Friday, January 17, 2014

No to Salary Caps and Floors

Baseball is one of my favorite guilty pleasures.  I love almost everything about it.  But about this time of year everyone piles on the “Baseball needs to change” bandwagon and rips America’s Pastime.  It is my theory that you can tell whether you are a liberal or a conservative based upon how you view Major League Baseball, but that is for another day.  I will defend the Hall of Fame voting in my next post, but I want to defend the lack of a Salary Cap in MLB.  It is one of the last hold outs for capitalism in American sports, and people are always trying to take it away.  
Tim Williams is one of my favorite Pittsburgh Pirate writers, and a fan of the Sabermetric system, so I enjoy his posts.  He has written a thought provoking post on the need for a salary cap and the problem with having such Income Inequality in baseball.  I am going to have to disagree.
Let me say, I do think MLB has made some rules to try and ensure the Red Sox and the Yankees always make the postseason such as the limit on draft spending and the taking away a draft pick for top free agents.  Those things need to be changed, but income inequality is not a big problem in baseball.  Let’s examine Tim’s arguments.  
Tim sites the lack of high priced free agent signings by teams with less than $90 M in TV revenue.  And as a Pirate fan, we never get big named free agents.  But the question is should we even want them?  Look again at Tim’s list, and now lets compare actual win-loss results.  
The 2012 signings of Josh Hamilton and Zack Grienke had vastly different results.  The Angels finished below .500 and missed the playoffs.  The Dodgers won their division with 92 wins, a good total.  However, that win total was less than the Pirates (94) and less than the Cardinals (97) who are both Low Revenue teams of about 30 M.  The record was also lower than other small market teams Oakland (96), and tied with Cleveland and Tampa Bay.  All of these teams made the playoffs just like the Dodgers.
The 2011 signings are similar.  The Angels appear on the list again, and while this time they finished over .500, they missed the playoffs.  This does make the below .500 finish this past year look even worse.  The Marlins signed Jose Reyes despite being a Low Revenue Team and they finished dead last in their division.  The Tigers signed Prince Fielder and won their division with 88 wins.  It should be noted that the Cardinals are the team that lost Albert Puljos to the Angels and they made the playoffs without him two years in a row.
The 2010 signings also offered no clear advantage.  The Red Sox made a big signing, but it helped them to a 90 win season.  However, it was not good enough to make the playoffs.  The next year they were worst in the division, and this past year they did win it all, but Carl Crawford was no longer a Red Sock making his deal with them look like a failure.  The Phillies had the best record in baseball and over 100 wins thanks to their big signing, but the Nationals had a below .500 record.  St. Louis made the playoff this year too, as did Arizona and Milwaukee.  
So while it is true Low Market Teams have trouble signing big name/high priced free agents, it is far from clear that these players help.  And perhaps the contracts hurt as we are seeing with the Angels who now have two huge contracts with no playoffs to show for it.   
Tim’s other argument is the “success” of other sports that have salary caps, floors, and 50/50 revenue sharing.  He uses the NFL and their amazing TV ratings compared to baseball.  The problem with this is the ratings have no proven relation to teams and salary.  The sad fact is that NFL is popular because it is easier for the modern man to watch than baseball.  It is one of those back and forth sports, and it has short bursts of action and ultimately a clock that ends the game.  This is perfect for the world today that has problem of paying attention, committing to long term anything, and wants to do as little thinking as possible.  And the other dirty secret is gambling.  The NFL is wildly popular because so much money is riding on every game.  The amount of money bet on an NFL game dwarfs what it would be even on World Series games.  The NFL actively promotes this relationship, which is why they have injury reports out a day or two before kick off.  It is about betting money.  
Perhaps Tim should have looked at other sports with salary caps.  The NBA does not do that kind of TV rating, and we can not really say that every NBA team has a chance to win.  Anyone here a Bobcat fan?  My point exactly.  The NHL has a hard cap, and they cannot even get on TV.  Their teams all have a chance to win, but no one cares.  Why?  Because the success of the sport has little to nothing to do with the salary cap system.
An easy argument can be made that the single most successful and consistent franchise over the past decade is the St. Louis Cardinals, a Low Revenue Team.  This goes to prove the point, a salary floor and cap are not needed.  One needs to have good management making good decisions and your team can win and win often regardless of revenue.