed that in the mid 90s players got just over 50% of the revenue, and by then it was already under 40%. A salary cap will just put more money in owners' pockets .... even if tied to revenue it's too easy for owners to split up their businesses to show their baseball revenues being lower. (e.g., a team can sell the parking lot to a separate company, wholly owned by the owners, and the parking revenue is now not part of the baseball revenue as it's an indepenent separate business).
Baseball players are underpaid!
A cap without a floor is a nonstarter.
A cap with a strong floor will help, but the owners will have to open their books as they have in the other sports
A cap with a strong floor will help, but the owners will have to open their books as they have in the other sports