Blog Entry

The More Things Change...

Posted on: January 9, 2010 12:50 pm
Edited on: October 14, 2011 1:13 pm

One of the things that has not changed much over time is winning is contagious.  The most powerful team of my youth, The New York Yankees, is today the most successful team of the past decade and a half.  Back in the fifties most teams had their share of 'star' players.  The NY Giants had Willie Mays, Ted Williams was a Red Sox, Stan Musial played in St. Louis, and my Dodgers had Duke Snider and Gil Hodges.  There was no free agency, so players were bound to their team at the pleasure of the team.  Contracts were generally one year affairs and a cut in salary was not unheard of, even after posting a 'good' year. 
My best guess to the continued success of the Casey Stengel Yankees would be they scouted and traded better than their competition.  Today there is free agency and success is often measured by the size of the corporate checkbook, and
there is an inequity in baseball that will only solved by a salary cap, of course the players union is opposed to a salary cap for obvious reasons.  Namely a large percentage of their members would no longer have jobs or would have jobs at a lower dollar value than they do now.  Of course for the cap to work an upper and lower limit would have to be established and this is where the owners get involved in opposing a cap.  Some of those teams mentioned would find an upper limit salary cap limiting to the roster they are accustom to fielding and a lower limit cap may very well be above the spending level of others.

One of the "fixes" to the problem has been in place for over 20 years and that is Revenue Sharing.  This requires each team to contribute 31% of its revenues to a pool which is then equally divided among the 30 clubs.  The intent is to level the playing field between the big and smaller market teams.  The following numbers are from the 2002-2007 periods, but I have no reason to believe that much has changed in the past 2 years.  In 2005 the Yankees paid into Revenue Sharing 76 million dollars more than they received back from the pool.  That same year Tampa Bay, Toronto, Florida, and KC each received > 30 million more than their contribution.  This would seem to indicate that the field was indeed being leveled, but not necessarily the playing field. During the 2002-2006 periods the revenue sharing dollars for KC doubled to 32 million dollars in 06, a 100 % increase over 4 years.  Player costs for KC increased by 6%.  The 2006-07 Florida Marlins received a total of 60 million dollars in revenue sharing, and over the same 2 years had a combined player salary of < 46 million dollars.

Another element of field leveling is the luxury tax. In 2008 with the upper limit for Luxury Tax intent was set at a payroll amount of 155 million dollars, that resulted in only the NY Yankees (26.9 M) and the Detroit Tigers (1.3 M) being assessed a” tax penalty".  The Luxury Tax is assessed by MLB at a 22.5 % penalty for the first time exceeding the threshold, 30% for the second trip into the "outer limits" and 40% thereafter.  It is the 40% penalty that the Yankees have become intimate with and are annually invoiced for.  In 2009 the threshold is 162.5 million dollars and the NYY will be the only team over the limit. 2010 the ceiling rises to 170 million.

My view, there will always be large and small markets, the problem is those teams whose owners are in over their heads and cannot keep up with increasing salaries or will not increase spending, some teams the Indians and the Pirates do not have the financial wherewithal to compete. 
Location, location, location is often cited a formula for business success, what do you do with a location that will not support a winning team.  Both Tampa Bay and the Florida Marlins regularly have higher attendance on the road than at home. They are not alone.

The fix might very well be requiring that Revenue Sharing be reflected in the increased budgets of the receiving team’s major league team or its minor league teams.  Any shortfall of spending of those dollars as designated would result in a 2 for 1 penalty in the following year, this would prevent owners from pocketing the revenue sharing funds rather than using them to improve the product.
Secondly, lower the Luxury Tax threshold to capture more of the high spending teams.

The numerical data was gathered from various internet sites, the balance is my own personal view.





Since: Feb 7, 2009
Posted on: January 11, 2010 10:31 am

The More Things Change...

The lack of a salary cap I believe has less to do with greed from the player's union as it does greed, and the inability to unite, from the owners. The NHL shut it down for a year to get a cap, MLB won't do this - even the weakest teams make money from operating. The other hammer the players have is that whenever the Owners talk cap, the Players just say, "Ok, just show us the books and we'll talk," and the Owners suddenly go mute.

Also, I don't necessarily believe a Cap is the answer. The NFL & NBA have caps, but the playoff teams stay largely the same year to year, and they have more playoff spots. Meanwhile many low-to-mid-market teams (Rockies, Rays, Marlins) have post-season success.

Baseball, unlike other team sports, is more driven by individual performances at the moment (Batter vs. Pitcher) than the other sports, where good coaching and team execution make the difference.
The more I think about this, the more I think I may have a blog of my own forthcoming.

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