Baseball Needs More Balance

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The New York Yankees have been accused of buying the 2009 World Series. You may be wondering why a similar payroll didn’t buy the 2010 World Series.

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Baseball consists of two major elements: skill and luck. However, while skill can be bought, no one has control over luck. Based on wins and club payroll, analysts have concluded that an additional $7 million of payroll was worth one additional win.

At one end of the money spectrum are teams such as the Yankees, Red Sox, and Phillies, clubs that spend well north of $125 million (and over $200 million for the Yankees, who spend money like it’s water). These teams are devoted to putting a winning team on the field and endure paying a luxury tax when their payroll surpasses a certain spending threshold.

Red Sox owner John Henry termed baseball’s revenue-sharing system as “welfare”. The system puts money in the pockets of low-spending teams’ owners. Teams can spend however much their owner wishes due to the lack of a salary cap.

At the other end are the low-spending teams, which are frequently in small markets. These teams are the beneficiaries of the revenue-sharing system. Clearly, spending money on payroll will more than likely improve a team’s winning percentage. The different motivations and resources of clubs can give fans hope for the season or can force fans to endure another year of frustration. A way to bridge the astronomical gap that exists between payrolls is to institute both a salary cap and a salary floor.

The goal of the salary cap/floor is to increase the competitive balance among teams. General managers would be forced to assemble well-rounded teams without relying on big-ticket superstars. Developing a productive farm system would become necessary. With wise personnel decisions, even Pirates fans could have realistic hope. Additionally, fans would develop more team loyalty as marquee players would have less of a financial opportunity to skip town—humungous offers from competing clubs would be less frequent.

The salary cap should be $100 million with a floor of $70 million. This range encompasses approximately the middle third of 2011 team payrolls. Close-fisted teams such as the Pirates and Padres would be forced to increase their payroll, while the Yankees and Red Sox would need to limit their offseason splurges. As in hockey – whose hard salary cap/floor works well – the floor and cap would increase annually at the rate of the growth in league revenue.

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The MLB players’ association rejected an offer that would have put a salary cap/floor in the 2006 collective bargaining agreement. However, the majority of players could benefit from a cap/floor due to a more even distribution of money. Only the most highly paid players would see a salary reduction due to the cap.

Both players and owners need to preserve the excitement, quality, and accessibility of baseball to maintain and grow its fan base. Baseball has an 800-pound gorilla of a competitor. In the past few decades, football has become an economic powerhouse that rivals and even eclipses baseball. Without cooperation between players and owners, baseball will continue to lose ground.

Championships should be won by astute general managers, not by owners’ deep pockets. Excellent players should be grown through a fertile farm system rather than owners growing profits in the bank. Victories on the diamond should override an owner’s financial wins. Astute coaching strategies should win games rather than a starting nine filled with high-priced signings. These elements keep the vitality in baseball.