Baseball Salary Cap
November 16, 2009
Major League Baseball’s Collective Bargaining Agreement is set to expire at the end of the 2011 season, but there is already talk of what the next agreement will look like. MLB is the only major sports league in North America without any type of salary cap, and discussion of implementing one is sure to be included in the next round of CBA negotiations. With the recent World Series victory by the New York Yankees, count on criticism of the current competitive structure to increase, as well as calls for a more equitable system to be put in place.
New York ranked first in opening day payroll last season, spending 201 million dollars in player salaries on route to their 27th World Series title. Compare that to the Pittsburgh Pirates which spent just over 48 million (28th in overall payroll) and finished with a 62-99 record. Nine teams had payrolls over 100 million dollars, and five of those (the Yankees, Red Sox, Angels, Phillies, Dodgers) reached the postseason, while two of the remaining four (the Cubs and Tigers) finished with winning records. However, four of the ten teams with the lowest payrolls also finished with winning records, and one (the Minnesota Twins) won their division.
The main proponents of a salary cap are small market clubs that lack the financial resources of teams like the Yankees and Red Sox. These clubs rely heavily on effective scouting, player development, building through the draft, and wise spending. Failure in any one of these areas can have severe consequences which may set back an organization for years. For example, the 2007 Cleveland Indians ranked 23rd in payroll, but was one victory away from reaching the World Series. Last season, they finished 34 games under .500, with a third of their payroll consumed by two injured players (Travis Hafner and Jake Westbrook) in which they had invested over 87 million dollars worth of extensions during the 2007 season. Due to the deteriorating economic climate and high payroll, the team was forced to trade many of their top players who were due for large pay raises in free agency.
The opponents of a salary cap (big market clubs and the players union) would blame the Indian’s predicament on their front office rather than the absence of a salary cap. They point to the continual success of small market organizations like the Oakland Athletics, Minnesota Twins, and Florida Marlins despite no salary cap. And, as the Yankees would be quick to point out, spending does not guarantee success. New York has been ranked first in payroll for the past nine years, but 2009 was the first in which they finally obtained baseball’s top prize.
Given the current economic climate, the salary cap could pose a serious hurdle to negotiations of a new CBA, especially among owners. Even if overall economic conditions improve substantially, the growing disparity between the haves and have not’s could lead to a messy round of negotiations following the 2011 season.
For further discussion regarding the salary cap and baseball spending in general, see:
Bustin' the Cap: Why a Salary Cap Would Do Nothing for Baseball | Bleacher Report
ESPN.com: Page 2 : Does baseball need a salary cap?
-Adam Renon