Tuesday, December 23, 2008

Spare me the salary cap argument

I try to be fair and rational. I love the game of baseball. And I am also a Yankee fan. Those things are in constant conflict and I try like heck to be consistent and logical. Sometimes I succeed, other times I fail.

But the "baseball is doomed", "we need a salary cap", "the Yanks are ruining the game" stuff is just whining. Baseball is healthy. The economy is in the shitter, no question, and it will impact the gate this year. But most of baseball's non-gate revenues are guaranteed TV/Radio/Internet revenues. Fewer people going to the games will end up watching online or with an MLB package. Baseball will continue to thrive, much less survive.

And with a very basic economics background melded with several summers of construction gigs, I can tell you with a ceiling, there must be a floor. Take a look at the 2008 payrolls and you'll see the average of about $90 million per team and a total of $2.7B. There are 17 teams below the average, 13 above. So where is the ceiling and where is the floor?

If you take the top 5 teams off the list and use that 6th team as the ceiling, you'd have the Angels at $119m. Take the bottom 5 teams off the list and you'd have the floor at the Royals' $58m. Said differently, adding and subtracting roughly 1/3 of the average to get your ceiling and floor. Is that a good spread? For illustrative purposes here, let's assume it is. [In the NFL in 2008, the floor is set at about 85% of the ceiling; much closer than our 50%]

The Marlins are lowest on the list with a payroll of $21 million. If you enforce the ceiling, you must enforce the floor. And if you enforce the floor, you are requiring the Marlins to nearly triple their 2008 payroll. And since we all know how poorly the Marlins draw, I'd guess they'd be forced into some baseball equivalent of Chapter 11 within a year. And what would happen to those big Yanks contracts? Would they be voided, allowing those guys to again be free agents? How would you choose which ones you could jettison?

If MLB were to enact a ceiling and a floor, the league would be forced to either relocate teams or contract those that cannot survive. Remember those fun contraction rumors from a few years back?

Then, there is the issue of the Union. The point of any union is to protect its dues paying members from the might of ownership. Or something like that. Now, MLB's union has the benefit of a limited number of members dividing up a tremendous pie of cash. A ceiling would artificially supress wages for the union members so that would never, ever get ratified. Marvin Miller would raise the most holy hell-storm ever. And, as I have said before, I am staunchly pro-labor. An argument FOR a cap/floor is decidedly pro-Management. I'd rather root for the millionaires than the billionaires. Pay the guys who are doing the work, earning those revenues.

[This model is the Wall Street model. Pay for performance. It's why you saw those crazy amounts the Wall Streeters were earning. They generate huge fees/revenues/commissions for each Investment Banking House. The biggest producers get paid a healthy percentage of that pie with a trickle-down. For fixed wage earners, we're paid the same almost regardless how good or bad we perform. Of course, poor performers don't last very long but with a fixed wage, I can bust my tail all day, every day and not share in the revenues proportionately. My job is theoretically lower risk (which I happen to like right about now) and that comes with that lower reward. As a side note, I am curious to see if there will be an increase in homes for sale by me due to the Wall Streeters who got laid off or didn't get their bonuses (often in many multiples of a very comfy base salary).]

All that said, no matter how much the Yanks spend this coming season, or any season, guarantees anything. It's not like ARod swings with his wallet. Does adding Teix to an off-season bounty that already included Sabathia and Burnett HELP the Yanks improve their odds of making it to the playoffs? Of course. But with the Sox still potent as ever and the Rays' young guns still standing in front of the Yanks, nothing's a given.

The Yanks have added a ton of long term contracts, but I wish everyone would just stop quoting the total values. The Yanks shed some $88m or so before their buying spree. Adding these three horses and there's still headroom. The total payroll still ridiclous compared to the Marlins but which team is fleecing their fans more? Hate the Steinbrenners all you want but at least they are giving their fans a first rate product for first rate ticket prices.

What started as a quick "zip it" posting meandered into something more. Tell me where you'd set the cap/floor or what solution you have. If you want the cap, tell me what the parameters would be. Don't just say "we need a cap". Describe your plan. Convince me. Show me how it would work, how you'd enact it? Over time or immediately. Otherwise, keep the whining down. My basic rule is this: If you can't propose a solution, don't whine about the problem.

My other rule: It is about the money, stupid. Always is.


Anonymous said...

One argument for a cap, and for me, the most compeling reason is that the constant increase in payrolls amonst ALL teams means more revenue streams are needed. This translates into new ballparks, even before a park has even completed its useful life, and that means the citizens have to pay for it whether they want baseball or not.

Anonymous said...

New ballparks are needed to pay the exorbitant salaries and this Yankee craziness means arbitration numbers will increase dramatically next year and all subsequent years.
If you are a fan of baseball or not, bend over, your taxes will be increasing!