Some have said that the Major League Baseball Player’s Association is the most powerful union in the United States. Considering the money they make and the power they yield, it’s tough to argue.

But what happens when a change may need to be made for the good of the game, and the union is against it? Do they let the game suffer to keep their “hard-earned” lifestyle and bargaining agreement? Do they fight to win, regardless of right or wrong, like they did with steroid testing? When it comes to a salary cap, getting the union to agree may be the most difficult negotiation in sports history.

One thing, however, is getting more and more clear with each passing season: Major League Baseball needs a salary cap. The parity that exists in baseball is a myth, and restoring the competitive balance can only be achieved with control of salaries and a proper revenue sharing program.

There are some intelligent people that I respect, like CNBC’s Darren Rovell, that point out that baseball has had 10 World Series winners in the last 15 years (16 actually), therefore there is enough parity that a salary cap for that reason is wrong.

But those winners (Phillies, Red Sox [twice], Cardinals, Marlins [twice], Angels, White Sox, Diamondbacks, Yankees [four times], Braves and Blue Jays [twice]) don’t tell the real story about why a cap is needed.

Just because you have 10 champions in 16 years doesn’t mean that the season and the league have true competitive balance. All it means is that in those 16 years, 10 different teams have had playoff success. What it doesn’t tell is who is making the playoffs.

What it also doesn’t tell is that in the last 16 years, eight championships came from the top four media markets in the country, and another two from the top media market in Canada. That is not competitive balance. That is major market dominance.

Baseball is not a sport that creates the most deserving champions. After 162 games, the best teams usually make the playoffs, but five and seven-game series are not the best way to crown “the best team” in baseball. It’s just too small a sample. Therefore, basing all of baseball’s level of competition and competitive balances on World Series winners alone is flawed.

So let’s go a little deeper.

Competitive Balance vs. Other Sports

Since 2000, seven MLB teams have not been to the playoffs (Expos/Nationals, Royals, Pirates, Blue Jays, Reds, Orioles, Rangers). In the NHL, NBA and NFL combined, two teams have missed the playoffs (Buffalo Bills, Detroit Lions) since the turn of the century. That’s it. Every NBA team has made the playoffs this decade, and every hockey team has made the playoffs — and they skipped a season!

The seven teams that baseball has not seen go to the playoffs is more than three times as many as all of the other major professional sports combined.

That is not competitive balance.

That is clear proof that Major League Baseball has created a situation where only certain teams are even capable of success, a situation that is exclusive to baseball.

Since the player’s strike in 1994 caused the cancellation of the postseason, salary caps have been a touchy subject. A salary cap is the reason we had no World Series in 1994, and it’s the reason that baseball is facing another threat to its well-being in the foreseeable future.

The only sport with no salary cap has the least competitive balance. Coincidence?

How Salary Caps Affect Competition

The premise of the salary-cap-promotes-parity argument is simple: If teams all have to spend about the same amount of money, then everyone has a fair chance of winning.

I agree with many people that it just isn’t that simple. Imposing a salary cap, by itself, does not promote parity. What it does, as part of a bigger system, is include revenue sharing whereby teams from the biggest markets, perhaps even with their own television networks, provide a level playing field across the board with teams that genuinely can’t do that.

You could make the argument that teams like the Oakland A’s have done pretty damn well for having such a low average yearly payroll. I can’t argue that. But can you argue that they are not doing as well as they could be? When a team excels like Oakland has at finding young talent, how fair is it that the day those talented players hit free agency, they’re gone.

The Florida Marlins have proven that they are as good as anyone at scouting and building a winning team. But twice after winning the World Series, they have had to have a huge fire-sale to get rid of everyone before their contracts skyrocketed. Small market teams can have fleeting success, but because of the economic conditions in baseball, they can’t maintain it. That is where the problem lies.

A salary cap, and the matching salary floor, coupled with a solid revenue sharing program, will allow teams like these to compete year-in and year-out. It’s not fair that teams like this have to take a year or two off after being successful, just to stay in business. The Cubs, meanwhile, haven’t put a World Series winner on the field in over a century, but being in Chicago, they can do business differently.

It’s not just about competing for salaries, it’s about competing in business. The Cubs and Yankees don’t work off of the same business model as the Marlins and A’s. Being in the same league and the same sport, that’s just unfair.

What Works and What Does Not

The NHL

The NFL, NBA and NHL all have some form of salary cap, and yet they not only survive, but they thrive.

The NHL has seen better days, but it’s not the salary cap that caused their downfall. Their ticket sales are through the roof, with better attendance numbers than prior to the work stoppage. But because of their newest Collective Bargaining Agreement (CBA), they have moved on from the work stoppage.

The most important thing facing the NHL is keeping their business in the black. The only way to do that is for the wealthier cities to help out the not so wealthy cities, all the while allowing for even competition.

The NHL’s CBA includes a hard salary cap, as well as a salary floor, guaranteeing that each team’s total salaries stay within a predetermined window.

The NHL Player’s Association had vowed to never accept a hard salary cap, but after a year of no hockey, they gave in to the realism that it was going to have to happen if they wanted to play again. With the acceptance by the NHLPA of a salary cap, the league offered a version of revenue sharing that would allow for a higher salary cap, making both sides happy.

Since the lost season of 2004-05, the NHL has prospered. Certain cities continue to have financial troubles, but those are issues that run a lot deeper than salary caps and revenue sharing. Ticket sales are up league-wide, and when they get a better television contract — which they will eventually — the revenue sharing that is in place is going to help out many, many teams in the league while driving up the salary cap. Everybody wins in the long run.

The NBA

I’ve long felt that the NBA had the best CBA in all of sports. It has some things I could do without, and it is probably the most complicated of all CBAs, but overall, I think it is the best CBA for its sport.

Of the specific items in the NBA CBA that I like the most is the “Larry Bird” exception, as well as the maximum salaries. In the future, I think all leagues will need to have both of these in order to survive. Baseball is currently seeing similar drastic rises in salary that the NBA saw in the 1990’s, and in order to keep things in line, changes will have to be made.

The “Larry Bird” exception allows teams to resign their own players, regardless of their team salary. That means even if a team is over the salary cap, they can resign their marquee players to A) keep them happy, B) keep the fans happy, and C) not get outbid by another team simply because they couldn’t fit a superstar under the cap.

There are many “exceptions” to the NBA salary cap, allowing teams to sign players even if they don’t have the cap room to do so. While their rules and codes may be complicated, the NBA has a lot of good ideas that seem to be working in practice.

There is no doubt to me that some of the provisions from the NBA’s CBA must be included in a Major League Baseball salary cap.

The NBA has put in limits on rookie salaries (something the NFL will need soon), veteran salaries, and allowed for all kinds of exceptions to allow teams to work with the cap to create their team. This is why I believe that the NBA has the best system, and all future sports CBA’s should be based off of the NBA’s.

There are no penalties for being over the cap in the NBA, but there is a luxury tax. This is something that I think can be improved upon.

The NFL

Like the NHL, the NFL has a “hard cap,” meaning that you can’t go over it. For this reason, you see a lot more wheeling and dealing in the NFL than you do in the NBA with regards to the salary cap. You still don’t get a lot of trades in the NFL, but you see marquee stars get waived far more often than any other sport. The reason that that happens is that the NFL, in addition to the hard cap, does not have guaranteed contracts, allowing for high paid players to be cut and their salaries to not kill their cap numbers.

From Wikipedia:

“The salary cap has also served to limit the rate of increase of the cost of operating a team. This has accrued to the owners’ benefit, and is widely regarded as being responsible for the NFL being overall the most financially stable of the major North American sports organizations.”

The NFL is probably the best run of all of the sports, even if it is not technically the best designed. I prefer the NFL and NHL’s hard cap over the NBA’s soft cap, but I think each league has something to offer when creating the perfect CBA.

What Will Work For Baseball

So with all of this in mind, how do you create the perfect Collective Bargaining Agreement for Major League Baseball?

Well, step one is getting the Player’s Association and the owners to agree that baseball needs to make this change. Right now, there are several owners that are willing to entertain the idea of a cap. But getting the owners on board is the easy part.

The hard part is convincing the MLBPA that a salary cap works to their benefit. Currently, you have pitchers that are, by all definitions, below average, being paid ridiculous amounts of money. The salaries are no longer in line with the performances, but teams are still forced to overpay for mediocre talent just to have any talent.

Players like Alex Rodriguez, CC Sabathia and Manny Ramirez will never support a salary cap, and even less likely to support it are players that think they are the next Alex Rodriguez, CC Sabathia or Manny Ramirez. These guys have at least already been paid, but the future is dependent on these exorbitant salaries to support them when they reach the top.

The players and their union fought tooth-and-nail to keep steroid testing out of the sport, now you want to drastically cut their potential salaries? Good luck with that.

But like the players of other sports, they will have to learn one way or the other that it’s going to happen eventually. You can do like the NFL and NBA and reluctantly agree to a cap and go on and prosper, or you can do like the NHL and fight it to the point of a drastic work stoppage, then take a massive pay cut and still get a salary cap. Which one sounds better?

The key to a baseball salary cap is to have a good combination of the other sports CBA’s, while preserving some of the things that makes baseball special — like the importance of the major baseball markets.

You don’t want to give a team like the New York Yankees a completely unfair competitive advantage for being so marketable, but at the same time, you can’t take that away.

The Perfect CBA

Revenue sharing is essential to the future of the sport, but so is a proper cap. You can’t just put a sharing program in place and set an arbitrary number for a salary cap, but you have to accept that they will happen and go from there.

Teams like the Yankees and the Mets are living in a different world than a team like the Minnesota Twins. Yes, the Twins can find and nurture talent, and occasionally put a good team together, but they just can’t sustain it. That’s why Johan Santana is with the Mets and not the Twins. It was about who could afford his next contract, and it wasn’t the Twins.

Baseball has a luxury tax system in place, and that’s a fine first step, but it’s just not enough. When teams like the Yankees scoff at the tax and pay it like it is a backup shortstop, it’s not doing its job. The luxury tax does not replace proper revenue sharing, it only adds a few bucks into the league’s general fund. Only a handful of teams even pay it, and at no point can you be guaranteed that a team will be paying it in future years. This means that you can’t put a proper plan in place to build for the league’s future based off of that revenue source.

To create a perfect CBA, I think you need to borrow from each of the other three major leagues and put their best pieces together.

I like the exceptions that the NBA has, but I think there needs to be a hard cap. The solution for that would be to have a soft cap with a strict luxury tax on top of it and less exceptions. If you are not signing players to the stricter terms of exceptions, then there would have to be a strict enforcement of the hard cap. The hard cap would only become soft with the signing of players to any of the exceptions.

From this point, some type of calculation could be made to create a “post-exception” salary cap, a number each team must fall under when you remove any exceptions from the total payroll. Think of it as a prorated hard salary cap.

In order for this or any cap to work, it must be paired with a lower-limit salary number. This means that you could no longer have your Florida Marlin teams that have entire payrolls below those of single players on other teams. With the increased revenue sharing, teams could no longer use the excuse that they can’t afford to compete, thus they would have to try to compete.

Why It Must Happen Now

Baseball is a numbers game. For over a century, people have read stats and box scores inside and out, comparing stats and inventing new ones. But it’s also a numbers game off the field. Agents like Scott Boras have taken over the game because of their ability to sell a player based on his stats. And since it is the only part of the game that Boras has to be concerned about, he’s often better at it than those sitting across from him at the negotiating table. Because of this, we are seeing salaries rise faster than the game can support, and the only way it will stop will be the bursting of the bubble, or calmer heads finding a proper solution.

Rather than watch our National Pastime crumble and fail, I’d rather see it overcome and be better. I want to see small market teams who are great at finding talent keep that talent and build a winning franchise, not just the occasional passing decent team. I don’t want to see players have to leave the team that nurtured them to take the bigger paycheck in a bigger city.

With the recent “steroid era” in baseball, fans are hesitant to embrace the sport like they did in their childhood. One way to win back the trust of the fans is to spread the love a little bit. Allowing cities like Kansas City and Pittsburgh to field a winning team is important. The successful football and hockey teams in Pittsburgh will tell you that they have loyal fans, they just don’t have the pure numbers to provide for their players like teams in New York, Boston, Chicago and Los Angeles.

It’s a shame when a baseball star is about to becomes a free agent and before the season is even over, you know that his options are limited to about six teams in the offseason. Competitive balance is not about how many teams have won championships in the last 15 or 16 years. Competitive balance is about allowing every team the opportunity to compete each and every year.

Right now, baseball doesn’t have that. A salary cap and revenue sharing program like all of the other sports have is the only way to accomplish this. The players might not like it, and some of the owners might not like it — but it is essential to the future of any sport in the 21st century.

The Player’s Association may be the strongest union in the world, but that does not make them right. They were wrong on the steroid issue and for that reason alone, the owners have the right to play hardball with them. At the end of the day, the owners are the ones writing the checks, and if they feel that this step needs to be taken to protect their business, they need to do it, union be damned.

Trust me — it’s going to happen. The question is does baseball want their salary cap to be instituted preemptively, or do they want to wait for a work stoppage and see if they can rebound again like they did after 1994.

For these reasons, I believe that the time is now for Major League Baseball to take the step to begin instituting a salary cap and revenue sharing program to save the future of the game.

Share this story...

Discussion

No comments for “Baseball’s Parity Myth and the Need For a Salary Cap”

Post a comment

You must be logged in to post a comment.