Does Baseball Need a Salary Cap?

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Major League Baseball stand alone in the fact that the league does not institute a salary cap. A salary cap is a monetary limit that teams cannot exceed that is agreed upon by the league. The NHL, NBA, and NFL all have salary caps. So why doesn’t the MLB? Well they kind of do. Instead of a salary cap the MLB has what is called a luxury tax, which is a tax imposed on teams who exceed a certain limit set by the league. So it’s not really a salary cap, but it does, or at least, is supposed to discourage large market teams from having a payroll that makes the payroll of a small market team look like pocket change. But does the luxury tax actually work? Let’s take a look at all 30 teams’ 2012 payroll and see what we can see.

2012 Team Payrolls
NO. TEAM PAYROLL AVERAGE
1. New York Yankees $197,962,289 $ 6,186,321
2. Philadelphia Phillies $174,538,938 $5,817,964
3. Boston Red Sox $173,186,617 $5,093,724
4. Los Angeles Angels $154,485,166 $5,327,074
5. Detroit Tigers $132,300,000 $4,562,068
6. Texas Rangers $120,510,974 $4,635,037
7. Miami Marlins $118,078,000 $4,373,259
8. San Francisco Giants $117,620,683 $3,920,689
9. St. Louis Cardinals $110,300,862 $3,939,316
10. Milwaukee Brewers $97,653,944 $3,755,920
11. Chicago White Sox $96,919,500 $3,876,780
12. Los Angeles Dodgers $95,143,575 $3,171,452
13. Minnesota Twins $94,085,000 $3,484,629
14. New York Mets $93,353,983 $3,457,554
15. Chicago Cubs $88,197,033 $3,392,193
16. Atlanta Braves $83,309,942 $2,776,998
17. Cincinnati Reds $83,309,942 $2,776,998
18. Seattle Mariners $81,978,100 $2,927,789
19. Baltimore Orioles $81,428,999 $2,807,896
20. Washington Nationals $81,336,143 $2,623,746
21. Cleveland Indians $78,430,300 $2,704,493
22. Colorado Rockies $78,069,571 $2,692,054
23. Toronto Blue Jays $75,489,200 $2,696,042
24. Arizona Diamondbacks $74,284,833 $2,653,029
25. Tampa Bay Rays $64,173,500 $2,291,910
26. Pittsburgh Pirates $63,431,999 $2,187,310
27. Kansas City Royals $60,916,225 $2,030,540
28. Houston Astros $60,651,000 $2,332,730
29. Oakland Athletics $55,372,500 $1,845,750
30. San Diego Padres $55,244,700 $1,973,025

Now I didn’t go to math school, but it’s pretty evident that the top payrolls are eons above the bottom payrolls. The New York Yankees’ payroll is 3 1/2 times larger than the San Diego Padres’. Well now, let’s look at another table. How about one showing market size and average revenue for all 30 teams from 1995-2005. Now being the baseball genius that I’m sure you are, you will realize that this table incorporates the Montreal Expos because with this data, the Washington Nationals do not exist.

Team

Market Size (100 represents league average)

Average Revenue in millions from 1995-2005

Yankees

262

$187.54

Braves

102

$134.38

Red Sox

155

$131.83

Indians

84

$129.09

Mets

244

$127.96

Orioles

124

$125.72

Dodgers

175

$122.63

Diamondbacks

64

$121.13

Mariners

112

$119.03

Rockies

59

$115.44

Rangers

103

$113.33

Cubs

105

$113.19

Giants

84

$106.50

Cardinals

56

$104.73

Astros

86

$100.18

Rays

87

$92.36

Angels

147

$91.27

White Sox

90

$91.08

Tigers

95

$84.56

Phillies

130

$83.87

Padres

45

$82.64

Blue Jays

96

$81.42

Athletics

61

$75.13

Marlins

95

$74.89

Reds

69

$74.55

Brewers

39

$72.39

Pirates

54

$72.08

Royals

38

$69.07

Twins

69

$63.36

Expos

78

$55.13

So what does all this mean? And quite honestly who cares? Well here’s what you should take away from this table. For the most part, the teams with the higher revenues are teams in higher markets. Makes sense. Now, you have some teams, in relatively small markets with pretty high revenues, that’s what MLB wants, or at least what they say they want. When small market teams make the playoffs and play a large market team. Baseball’s ratings are through the roof. When you have two teams, like the 2001 world series, the Yankees vs the Diamondbacks, one, the Yankees, being a large market team, the other, the Diamondbacks, being a middle market team, you have great ratings. Only the 2004 World Series has beaten the 2001 World Series since and that has to be accredited to Red Sox breaking their curse. So baseball wants a few, small market teams to mix it up with large market teams. because that what fans want.

So should MLB impose a salary cap? No, absolutely not. The saying “the rich get richer and the poor get poorer” doesn’t really work when the poor are multimillionaires. A high payroll and large market doesn’t necessarily equal success. Look at the recent success small market, small payroll teams like the Oakland Athletics, Tampa Bay Rays, Cincinnati Reds, and Washington Nationals. Then look at the recent struggles of the LA Angels, Seattle Mariners, New York Mets, and Chicago Cubs. Money is not the only factor controlling the success of a baseball team. Small market teams are figuring out ways to win and beat these large market teams. Small market success is almost becoming a new fad for the MLB. Fans love to see players they’ve never heard of take on the likes of Derek Jeter and the Yankees. It’s what makes baseball great. The Yankees may have 27 rings and that’s all well and good, but the times are changing. The Yankees, and other large market teams for that matter, go through years of failure just like every other team. Paying millions upon millions of dollars for a lineup isn’t going to win championships. Of the ten playoff teams in 2012, 5 were in the top 15 of payroll, 5 were in the bottom 15.

Salary cap, is, and will probably always be the most controversial issue in baseball, well maybe second behind the DH. But when it comes down to making a decision on whether or not the league wants to impose a cap they look at success of small market teams. If these small market teams keep finding ways to win, the league is not going to impose a salary cap.

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