The Salary Cap: Why MLB Doesn't Need to Be Like Other Sports

As a guy who will never understand the problems associated with signing a million-dollar contract, I still tend to side with the players on the issue of fair pay. I am not trying to get into a debate about millionaires and billionaires. I think many of us can relate to the feeling of frustration over little pay or a feeling of being undervalued, especially when thinking about how much the people above us make. None of these owners are poor, considering that owning a professional sports team is one of the most profitable investments of the most recent decades.

Under the recently expired Collective Bargaining Agreement, there was no salary cap in the MLB, which is rare for North American sports. The NFL, NBA, and NHL all have a hard cap that prevents large market teams from outspending the smaller markets. Some claim that this is a disaster and allows teams to simply buy their way to a World Series victory. However, I counter with the stats. Dating back to 2010, only 3 teams with top 5 payrolls won the Commissioner’s Trophy. In the same sample size, there were as many teams ranked in double digits in terms of spending that won the World Series as there were teams in single digits. Yes, a team still must spend some money to win games. There is a correlation, but it is not synonymous with winning a World Series.

“Oh, but, Clark, small market teams cannot afford to sign free agents. We need a salary cap to preserve the fairness of the game.” To that, I say … false! All the owners have money, whether they demonstrate it or not. Let’s not forget that 26 of the 30 owners are billionaires. Revenue sharing, which is supposed to serve as an equalizer between large and small markets, only became a part of the Collective Bargaining Agreement in 1996. Hmmm. 1996? Cannot think of anything that would have caused that … oh wait, the strike that nearly killed baseball. Teams could not financially recover from missing games (RIP to the Expos). Teams lacking their main source of income was the main justification for revenue sharing being implemented. However, the misuse of these funds has become evident with teams like the Pirates, Rays, Marlins, and Athletics, who have had the lowest payrolls in the MLB over multiple seasons. This is despite having millions of dollars of additional payroll being handed over to them from large market teams. In terms of revenue, the small-market Tampa Bay Rays netted $112 million in 2020, whereas the New York Yankees netted $108 million in the same year. Yet the Rays ownership cries broke every year. The failures of the current revenue-sharing system demonstrate the fundamental divide between teams that are willing to spend and those that are not. A salary cap with the same intentions as a revenue-sharing program would penalize teams for caring about the product on the field. If a team wants to write blank checks for players, let them do it.

For roughly 22 teams, the luxury tax already serves as a soft cap. Yes, the 2021 Dodgers said: Forget the cap. We want to spend all the money in the world. Great. Do you know how that worked out for them? It did not. You cannot just buy a World Series; baseball is different. Revenue sharing started with pure intentions but has turned into large market teams donating revenues to small-market teams, who just turn that money into profits.“Small market teams cannot afford the big contracts. Their only hope is to lock up young unproven stars on team-friendly deals.” For crying out loud, the small market Colorado Rockies signed Nolan Arenado to an 8 year, $260 million contract. It averages out to a $32,500,000 average annual value, which is one of the largest contracts in MLB history. Do you think $260 million is a big number? Fernando Tatis Jr. and Manny Machado both have contracts north of $300 million and are on the same smaller market team - the San Diego Padres. That comes out to $640 million committed to two players over 14 years. So, I do not want to hear the argument that smaller markets cannot afford these players without a salary cap.

Stars will always get paid, and as the game evolves and players develop, the contracts will get bigger. A salary cap limits the rest of the players on the team from getting a big payday. Out of the 4 major North American professional sports, baseball has the highest percentage of players making the league minimum. It is not the high-end players that I am worried about. History has shown that they are always going to be paid. Take the other professional leagues with a salary cap. The NFL has Patrick Mahomes with a 450 million dollar contract, and the NBA has Steph Curry, who makes $45 million per year. The case is not the same for the middle-tier players. Consider the average MLB player signing a free agent contract since the last CBA. Since the signing of the most recent agreement, we have had historic contracts, but few realize the steep drop-off in spending. A majority of free agents sign deals worth 5 to 7 million for a year, whereas previously these guys would receive a $7- 10 million average annual value for multiple years. Don’t believe me? Check out this link, scroll down and look at the names signing minor league deals or deals worth less than $5 million. I guarantee there are guys on this list you recognize. The new structure incentivizes a team to call up a younger player from their minor league and platoon him and other young guys while manipulating their service time rather than paying veterans what they are due. Many of these platoon guys bounce around the MLB until their rookie contract is up, and they are unable to receive a new contract in free agency.

Critics often suggest incorporating salary caps similar to the styles of the NFL and NBA. With the salary cap, the value of the NFL has increased, but the salary cap has shrunk. That is the Player’s Association's worst nightmare and one reason it is a non-starter in their negotiations. The MLBPA has been strong in their no salary cap stance for as long as I can remember. It is one of the quirks that makes baseball special. What about the NBA and the revenue spending requirements? It is a great concept and works to a certain extent within the NBA but is unfeasible in the MLB. The MLB required teams to spend the shared revenue on their on-field product. Unfortunately, teams exploited the vague wording and were able to pocket the revenue without consequence. The owners will not agree to a salary floor without a cap being implemented. Adding a hard cap is a non-starter for the MLBPA, as they have made clear in the public discussions over CBA issues.

Additionally, other professional sports are fundamentally different. One player cannot have as big of an impact on a baseball team as he can on a basketball or football team. For example, the NBA is dominated by super teams. Teams tend to win championships in multiples. It only takes two to three players to form a winning super team; in the MLB, it takes more than two to three great players to win a World Series. The alleged super teams often fail. I will admit that the Yankees of the late 1990s and early 2000s were a dominant force and fit the bill of a super team. But I counter with the 2021 Los Angeles Dodgers, who were being talked about as an all-time great team. They were favored to win over 107 games and walk away with the Commissioner’s Trophy with little to no contest. Well, their 101 wins looked great in the stat book, as a team with 87 wins won the World Series after beating them in the National League Championship Series. In the NFL, Tom Brady joined a sub .500 team and won the Super Bowl the following year. In contrast, Mike Trout could not single-handedly carry a team to a World Series run because if it were possible, he would have accomplished it. We should celebrate that baseball is unique and not force it to be something that it is not.

In summary, the potential ramifications of a salary cap would be detrimental to the working middle class of players. It will only punish the teams willing to spend on their product and will not increase the competitive field in the MLB. The Players’ Association has worn the badge of being the only league without a salary cap like a badge of honor. No cap allows for the top-tier players to receive their value, but it does not hurt the ability of middle- and lower-tier players to cash in on their talents. There are countless examples of players being forced out of the league once they hit contract years in free agency. Teams choose to save money and go with younger players. Unfortunately, a salary cap would make this even more obvious within the sport we all love. Additionally, despite having no salary cap, the MLB has had the best parity of all professional sports leagues over the last 20 years. Parity measures the frequency with which different teams win championships. It seems like there is no need for a salary cap to increase the competitiveness of the MLB. There are bigger problems currently facing the league than a salary cap, like service time manipulation and tanking. Oh wait, I forgot we are locked out, and there is little hope for the season to start on time. But hey, I am going to dream about a beautiful sunset (go to page 144, just trust me on this).

Sources:

fangraphs.com

img.search.brave.com

mlbtraderumors.com

statista.com

stevetheump.com