As the Yankees have gone on something of a spending spree this winter, netting the team three of the top free agents around, small-market clubs bemoan the spending. The Brewers were unamused with the Yankees. The Marlins’ David Samson voiced his concerns, and the Astros have grumbled about the spending as well.
So with all of these complaints come the inevitable discussion about a salary cap. If the luxury tax, designed to penalize the Yankees, isn’t reining in the spending, should baseball adopt a spending cap? While the Players Union would never agree to a cap, a few good baseball minds feel that the smaller market teams wouldn’t be so keen to take on a cap either. The problem arises not on the upper bounds of the cap but on the lower.
Shawn Hoffman, writing at Baseball Prospectus, elaborates on this argument:
Using 2008 as an example, the thirty teams took in about $6 billion (not including MLB Advanced Media revenue), for an average of $200 million per team. Forty-five percent of that (the players’ share) is $90 million, which we’ll use as the midpoint between our floor and cap. If we want to make the floor 75 percent of the cap (a low-end figure, relative to the other leagues), we can use $77 million and $103 million, respectively.
With a $103 million cap, nine teams would have been affected last year, and a total of about $286 million would have had to be skimmed off the top. Since total salaries have to remain at existing levels, the bottom twenty-one teams would have had to take on this burden, which had previously been placed on the Yankees, Red Sox, et al. On the other end, fourteen teams would have been under the payroll floor, by a total of $251 million. Even discounting the Marlins’ $22 million payroll, the other thirteen teams would have had to spend an average of $15 million more just to meet the minimum. Some of those teams might be able to afford it; most wouldn’t.
Imagine being Frank Coonelly in this situation. Coonelly, the Pirates’ team president, has publicly supported a cap. Had our fictional cap/floor arrangement been instituted last year, the Pirates would have needed to increase their Opening Day payroll by $28 million. Not only would the team have taken a big loss, but Neal Huntington’s long-term strategy would have been sabotaged, since the team would have had to sign a number of veterans just to meet the minimum payroll.
It’s clear to imagine a situation in which teams would not be able to support a minimum payroll. Just look at the economic turmoil that has descended upon our nation and its impact on the sport.
Hoffman notes that the best system is one that redistributes revenue and creates opportunities for more teams to make the playoffs. In fact, his proposed best system is the one baseball currently employs, and he’s right. The current playoff system works.
In any situation, some teams will always emerge at the top of the spending pile. New York City is bigger and wealthier than any other city in the country, and the Mets and Yanks will have a natural advantage that they should embrace. But baseball has developed ways to spread the money around, and smart GMs can put together very competitive teams with limited resources.
In the end, a cap discussion is mostly just sour beans. Other teams are envious, and they’re not as good at putting a roster together under the Moneyball approach. Meanwhile, a salary cap makes for some nice January discussion, but it will never happen.