I’ve written a great deal here about salary caps in baseball. Also, here, here and here. I looked at salary caps from every which way I could. I wrote how salary caps always come with salary floors. I wrote how the revenue-poor teams in baseball (many of which are profits-rich, but that’s another story) could not afford much in the way of a salary floor, so baseball could not afford to have much in the way of a salary cap. So I did say it: baseball cannot afford an effective salary cap.
Unfortunately, I also said that I wished it were not so. I said that baseball needs an effective salary cap, that I wished baseball split its revenue so that it could afford an effective salary cap. It seemed right to me that baseball should be played on a more even financial playing field, that some teams (like my beloved Yankees) should not be able to spend 5, 7, even 10 times the amount that their revenue-poor (if sometimes profit-rich) cousins in Pittsburgh and Tampa Bay were spending. A salary cap (and floor) would do something to narrow the gap between Pittsburgh and New York. Narrowing this gap seemed fundamentally fair to me.
And it still does.
But there’s a better way to narrow the gap, and that way is to share revenues as fairly as we can between rich and poor baseball teams. I will talk a lot about revenue sharing during the upcoming baseball season.
The current NFL labor woes highlight why baseball does not want a salary cap, or a salary floor: in order to have a salary cap and floor, the teams and the players have to agree on a fair division of the revenues. The cap represents the high end of this split, and the floor represents the bare minimum that the owners have agreed must go to the players. Once a sport puts a salary cap (and floor) in place, this split must be agreed to each time the owners and players negotiate a new collective bargaining agreement.
The problem is, there’s no obvious formula that owners and players can use to split league revenues. The NFL owners are claiming that their expenses are rising and that they need a greater share of revenues to restore their teams to their former profitability. But even if this were true (and naturally, the players do not believe that the owners have proved their claim), there’s nothing written in stone saying that the players have to make less so that the owners can make more.
This is why salary caps (and floors) are a bad idea, always a bad idea. The idea of caps and floors is nothing more than an uncomfortable partnership between owners and players, where the partners are destined to bicker forever over how to divvy up the partnership revenues. As a former lawyer, I can dutifully report that there ARE plenty of partnerships with bickering partners. Some partners loathe each other, yet have to work together. If you’re the lawyer representing such a partnership, the last thing you’d ever do is force the partners to renegotiate their partnership agreement every four years.
It’s common sense: when you’re dealing with a problem relationship, you don’t add issues to compound the problem. If your marriage is a little shaky, that’s not the time to adopt a child. If things are testy with your next door neighbor, maybe you postpone your run for president of your neighborhood association. And if you’re running a multi-billion dollar sports league where owners and players have a history of conflict, maybe you don’t make the league dependent on the owners and players agreeing every four years how to split the revenues.
Baseball has done this better. At the moment, the “partnership” between MLB and the baseball players’ union is functioning reasonably well, but it will not always be so. There will come a day when labor relations in baseball are as terrible as we’re presently seeing with the NFL. When that day comes, MLB and the baseball players’ union will have plenty of issues to divide them: luxury tax levels, and years to free agent eligibility, and “hard slots”, and the like. But they won’t have to argue how to split up the revenues, because (owing to luck, or foresight, or just the players’ ability to have their way back in 1994) baseball does not have a salary cap. For which we should be grateful.
People like me, who would like to see baseball played on a more level economic playing field, will need to look to revenue sharing – a revised form of revenue sharing that improves competitive balance in an efficient and cost-effective way – as the principal means to achieve greater fairness in baseball.
Because salary caps are a bad idea. Always were. Sorry I ever said otherwise … but thanks to the NFL, I’ve seen the light.