Why Baseball Needs a Salary Cap
Why baseball would benefit from everyone rowing in the same direction
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Last week, I talked about baseball arbitration. As I learned about the subject, a nagging thought popped into my head over and over: arbitration, despite its many flaws, is merely a symptom of a larger problem.
Solving Problems That Don’t Need to Exist
Arbitration is in place to solve a problem MLB and the MLBPA made: A player, while under team control, needs to negotiate salary for the season. When there is only one variable and no viable alternative, stalemates are the norm.
This does not happen in any other sport. Hell, it doesn’t happen in any other business.
Identifying the Real Problem
If arbitration is only a symptom, it is important to identify the real problem: MLB and the MLBPA do not have aligned goals.
The NBA and NFL may have flaws in their labor negotiations- I could write for days on the idiocy of the “max contract”- but they get one thing right: both sides are incentivized to grow revenue.
Why did the NBA bubble work? Why did the NFL expand its playoffs? Because this put more money in owners pockets and more money in players pockets.
Every seven years for the NBA and ten for the NFL, the league and the players negotiate a collective bargaining agreement. While there are hundreds of key points, the most important one is- and likely always will be- money. The number one question to solve is “What percent of revenue goes to players, and what percent goes to owners”.
In other words, how do we split the pie?
While these negotiations may bring tension and disagreement, it frees everyone up to focus on growing the pie for every other decision.
This was especially obvious this year:
The NBA and the players knew the Orlando bubble was their best shot at the biggest pie.
The NFL and NFLPA worked tirelessly to put protocols in place to maximize their chance at a full 16 game season…again, to create the biggest pie.
And this happened while MLB and the MLBPA wasted months and months coming to an agreement.
Is Their a Solution?
When looking for solutions, there must be a give and take. No one should expect owners to give up anything unilaterally. However, we can find win-wins that reduce the focus on divvying up the pie and allow more time to be spent growing it.
Major League Baseball needs a salary cap…and all the things that come with it.
Salary caps are generally thought of as a way to reduce wages and benefit ownership. And yes, in an otherwise free market, a cap would do this. But baseball is not a free market and a salary cap could get us closer to one because of the things that come with it:
Open books. Assuming the salary cap is tied to league revenue, teams would be forced to open their books.
Salary floors. Along with salary caps come salary floors. With all teams being forced to spend, a more real market for free agents opens up.
Not only does the above get us closer to a free market, it also starts to chip away at the distrust that exists between the league and its players. Once both sides know how much of the pie goes to each side, they can tackle other issues:
Unfair compensation for players. It is crazy that all-stars are consistently making league minimum salaries or having their worth determined by arbitration. Likewise, it makes little sense for a former all star to be earning $20 million or more while riding the bench due to a massive deal they signed years ago.
A salary cap could open the door to the league reducing their control on first time MLB contracts in exchange for restrictions on guarantees for free agents.
A Small Playoff Field. While baseball purists may hate it, playoffs = $$$ for every professional sport. There is a reason the NFL moved from 12 teams to 14, and will increase again to 16 shortly.
If both sides were sure of a positive impact to their bottom line, more playoff teams would be an easy win-win.
A Shrinking National Audience. Baseball is losing market share (especially on a national level) to football, basketball, and hockey. Negotiations around making the game more fun for a national TV audience are easy when the gains from these initiatives are split amongst all parties.
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Currently, baseball’s focus on splitting up the pie rather than growing it removes creativity in a world that needs it.
MLB’s competitors are constantly adjusting rules, enhancing the TV product, and thinking outside the box to grow the game while MLB and the MLBPA struggle to agree on what the goal even is.
And here’s the kicker- we, the fans, want you to expand the pie. We want to give you more money. That’s all we’re asking for.
So please, baseball, find a way for the league and players to come together and make changes that allow us, the fans, to give you more of our money.