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Last week for Baseball Prospectus, I wrote about how a priority in the next collective bargaining agreement between MLB and the Players Association should be a salary floor. Too many teams get away with not spending the money they bring in each year, whether it’s revenue-sharing checks received after the season, their share of national television revenue, or even their own local revenues: a salary floor wouldn’t force everyone to spend as much as they are able, no, but it would at least force the lowest number trotted out their each year to be higher.
There were a few things I didn’t get into in that piece that I’d like to discuss now, though. For one, last week’s feature was mostly about why a salary floor was a necessity, given the current competitive conditions and the revenue even the poorest teams in MLB are bringing in annually. Second, though, is that these other issues deserve more time to themselves, so, let’s give that to them.
MLB loves the idea of a salary floor, and it’s worth pointing that out, because their love for the concept of a salary floor is the kind of thing they like to use as a weapon in negotiations — remember, it was just last year that they leaked their proposal including a $100 million salary floor, as a way of showing that look, they’re taking these concerns very seriously! It was theater, of course, attached to a lowered luxury tax threshold of $180 million, but that’s really just the start of what MLB would expect if they were to institute a salary floor. I know some people believe a salary cap would have to be instituted in order for a salary floor to also be introduced, but I don’t believe that’s true. The league knows a cap isn’t going to happen, so they wouldn’t bother with that. No, they’d find other ways to lessen spending while making it seem as if they were fixing things with a salary floor.
For instance, there is lowering the luxury tax threshold as they proposed, but they could also lean even more on revenue-sharing to subsidize the “small-market” teams that would claim it’s a struggle to field a $100- or $125-million roster, or whatever the salary floor would end up being. Create a situation where the Dodgers and Yankees et al are paying even more into the central fund in order to help finance the rosters of other clubs, which would in turn drive down the overall spending by those clubs, since they would say, “hey, we’re not actually making as much money as we used to.” Of course, it wouldn’t actually be a struggle for these teams to field a roster at or above a salary floor — and if it somehow was, well, sell the team and collect your $2 billion or whatever so an owner capable of withstanding a one-time $10 million operating income loss can take the reins — but MLB has its narrative and its closed books, and they aren’t likely to want to change the status of either of those things.
And if that’s the case — that MLB would institute a salary floor that the richest teams are subsidizing, perpetuating the lie that these “small-market” clubs simply can’t hang — then there’s basically no chance that the penalties for being under the salary floor would be all that daunting. And that’s really the reason to bring up the need for a salary floor in the first place: to point out how strange MLB’s system is in the first place, how easy it should be to agree to fix what’s wrong with it, and then to realize that nothing is going to change because MLB has no desire to change it.
As I wrote last week:
MLB has a “Steve Cohen tax,” but what it really needs is a Bob Nutting Tax. The league needs a salary floor. It needs punishments in place for not spending that are as aggressive as the ones the owners wished they could have made the players agree to for the luxury tax this past winter. Losing draft picks, having to pay monetary penalties, losing access to revenue-sharing dollars and rebate checks—all of it. Make it so a team not spending $100 million or $120 million or whatever the figure would be loses even more by not making up the difference between the payroll they want to have and the payroll they, by CBA mandate, need to have. Hell, make them pay the difference between those two figures into the central fund, lop that amount off of their revenue-sharing check and redistribute it among all the eligible teams that did exceed the minimum, whatever you need to do to ensure the money is going to be “spent” one way or another. There’s no reason a salary floor can’t work, and in a way that spurs competition, except for that all of the owners running a full or partial grift each year would be violently opposed to instituting one.
Just stop and think for a moment about how absurd it is that MLB’s rules dictate that a team is punished for trying too hard to win. Yes, I understand the fear of 20-plus years ago, when the Yankees were creating their own money-printing regional television network while the Twins were being threatened with contraction, is what led us to this current situation. But even if you do take those concerns of the early aughts at face value (and you should not), this is a different era. Teams are pulling in at least $100 million per year from national and local television revenue. Revenue-sharing is incredibly healthy given how much money is floating around the league. Even when gates are lower than they’ve been for one reason or another, new revenue streams keep popping up all over the place — MLB.tv had only just begun in 2002, and MLB Network followed in 2009, now there are sportsbooks and talks on joint ventures from the major sports leagues to cut out the RSN middlemen and increase the league take home — plus you have to consider that lower attendance doesn’t necessarily equal a lower gate, thanks to the maximizing of profits per ticket sold.
There’s just so much money in the game, even for the relative poorest of the 30 clubs, and it’s absurd that there has been no course correction yet to punish them for not utilizing these funds in order to field a more competitive team, especially when punishments exist for those that do try to compete.
This is all a long way of saying that the model devised 20 or so years ago doesn’t need to apply to the present, but it benefits MLB to pretend that it does. A salary floor should be a priority, but there are a number of reasons why that doesn’t mean it will come into existence, and it certainly shouldn’t come at any cost, which is nothing the PA needs me to tell them. Just knowing what should be, and why it won’t be, is important to understanding the nature of these discussions, though, and which side is in the right with their asks.
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