One response to “Opinion: It’s time for Major League Baseball to implement a salary cap”

1. 

   Mark C

   January 20, 2025

   “It was time” about 20 years ago. They need a cap AND floor, one doesn’t do much without the other. The author completely misses out on a lot of factors.
   1) The CBT is useless. A team that can afford to way overspend on payroll can afford to pay the CBT, if it even applies.
   2) Teams like the Dodgers own their broadcast network, meaning all that money is not counted against the local sharing formula. It’s “free” money, and being in the 2nd biggest media market on the planet, it’s a HUGE advantage. NY Yankees also own most of their network, and are in the biggest market in the world. Half the teams, like the Royals, own zero of their network so all local network revenues are subject to the sharing formula, while being in one of the smallest media markets.
   3) Market size penalty by rule says those teams above the median market size can not EVER be net recipients of local sharing revenue, they must always pay. That means then by rule the bottom market teams must ALWAYS be net recipients, they never pay more than they receive. This means top teams always subsidize bottom teams.
   4) Since top market teams must always be net payors, what about those right on the middle? Oakland As was the team right on the cusp; by moving to Vegas, a “smaller market”, the As just increased their net receipts without spending a dime on payroll or winning one single game.
   5). Because there is no floor and no requirements to spend a single nickel of sharing money on payroll, bottom teams are free to spend as little as they want. A couple years ago the bottom team spent only 15% of what the top team spent, making it wholly uncompetitive. Each year half the league is completely uncompetitive, most of them year after year, with no penalty. In the NFL a team MUST spend at least 87% of the cap on payroll (as averaged over the previous 4 years). In MLB there is no bottom limit. Teams like As, Pirates and Royals (for many seasons) can spend next to nothing and field AAA-level teams and lose 100+ games and still reap 10s of millions in sharing money. In most other industries, this is called “a racket” and should be subject to RICO statutes.
   6). Stadium liabilities are not subject to local sharing formulas, so owners push for new stadiums because that debt and expense is deductible out of their total local sharing revenue. It’s basically a way to dodge losing local sharing revenue especially when the local population pays half or more the cost of the stadium. This is why the Royals want a new stadium – it’s a massive deduction AND they want to reduce regular seating and expand luxury suites, which is where the money on fan revenue is – not walk up fans. Same for the As in Vegas; by pairing with local hotels and casinos, they can sell more boxes. An empty paid-for box makes more in revenue than 40 butts-in-seats fans. Butts-in-seats fans are a nuisance, as they require more concessions, restrooms, and parking. The money is in suites, not seats. This is also why the Royals REALLY wanted a downtown stadium – to pair with local hotels and conventions to sell boxes. They don’t give a damn if local fans want to fight traffic to head downtown.
   7). National broadcast sharing revenue only applies to nationally broadcast games, which is almost never the Royals. This means top teams subsidize bottom teams because top teams are always the national games. Merchandizing is also nationally shared, and again top teams subsidize the bottom. Yankees gear is sold all over the world, Royals gear sold around the KC metro region. A Yankees merchandize license is worth WAY more than a KC one, but Royals share in that Yankee fandom without lifting a finger or spending a dime.
   8). The local revenue sharing formula is a highly secret one; nobody knows the exact formula. Such shenanigans are then subject to shady outcomes. In the NFL, everything is nationally shared, there are no “Big markets” or “small markets”. Teams in tiny markets like KC, Buffalo, and Green Bay are hugely successful while top markets like NY Giants and Jets flail around, despite the mandatory 87% floor. At that point, it comes down to ownership and coaching, and teams can spend what they want on top coaching.
   9) Because of the local sharing formula, “small market” teams are actually incentivized to NOT win. Winning more games means more butts-in-seats, more butts-in-seats REDUCES your sharing portion. You can win more games and actually LOSE money. It’s counter intuitive but that is the reality for “small market” teams. This is why the top teams MUST spend more for players, because they are subsidizing all the leaches on the bottom. End result – attendance declined for 15 straight years in a row, viewership for the playoffs/WS has cratered, and half the league is irrelevant each season. Hitting has cratered, the game has become unwatchable for many teams because its HR-or-K. Pitchers must throw 95+ to overcome the roided players, so injuries have more than doubled over the past few years and kids barely out of high school are having TJ surgery. MLB has to crank out the propaganda to make everyone think everything is great, when in fact attendance increased less than half of one percent last season despite MLB trying to make you think it was up 9% (it was up over COVID after totally tanking attendance, it’s barely recovered to where it was before COVID which was a 15-year decline).
   10) The reason Bally went bankrupt was because it could not afford to pay the broadcast licenses based on the advertising and subscription revenue it received. Nobody watches terrible teams, and with the ridiculous black out regions, nobody wants to pay top dollar for ads no one local will see. With declining attendance and black outs that cause declining viewership, interest in HR-or-K unwatchable baseball leads to collapse of the system. And MLB doubles down with all the Dodger payroll nonsense.

   So, in sum, a cap by itself will do little, there MUST be a combined floor. In short, the NFL model. It still amazes me how many writers are utterly ignorant of MLB financing.

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