Wednesday, February 24, 2010

UCB Roundtable: Salary Cap

0 comments

My turn at posing a question to the UCB began with buying myself a new purse. Well, it's Spring Training, right? New season, new opportunities, new jerseys. Why not a new handbag to announce my fandom to the world? (And some pretty cool new earrings to boot!)

Spring makes me feel like shopping, and shopping makes me wish I had a lot more money. Money got me thinking about salaries and bonuses and team spending, and that made me wonder about payroll discrepancies across baseball.

Sure, some teams can get by spending less, and some teams feel the need to write blank checks to bring in the talent, but amazingly, there seems to be very little correlation between the number of zeroes and the number of trophies. Maybe this is because of the farm system. Maybe players feel more connected to the team that brought them up, and this loyalty shows itself in the form of "hometown discounts". Maybe arbitration and options and years of service have a positive impact on team development. Maybe a salary cap would only give players more incentive to "test the market".

At any rate, I was curious what the rest of the bloggers thought about the notion. Is a salary cap necessary? Would it work? And how would it affect the Cardinals specifically?



Daniel (C70 At The Bat): I've never been a big fan of salary caps. I'm a bit more on the side of the unfettered market, though I have no problems with the luxury taxes baseball has in place now, so that you can spend what you want, if you are willing to meet that price. Salary caps, in my mind, are owners desperately trying to find some way to control themselves.

As for necessary, I don't know that it is as much in baseball. Now, if you want to make sure that teams are able to compete long-term, maybe you have to do something of that nature. But in the decade just past, the Yanks only one at the beginning and end, the Rays were in the series, Philadelphia (which should play as a bigger market, but doesn't always) won one and was a runner up, Arizona took home a title, and unless you were in Kansas City or Pittsburgh, you saw your team in the playoffs at least once in that span.

The problems in baseball aren't necessarily in the money department, but in the brains department. A smart ownership with a focus on the draft and large upside bargains can go a long way. Can they sustain it beyond a couple of years? Maybe not, as those players start pricing themselves out of the budget. But there should be new ones ready to take their place.

I don't know how much a salary cap would affect the Cardinals, either. They have their own internal cap, of course, but they play in a division where most everyone is spending less than them anyway, so that wouldn't change much. They would probably lose Pujols, though, or they wouldn't have signed Holliday.

Jack (Thoughts About Cardinals): I really don't like the idea of a salary cap in Major League Baseball. It would change the nature of the game tremendously. The luxury tax is enough socialism in baseball for me. The Cardinals would probably not be affected by it terribly, however, because we tend to be in the middle of the pack payroll wise. Our organizational philosophy would likely not change that much.

Jeff (Five O'Clock Blogger): My Short Answer is "No, a salary cap is not necessary." I'm not sure I'm smart enough to provide a well-reasoned Long Answer, but I usually don't let that stop me.

For one thing, I'm opposed to salary caps on philosophical grounds: I'm not a fan of rules to protect one from oneself, and it seems that salary caps are in place to do just that.

Secondly, I don't see where caps necessarily level the proverbial playing field. In the capped NFL and NBA, it always seems like the same handful of teams are the top teams and another handful are busy putting down carpet and paneling in the basement every year. Sure, you'll get the odd Cincinnati Bengalses or Golden State Warriorses surprising folks every now and then, but then they go right back to hanging with the Detroit Lionses and New York Knickses.

Meanwhile, your Indianapolis Coltses and L.A. Lakerses seem to dominate every year anyway. And that seems to be because they are well-run organizations that employ smart people who know what they are doing, which is what the more successful baseball teams do, without a salary cap.

Say what you will about the well-heeled Yankees and Red Sox "buying" championships (a notion I disagree with), but Brian Cashman and Theo Epstein and their minions are smart people. Meanwhile, the (nearly) equally well-heeled New York Mets and Chicago Cubs can't seem to stay out of their own way. I'm not saying that Omar Minaya and Jim Hendry aren't smart; they're just throwing their millions at the wrong guys.

And that's what it boils down to, whether in MLB, NFL, NBA, NHL, MLS, EPL, PDQ or WTF... it's not how much money you have, but how well you spend it. Teams like Tampa and Colorado seem to have figured this out, while the Royals and Astros haven't. A salary cap isn't going to help the poorly run MLB teams any more than it has helped the crappy teams in other capped leagues.

What's frustrating about our Cardinals is that while our front office seems to be more forward-looking, the ... how do I put this charitably... "more traditional" field manager seems to have too much pull with the owners for my taste in terms of personnel decisions.

Ryne (Redbird Rants): I don't think baseball needs a salary cap. Maybe I fear change, but I think the system works fine. For all the jokes that the Yankees buy championships, the truth is that the organization earns them. And the Yanks and Sox and the rest of the big market teams don't win every year. The Cubs are up there in payroll and it will be 102 years since a championship for the franchise. Yes, the small market teams have a tougher time sustaining success and winning championships, but their owners could spend just as much. I mean, these guys are all billionaires right? Some owners just care about winning more than others (George Steinbrenner). The Tampa Bay and Kansas City owners could pour just as much into a team as George does. They choose not to. Small markets would do make just as much money with a good team on the field. People like to see wins not losses, and regardless of the market, fans will pay to see a good, competitive ballclub. So, I would leave the system alone, it really does work.

As far as the Cardinals are concerned, a change wouldn't hurt them. The team doesn't throw money around on free agents and has a solid front office and coaching staff in place. With good baseball people in the organization and coaches to develop talent, an organization can thrive. Look at the Minnesota Twins. The Cards don't spend too much or too little and still dominated the decade in the NL Central, so the organization's strategy works.

Kathy (Redbird Chatter): As an employee, I cannot imagine wanting to work for a company with a salary cap. The concept just seems to go against the principles of capitalism and competition that Americans hold dear. Picture working for a company that no matter how great a year you have, you cannot get the raise you deserve or the company cannot hire the best and brightest in their field.

Now, if I were an owner, particularly of an already profitable franchise, I would be pushing for it. My biggest cost would become fixed. If I raise ticket prices, sell more tickets or merchandise, that money would just go into my pocket. The players union will never go for this. They could build in some sort of profit-sharing, but then each team's payroll would end up being exactly the same as it is now.

It seems like most of the teams that are regularly in contention have payrolls in the $80-120 million range. A salary cap would likely land in the middle of that range, which is right where the Cardinals' payroll typically is. So, it would have very little effect on the Cardinals.

The current "revenue sharing" or "luxury tax" gives teams in smaller markets money to actually spend. Without it, those teams would be spending even less. So, the problem of competitive balance, or imbalance, would likely be worsened by a salary cap.

Justin (Intangiball): (Ed. note: Welcome to the UCB, Justin!) As far as the game of baseball is concerned, I’d have to consider myself a purist. But I’ll be the first to admit that, “Because that’s the way we’ve always done it.”, is a weak defense. Let me offer a more visceral argument.

For many others as well I’m sure, the Cubs and Yankees are two teams that I love to hate. While Chicago is also "large market" and plays into this debate, the Yankees are the clear epicenter of any salary cap discussion. Because they win. Attempting to level the playing field by constricting them or any other organization would not only be detrimental to the game, but fruitless.

In 2008, the Yankees carried a payroll of over $200 million and failed to reach the playoffs for the first time since 1994. They watched as Tampa Bay and their $40 million roster claimed the pennant from within their very own division. The Rays had never even sniffed a winning record, much less the postseason. Prior to last season, there hadn’t been a championship parade in the Bronx since 2000.

New York is not exactly Pittsburgh, folks. Steinbrenner law practically mandates that the span of time between season-ending celebrations be amortized mathematically equal to dog years. Therefore, even as we discuss this in February 2010, a mere 4 months after their most recent championship run, George & Sons have already began suffering withdrawal symptoms for what to them is the equivalent of 2.33 years of failure….or 47 minutes in Cubs “years”. (Cue the rim shot)

There are, how many millions of people in NY? LA? Chicago? Unfortunately for smaller market teams, there is in fact strength in the sheer number of people paying attention to your product. There is no way to negate the impact of advertising dollars and ticket sales that "big market" teams achieve. We should also not forget that it is businessmen running these shops. A salary cap may prevent a team from fielding 3 or 4 A-Rods (pauses to throw up a little in throat) but beyond that would only force them to allocate funds to other areas of operation.

While the long term effects of a recession are debatable, a resulting corporate philosophy I predict is here to stay in all industries is one of lower overhead and less liability...greater agility in times of crisis. In other words, while the Yankees and their seemingly unlimited resources may forever represent a separate perception of risk, the days of reckless spending are over. Especially for aging superstars. Even more so for aging superstar pitchers. How many young, cost-effective studs are passed over for deals like Barry Zito's 126 million over 7?

If GM’s haven’t realized by now that the future is in smarter deals, farm systems, and international operations, they weren’t likely to be competitive regardless. But it appears that they have. Evident with every free agent Hall of Famer that vanishes into retirement. The fact that financial behemoths like the Red Sox and Yankees seem to have also figured this out is what should scare us the most. They're shooting a double-barreled shot gun while Baltimore throws rocks.

But forget all of that for a minute. Let’s get to the visceral part. Emotionally, baseball needs an Evil Empire as much as Star Wars did. What's a hero without a villian? When us “small market” fans inevitably watch the teams we love fall, who is there left to cheer for if not the underdog? The beauty of this is that when the Yankees or Red Sox or Angels face a team like Florida or Arizona or Colorado, teams that even by name are reaching out for market share beyond city limits, that club has not only their city rallying behind them, but so many of ours as well. I like that. And even when Goliath comes out on top as they did last year, it feels cheap. I'll take the feeling of our victories over that every time. Even if it is less frequent. To these prima donnas and their fans, I say GO to New York. You're not our type. We're baseball fans. You're playing a different game.

Ryan (Cardinals GM): Salary caps are generally not a good idea. Teams would probably be reluctant to guarantee dollars over a long period of time (especially to pitchers) because they would be locked into a budget. That could mean that the Cardinals might not have the impressive core that they do under the system currently in place. There would also probably be a greater emphasis put on scouting and development, as the value of 0-3 players would increase under fixed budgets. Not sure how this would affect the Cardinals. Luhnow has done some nice things with the farm system, but I also don't think that he can be considered one of the best vp's of player development. To go along with 0-3 guys, undervalued things like defense (it's still not being valued the same way by all teams) would also be at a premium, which I think the Cardinals do a fair job of taking advantage of. The Cardinals have traditionally always been a strong defensive team, and I think TLR and Duncan have a way of bringing out the best in players-Ludwick, Jeff Weaver, Chris Carpenter, etc. In short, if everyone had equal budgets, I still think the Cardinals would be ok in the division, because I believe they are the best run organization.

Mike (Stan Musial's Stance): Like some others who have already responded, I think the competitive imbalance is a function of talent evaluation. If you read any Joe Posnanski you see a humorous take on the Royals' personnel gaffes; the Pirates always seem to be blowing up the roster and starting over; the Padres didn't draft well in the last years of Kevin Towers. That evaluation disconnect does far more to keep those teams in the second division than the free market for free agent salaries does. A salary cap isn't going to fix problems in evaluating talent.

I don't think a salary cap is the answer. Not saying the league couldn't make it work, they probably could; but the same teams would still miss the playoffs because of the talent evaluation issues above.

Seems to me a salary cap discussion starts only when a team can't keep a talented free agent (like Johan Santana) due to cost. If teams could designate a guy as a franchise player and retain his services that way it might keep the playing field a bit more level, so that we don't seemingly see all the high-priced talent end up in New York/Boston/LA or other large market teams.

Should a salary cap be enacted, I don't see it affecting the Cardinals much. They've constructed their team with a couple of expensive marquee players (AP, Carpenter, Izzy, Rolen, Edmonds, as examples), then filled in the roster with guys they controlled or economical veterans. I don't see this team leaving that model soon.

Pip (Fungoes): First, if the goal of a cap is to increase parity, that begs the question "How much parity?" After all, MLB has experienced greater parity since 1995 than at previous times in its history. But the problem is that a salary cap, more accurately called a "payroll cap," doesn't even work either in theory or, as with the NBA, NHL and NFL, in practice.

Restricting the amount that a revenue-rich team can spend on its payroll only pushes its resources into other areas, such as international player scouting and player development, where it can still gain advantages. In other words, a payroll cap doesn't limit a team's revenue; it just moves it somewhere less traceable.

How might a payroll cap affect the Cardinals? Since the Cardinals tend to spend more than their division rivals, they'd lose some of their payroll flexibility. But, since they have been one of baseball's most efficient franchises (according to JC Bradbury), they would likely continue to excel in such a rigged environment.

A simpler idea that might actually achieve the intended consequences would be to give teams the freedom to relocate without owners being able to block them (requiring someone other than the feckless current commissioner). For instance, the New York market, home of the team that payroll-cappers most often target, the Yankees, could easily support three teams (as it once did). Allowing a revenue-poor team to relocate there would simultaneously increase its revenues and cut into the Yankees' and Mets'. Combined with the current alignment of teams, which already tends to reduce disparity (the Yankees and Red Sox, after all, play in the same division), allowing a team to tap into the revenue supplying the hefty payroll would further increase parity. Rather than reducing teams' economic freedoms, a better answer is to increase them.

Chris (Bird-Brained): Salary caps can work, generally speaking, but I don't think baseball needs one. I like the idea of revenue sharing, because teams like the Yankees do have a bit of an unfair advantage when you look at their big picture (including TV) revenues compared to, say, KC or Florida. Maybe a better solution would be a "salary floor," or just better tracking of how the teams that reap the benefits of revenue sharing spend their money, to keep the have-nots a little closer to the parity line. I used to get miffed about the Yankees "buying" championships until I noticed that half of their 2010 playoff roster is made up of players that came up through their system. Granted, the other half made over $100 million last year, but still. Drafting a championship team can work, but only if you hang on to the good draftees.

I think the Cards have done a pretty good job of holding on to the guys that can truly help this team long-term, and balancing that with quality free agent/trade acquisitions put them where they are today. Bill DeWitt can balance a budget. I don't think he'd be scared off or emboldened by a salary cap for Major League Baseball.

Thanks for your input, guys!

Personally, I can't see a salary cap improving the system, even if it didn't cause any damage.

Be sure to check out the rest of the UCB Roundtable fun by following the blogs over at the UCB site.

0 comments: