The culmination of the MLB season has brought with it the free agent frenzy that accompanies the colder months of the year. In most off-seasons, teams spend with free reign because the MLB does not have a salary cap. This week, two staff writers weigh in on whether or not baseball should institute a salary cap.
“Having money isn’t everything, not having it is.” – Kanye West
Thinking of playing a professional sport for a living? The smart fiscal choice would be to focus on your swing and take a shot at the MLB. Year after year, the highest player salaries in North American professional sports belong to baseball. With no salary cap, teams can spend as much or as little as they please. The MLB is currently the only one of the four major North American sports leagues that doesn’t use a salary cap.
Because of this, critics often raise questions about whether baseball truly has a level playing field. Teams like the Tampa Bay Rays and the Oakland Athletics have some fans convinced that, so long as teams are playing “moneyball,” anyone can win. The reality is that in the past 20 years, just four teams have made the World Series with an opening payroll outside the top 15 in baseball.
Critics of the salary cap point to teams like the 2012 Red Sox, who finished last in their division despite having one of the highest payrolls in the league. They say that spending money doesn’t guarantee success. This is true. An example closer to home is the 2013 Toronto Blue Jays. Despite a payroll that increased by over $40 million from 2012 to 2013, the Blue Jays finished last in their division this season.
It’s clear that a high payroll does not beget success. The problem in baseball is that a low payroll does mean failure, at least in terms of championships. To re-work Kanye’s quote: spending money isn’t everything in baseball, but not spending money certainly is. Ideas about baseball parity are pure fantasy. As fans, we look back fondly on teams like the 2001 Arizona Diamondbacks and the 2004 Red Sox and label them underdogs. Put aside nostalgia, and you’ll see that the Diamondbacks had the eighth highest payroll in 2001 and the Red Sox had the fourth highest in 2004. The 2003 Florida Marlins are the only World Series winner that can be justly called an underdog with a $45 million payroll.
What the MLB needs now is a salary cap modeled after the NBA’s system. This style of salary cap involves a soft cap—teams can spend above the cap, but are forced to pay a luxury tax if they do so. The further above the cap a team spends, the higher the tax gets. A hard cap, which the NHL uses, is unrealistic, considering the strength of the MLB Player’s Association, and is also unnecessary. The New York Yankees, and perhaps a few others, would still spend above the cap, but they’d get less for their money. A salary cap would also mean a salary floor, which would prevent owners from spending so little that it is near impossible for their team to compete as we saw with the 2013 Houston Astros.
A salary cap won’t mean perfect parity in baseball, but it would help achieve it. To win, teams would still need smart executives, good coaches, talented players, and plenty of luck; but with a salary cap, teams wouldn’t have to rely on deep pockets, too.
— Wyatt Fine-Gagné
If it ain’t broke, don’t fix it
Nine of the top 10 salaries in sports belong to major league baseball players. Of those nine, four play for the New York Yankees, with third baseman Alex Rodriguez earning an average of $59,000 per at-bat as part of his $28 million annual salary.
Moreover, each of the last few seasons have seen big money teams make splashes in the off-season. In 2011, the Marlins and Red Sox went all in, buying names like Jose Reyes and Adrian Gonzalez, respectively. This past year, we saw the L.A. Angels, L.A. Dodgers, and Toronto Blue Jays flexing their money muscles, hauling in the likes of Josh Hamilton, Albert Pujols, RA Dickey, and Zack Greinke. None of these free agent acquisitions ended well.
In an age where baseball’s television ratings are being diminished by more popular sports like football and basketball, the money somehow keeps on rolling into the big leagues. While a part of this trend can be attributed to richer team owners willing to dole out more money for wins, the majority of the new money in baseball is coming from TV contracts.
Most recently, the Dodgers inked a massive 25-year contract with Fox Sports West valued between $6 to 7 billion. That’s a cool $280 million on top of what was already one of the larger payrolls in the MLB. To put that into perspective, the Houston Astros opened the 2013 season with a total payroll of $26 million.
While the no salary cap rule has been an integral part of baseball for generations, recent Collective Bargaining Agreements (CBA) have included measures such as revenue sharing and luxury taxes to combat inequality in the league. These help enforce parity, for example: the Yankees doled out a record $29.1 million in luxury taxes in 2013. In the case of revenue sharing, a rising tide lifts all boats.
Ultimately, the greatest equalizer is greed. Having unlimited money to throw around can be both a curse and a blessing. In today’s competitive free agency atmosphere, signing a big name often means locking a player up for the rest of his career for more than $20 million a year. No matter what your budget is, a deal or two like that will leave a team crippled and inflexible for the foreseeable future. You only have to look at the Angels, who owe a total of $70 million to Albert Pujols, Josh Hamilton, and Vernon Wells in 2014. That’s almost half of an already bloated payroll for three players who combined for a paltry 2.3 WAR (Wins Above Replacement). In comparison, the no. 35 ranked best outfielder in baseball this year had a WAR of 2.3 by himself. All three are on the tail end of their careers and have contracts that are heavily backloaded.
Spending immense amounts of money doesn’t mean that large payroll teams can get away with ignoring the development of their farm systems. Free agent signings can be done prudently and in risk-minimizing fashion (for example, the Pirates’ signing of Marlon Byrd and Francisco Liriano down the stretch last season); having a blank cheque often leads teams to sign riskier deals with players well past their primes.
St. Louis survived the loss of Pujols in 2011 through smart drafting and development; Oakland defended their AL Central title in 2012 with cheap, low-risk free agent signings. Baseball has arguably never been on a more level playing field, with 15 different teams appearing in the World Series since 2000 despite growing payroll inequality. If it ain’t broke, don’t fix it.
— Elie Waitzer
Editor’s pick: cap them!
It’s time for the MLB to join its professional counterparts and institute a salary cap. Baseball’s parity is an illusion, and small market franchises are unable to sustain success in the long term. A restructured CBA highlighted by a salary cap mirroring the NBA’s is what the MLB needs to move forward as an organization.