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Major League Baseball Needs a Salary Cap

Steroids is just one factor that threatens the integrity of baseball. Sports is supposed to be a game of fair play. One major issue that needs to be addressed is a salary cap in Major League Baseball. This article gives hard-nosed facts to prove my point about the need for a salary cap. Major League Baseball needs a salary cap to help level the playing field. A salary cap is “a limit on the amount of money a team can spend on player salaries, either as a per-player limit or a total limit for the team’s roster (or both).” The purpose of the salary cap is to limit overall spending and to make sure one team is not dominant every year because they can afford the best players.

When professional sports leagues began, a cap was not necessary because players were earning salaries similar to that of the common working class. As sports grew in popularity with the American people, sports leagues started bringing in such high revenues that sports eventually became a multi-billion dollar industry. As players demanded higher salaries, the only teams that could pay them were the ones in large television markets because they brought in the most revenue. This enabled those powerhouse teams to dominate the league. An example of a team like this is the New York Yankees.

Three of the four sports leagues now have salary caps. The National Football League, the National Basketball Association, and the National Hockey League all realized the benefits of a salary cap. One of these benefits is that it causes greater parity amongst teams. Major League Baseball is currently the only major professional sports league without a salary cap. There are different kinds of salary caps in each of the three major sports with a cap.

The National Football League (NFL) has a so-called “hard cap,” which means that no team can exceed the limit set by the cap without receiving penalties from the league. The amount of the cap has increased each year since its inception in 1994. It began at nearly thirty-five million dollars per team and it now stands at eighty-five million dollars. This just goes to show how popular the NFL is, considering the cap’s increase of more than fifty million dollars in just eleven years. Revenue primarily comes from three sources: television contracts; license fees for selling NFL products such as jerseys; and the “gate”, which is the money people pay for seats to watch the games. The salary cap also makes sure that teams keep their operating costs down. The more they spend, the less revenue the league makes and the less they can spend on players. It is a very efficient system that has helped to make the NFL the most financially stable of the major professional sports leagues. The cap’s effect can be seen when you look at the dominant teams in the NFL over a long period of time. Rarely is a team able to stay dominant for any extended period of time. The Patriots have been dominant in recent years because they have been able to bring in role players who work as a team as opposed to selfish superstars. Even that is starting to catch up with them, as they are becoming an average team in the league. The cap clearly promotes better competition.

The National Basketball Association (NBA) has a so-called “soft cap” meaning that teams can go over the cap limit to retain players who have been on the team. Most teams do go over the cap. While there is no direct penalty for going over the limit, teams who do exceed the limit cannot sign free agents for more than the league minimum. The league also has something called a luxury tax, which is implemented when a team’s average payroll exceeds a certain number higher than the cap. When this happens, the team has to pay a large tax to the league. This tax is spread amongst the teams with lower payrolls. The NBA has also initiated a maximum salary for any given player considering the massive increase of salaries in the mid-nineties. The average salary is still around five million per player, the highest in professional sports. Since the National Hockey League went through a process of changing its cap, many thought that the NBA would take advantage of this momentum and change to a “hard cap,” but NBA commissioner David Stern was content with the current “soft cap.” Teams are more likely to stay dominant since the cap isn’t as strict, but it’s certainly better than no cap at all.

The National Hockey League (NHL) realized the need to implement a salary cap just two years ago because the league was losing money. Unfortunately, the players went on strike for an entire year to figure this out, but eventually a compromise was reached. Before the compromise, nearly seventy-five percent of league revenues went towards player salaries and the remaining twenty-five percent was not sufficient for the operating costs of the league. After more than a year of negotiations, the players association and the league agreed on having a hard salary cap. This hard cap contains many more restrictions than those of other leagues, but they are thought to be beneficial. The salary cap not only contains a maximum that a league can spend (thirty-nine million dollars for the 2005-06 season), but a minimum also. No player can earn more than twenty percent of a team’s revenue either. This stipulation makes sure that teams don’t overvalue superstars so much that it results in contract arguments with players on the team who make less. There are many other beneficial rules set forth by the NHL’s salary cap that should be capitalized on by other leagues.

All three of these professional leagues have greatly benefited from a salary cap. The one remaining league, Major League Baseball (MLB), should definitely install a cap now. This is because the benefits from the other leagues along with the negative affects of not having a cap are hard to ignore. Without the cap, dominant teams can stay dominant because they are in larger markets or because their owners have more money to spend on players.

The New York Yankees are a prime example of a dominant team taking advantage of not having a salary cap. They are a perennial playoff team and they have been world champions twenty-six times. This is because their owner, George Steinbrenner brings in almost anyone he feels will make the team better. The Yankees payroll this past year was an astounding 205 million dollars. The lowest payroll in MLB belongs to the Kansas City Royals with less than thirty-seven million. The Yankees have eight players who make more than ten million dollars per year. The Royals have just one. The Yankees only have two players who make less than one million. The Royals have only two players who make more than one million. While it’s probably true that the Yankee players aren’t necessarily worth the price they’re getting paid compared to other players, it’s definitely true that payroll has an effect on the performance of a team.

All except one of the six MLB division winners this past year have a payroll in the top half of the league. All except one of the six last place teams in divisions are in the lower half of the league payrolls. Even teams that have low payrolls but a good farm system struggle (A team’s farm system is simply the minor leagues where the team’s young recruited players are developed into professional level players.). Often times, a good minor league player will come up to the major leagues and continue to perform well. When teams with higher payrolls see this, they simply offer more money for the player than the player’s original team can pay, and they take that player. They essentially take advantage of the scouting done by other teams. Teams with high payrolls can both afford to bring new players in, and to develop a good farm system. It is very unfair to teams in smaller markets. Losing teams generally have a smaller fan base that brings in less revenue also. Fans will usually support a good team, and if a team is always good, it will always generate good revenue. This means that nothing major changes. Some teams improve, but others continue to be bottom-feeders and others continue to dominate year in and year out.

The evidence clearly shows that baseball should have a salary cap just like the other professional sports. With a salary cap, there are still good teams and bad teams. The only difference is that with the cap, the good teams are the ones with a better emphasis on teamwork, better coaching, and better player scouting so they can develop younger players. Baseball teams are basically good because they have a lot of money to spend on better players. A great example of a team under a salary cap that is still having success is the Detroit Red Wings. The Red Wings had been dominant for years in the NHL and they had the highest payroll. Since the salary cap has been installed, they have had to drop veteran players and pick up younger players who haven’t proven themselves to drop their payroll under the cap`s limits. They are still 16-5-2 this season. It just goes to show that they have great scouts who saw some great potential in the younger players and they are now reaping the benefits. The work pays off as opposed to the money paying off.

Players are told from a very young age to play fairly. The only way to make things fair in professional sports is for there to be a salary cap. I would feel much more proud of a team that was able to make the most of what they have than to just go out and get the best there is without having to work hard for it. I also think that more equal competition makes for more exciting sports. The more exciting a sport is, the more fans want to watch it, and the more revenue the leagues make. It’s a revolving circle that ultimately means more fairness, better competition, more money for the sports industry, and more fun for the fans. The salary cap has an affect on everyone who enjoys sports and it is clear that Major League Baseball needs a salary cap.

8 replies on “Major League Baseball Needs a Salary Cap”

Money doesn’t equal dominance I find it odd you failed to mention that the two teams in the World Series were 12th and 13th out of 30 teams in total salary.  How about the Mets who had the third highest payroll, how did they do this year?  Didn’t Cleveland, with the 26th highest payroll, barely miss the playoffs?  Teams who dominate always have a core of players that came up with their organiation.  Witness the mid 90’s Yankees, who were led by Derek Jeter, Jorge Posada, Bernie Williams, Mariano Rivera, and Andy Pettite.  Sure, they have an advantage in signing players because they have the most money.  There is no denying that.  But, you still can’t buy a championship.  If you could, the Red Sox would have won before 2004.

true I had researched all of those things, but the point of the article was to state a generality with some true facts to say that it does matter. Money doesn’t buy a championship, but it buys a better chance at success. Perhaps I should have included that. Either way, it’d be more equal with a salary cap.

I agree.. it would be more equal.  Still, we all know some organizations would find a way so screw up and still be awful.

true again teams would still manage to screw up (LA Clippers before this year). I’d also like to point out that who picked those teams to make the world series. It took some upsets to get them there. Great play over a fortunate stretch of time is perhaps the only reason the teams that got there did. It was predicted to be the Cards and the Yankees or BoSox who are all in the top 5 in the salary cap.

General comment First of all, the Yankees spent 217 million dollars this year, including trades that had cash involved, player buyouts etc. The New York Yankees have very good scouts. Their farm system is good, as well. But, the Yankees trade prospects away for overpaid antiques who do nothing. Just look at the move that they made to acquire Matt Lawton. The pitcher that they traded away, Justin Berg, had a 3.06 ERA for Staten Island. The Yankees had the number 2 catching prospect in the country, Dioner Navarro. Where is he? Gone. Andy Pettitte came from the farm system. The Yankees have successful farm systems, year after year, but they would be even more successful if they weren’t traded away.

DO NOT PUT A SALARY CAP IN BASEBALL. Why? Because the salary cap could destroy a team as easily as it can hurt it. For example, look at the Tennessee Titans. They were a Super Bowl team, but they had to cut everyone because of the SALARY CAP. If there wasn’t a salary cap, all of the players that were cut due to salary reasons would still be there. The New York Jets are another team who are having trouble with the Salary Cap. The New Jersey Devils also were cap-struck. That’s why Scott Niedermayer is with the Mighty Ducks. The New York Knicks overpaid for Allan Houston and Stephon Marbury. Now, they are in a hole that will take years to dig out of. Why? The SALARY CAP is why.

Ya, but……. You make a good point, but why are those teams in trouble, because they weren’t as good at the other teams in the league of using the system they were under. Everyone else had to deal with the same problem, only they did it better. The teams that are in cap trouble are in it because they overpaid or overvalued players. It places an emphasis on great scouting rather than money-spending. Since the Yankees have such a good farm system, they, like the Red Wings should be able to thrive under the salary cap. People would think that the Yankees have ability to win with the people they pick instead of picking old proven players.

i disagree with this — Wow, where do I start with this one? I realize the last post was somewhere around 2005 so this may be a dead topic…but hear I go anyway…
Point 1. You stated about the Yankees,”They are a perennial playoff team and they have been world champions twenty-six times. This is because their owner, George Steinbrenner…”

I have to stop you right there and ask why you act like Steinbrenner’s hunger for bringing in the best players has given them 26 champoinships? George Steinbrenner has owned the team since 1973-giving them 7 world series championships in 33 years-lest I need to remid you that they won 19 of their championships in the golden age of baseball before Steinbrenner was there.

Point 2. You state, “The Yankees payroll this past year was an astounding 205 million dollars. The lowest payroll in MLB belongs to the Kansas City Royals with less than thirty-seven million. The Yankees have eight players who make more than ten million dollars per year. The Royals have just one. The Yankees only have two players who make less than one million. The Royals have only two players who make more than one million.”

Please don’t tell me you think the Royals players should have the same payroll as the Yankees, vise-versa, or somewhere in the middle. Players get paid based on talent or how good they are…players do not get paid just to be nice and put them all on an equal level. Now I’ll admit that players are over paid and everyones salaries should go down…but I’m saying if the Yankees players suck they should get paid as if they suck…if the Royals  players do great they should get paid like they are great…which brings me to my next point…commitment to winning…

Point 3. You state all this, “All except one of the six MLB division winners this past year have a payroll in the top half of the league. All except one of the six last place teams in divisions are in the lower half of the league payrolls. Even teams that have low payrolls but a good farm system struggle (A team’s farm system is simply the minor leagues where the team’s young recruited players are developed into professional level players.). Often times, a good minor league player will come up to the major leagues and continue to perform well. When teams with higher payrolls see this, they simply offer more money for the player than the player’s original team can pay, and they take that player. They essentially take advantage of the scouting done by other teams.”

1 word. Commitment. When a team has a commitment to win they will go out and spend money on their team. It’s that simple. It’s the not the spending that equals winning, its the commitment of the organization as a whole, and more importantly the chemistry and mental approach of the team. Say we have prospect A who is a 5 tool prospect comming up in team B’s organization. Team B is in the bottom half of the league in wins. This guy notices that his team hasn’t done much to improve themselve, the organization doesnt go get good players, and it doesnt seem to keep his prospects…what is 5 tool prospect A going to do when Team C who is a contender comes in and offers him more money than his current team? He’s going to go to team C if his team doesnt show an effort to keep him or to improve. I firmly believe that if a team shows a commitment to win that the prospects will stay no matter what offer comes. Example: the Detroit Tigers. Notice in 2003 they finished in last place. After this season they showed an effort to be good by keeping some prospects and acquiring Ivan Rodriguez. The next year the aquired Magglio Ordonez. They kept Jeremy Bonderman among all this. Last year they aquired Kenny Rogers and along the way kept Zumaya whom the signed in 2002, Verlander whom they signed in 2004, and Bonderman whom they signed in 2001. Last year they made it to the World Series. They did this and kept their prospects because they showed a commitment to winning. Not because of outragous spending. Notice they beat the team who spent the most in the first round last year. Spending does not equal championships.
Just look at the Yankees after 2000 when their key players left and they went crazy spending on Arod, Damon, Pavano, Wright, Brown, Johnson, Giambi, and such players. Yes they have got to th eplayoffs but its all about championships…not success.

Point 4. You say, “When teams with higher payrolls see this, they simply offer more money for the player than the player’s original team can pay.”

In 2002, Forbes magazine lists the teams whos owners made the most revenue. Among the top 10 are the Indians, Orioles, Rockies, and Mariners. Its not that the teams cant pay, its that they wont.

Anyway, I just thought I’d give you some of my ideas on this article. Let me know what you think.

Money does matter — What you’re failing to realize UMTerps25, is that sure money doesn’t automatically mean a championship, but the reason the Red Sox never won is because they have the Yankees in their division.  They have a team in their division in the Yankees that outspend them, therefore, the Yankees have the better players and should be winning more championships.  It is also harder to compete with an entire league to get the wild card, if you’re the Red Sox, rather than compete to only win your division, which is much easier to beat out 5 or 6 teams rather than 14 other teams.  In addition, small market teams may compete, but only for a year or so.  The lack of money causes them to lose great players that they can’t afford to keep.  Thus, if they do have great players, they are only around until other large markets realize the talent in those players.  Once that happens, the players follow the money and the small market teams are left without a great player.  If the small market teams decide to trade this great player, trying to at least not lose a player for nothig, they will only be able to trade for an up and coming player out of the minors who they hope will become great.  So, if there is a salary cap, players will stay, for the most part, with their respective teams and thus, teams with great scouts and coaching will be the winning teams, rather than those teams with the most money.

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