23 December 2008

Yankees reloaded: Time to revisit a salary cap?

Everyone saw it coming. The Bronx Bombers, who need to fill their new palace in 2009 every night and get back into the playoffs, had to make a big splash. So they made three in signing C.C. Sabathia, A.J. Burnett, and M.C. Teixeira. Yes, we will now take our customary roles of railing against the Yanks and against the system. In these troubled economic times, it may feel a bit cathartic.

Way back in March 2006, when the economy was a wee bit healthier, I advocated for MLB to impose a salary cap. The twist would be that the cap talk shouldn't be initiated by the owners, but rather the players' union. I argued that the percentage of revenue the players received was inferior to that of the other three major sports, and that the players could be richer (on average) with a more equitably distributed system. Confirmation came last week, as it came out that MLB players as a whole received 52% of league revenues, compared to 59%, 57%, and 56.7% for NFL, NBA, and NHL players respectively.

Now I realize that the owners, whose laissez faire approach to baseball economics is practically out of the Ayn Rand playbook, have little interest in imposing new restrictions on their little confederacy. To show what those restrictions look like, here's a comparison of the four leagues and their team payroll models:

MLB does better than the mighty NFL without a salary cap. The 52% figure fits neatly within a range of 51-54% throughout the current CBA. If they're getting more out of their deal than the NFL, why would they want a cap? It may be that the only thing that could change their minds would be a sustained, massive drop in annual revenues. In such a scenario, the hardest hit teams would be the small market clubs. A sort of class warfare could ensue between the big and small market teams, but only if revenue sharing failed to shore up the have-nots' balance sheets. To date there's no evidence of such a problem. The only issue for the have-nots is their inability to compete, and as we've seen from the A's, Twins, and this year's Rays, they can compete for short periods if the franchises are run well. History has shown that a lack of competition isn't enough to cause serious tension in the ranks.

Both the NFL and NHL are headed for labor strife, albeit in different ways. In May NFL owners voted to opt out of the current CBA early, creating a situation in which the teams would operate without a salary cap in 2010 and perhaps 2011 - with a lockout even more likely in 2011. There's a good chance that if the NFL and NFLPA are unable to negotiate a new CBA, the hard cap seen in the NFL will be gone forever, to be replaced by something resembling either the NBA or MLB labor pacts. Four teams remain without new stadium deals, and small market teams like Cincinnati and Buffalo make $80 million less than their rich brethren in Dallas and Washington. Hockey, despite its post-lockout covenant, is facing a troubling economic future. Revenue growth, guaranteed contracts, and looming free agency have created a potentially toxic soup of unsustainable economic conditions. Some recent Sun Belt expansion teams are struggling to survive, bringing up talks of franchise relocation.

Hoops and hardball appear to be in good stead comparatively. David Stern has what he wants most in a post-Jordan era, the return of Lakers vs. Celtics - and don't think he won't pull strings to maintain the rivalry to its fullest. There's a similar Sun Belt expansion problem to that seen in the NHL, but it won't impact league health. Bud Selig had Bob DuPuy on the Marlins' ballpark talks like a flea on a dog, and all the attention appears to have paid off. Only two teams lack a new or upgraded stadium deal. You can bet that if Fremont doesn't pan out, Selig will send DuPuy out here to give the A's predicament the same treatment as Miami. Despite this, Selig can look at his counterpart Roger Goodell and think, "The only cap baseball needs is the kind worn on a head." For those of us looking for financial parity, that isn't an encouraging sentiment.

So here's the question for the day: If you could implement a salary cap in baseball, what would it look like? Feel free to be as brief or verbose as you like.


Transic said...

A bit off-topic.

In my humble opinion, the NFL is being stupid in breaking open the labor contract. What more could they want that they don't already enjoy: Hard cap and salary floor; multi-billion-dollar TV contracts; Unguaranteed salary structure; Super Bowl commercials being the most expensive; Ticket prices sky-high and now Personal Seat Licenses in the stratosphere (new Giants/Jets stadium). I guess the NFL has to make up for the losing NFL Europe venture, somehow. *sarcasm*

And we thought baseball is being hard on its fans. Not that I defend many of its practices, either, but they still have a way to go before matching the greed of the NFL, although the Yankees are well along the way to matching it.