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Rob Manfred has not said explicitly that the owners are seeking a salary cap in Major League Baseball, but the signs are there. Here’s the top reasons. (Photo by Julio Aguilar\/Getty Images)<\/p>\n
Getty Images<\/p>\n
For more than 50 years, owners in Major League Baseball have attempted on several occasions to implement a salary cap. There\u2019s more than one reason for them to want one.<\/p>\n
The current labor agreement between the owners and players in Major League Baseball doesn\u2019t expire until December 2026. Still, talk of an owner lockout has already swirled, with a core reason being a push for a salary cap. There have been several attempts by owners to implement one, with the 1994-95 strike, which led to the cancellation of the World Series, being the last. Among the major North American professional sports leagues, MLB is the last to operate under a free market system. The league utilizes a competitive balance tax system, commonly referred to as the Luxury Tax, to penalize clubs that exceed a specific player salary threshold by imposing a tax.<\/p>\n
The question is, why are MLB\u2019s owners seeking a cap system? The answers are more than the obvious ones.<\/p>\n
Cost Certainty<\/p>\n
From an investment in player talent perspective, a cap system narrows the spectrum of total salaries dedicated to the roster. If the cap were tied to league revenues, then owners would have a clearer sense of cost certainty. There are problems with this concept, namely that MLB leans more heavily on local revenues than centralized revenue across all 30 clubs. However, in theory, owners would enjoy being able to calculate budgets more easily. Given that the regional sports network bubble has largely collapsed, knowing approximately what player salary budget is has value for the owners.<\/p>\n
Increased Franchise Values<\/p>\n
Perhaps the primary reason owners are seeking a salary cap is centered on franchise values. A comparison of sales in similar small markets tells the story:<\/p>\n
Tampa Bay Rays – $1.7 billion
\n Portland Trail Blazers \u2013 Reportedly $4-$4.5 billion<\/p>\n
Recently, the Pohlad family withdrew the sale of the Minnesota Twins from the market, as they didn\u2019t receive the offers they were seeking.<\/p>\n
\u201cThe perception around baseball is that without a salary cap, its values will lag behind, at least behind the NFL and the NBA, and that\u2019s been the case,\u201d said<\/a> Steve Greenberg of Allen and Company, who often represents MLB teams in their sale processes. \u201cWe\u2019ll see what happens in Rob\u2019s final negotiation.\u201d<\/p>\n Potential Competitive Parity<\/p>\n The owners have touted parity in the standings and playoffs as the primary reason the league would seek a salary cap, and MLB Commissioner Rob Manfred has continued to cite this as part of the reason.<\/p>\n \u201cThis is an issue that we need to be vigilant on,\u201d Manfred has said. \u201cWe need to pay attention to it and need to determine whether there are things that can be done to allay those kinds of concerns and make sure we have a competitive and healthy game going forward.\u201d<\/p>\n Owners have also publicly expressed interest in seeking a salary cap in the next round of collective bargaining.<\/p>\n \u201cI wish it would be the case that we would have a salary cap in baseball the way other sports do, and maybe eventually we will, but we don\u2019t have that now,\u201d Baltimore Orioles owner David Rubenstein told Yahoo Finance at the World Economic Forum. \u201cI suspect we\u2019ll probably have something closer to what the NFL and the NBA have, but there\u2019s no guarantee of that.\u201d<\/p>\n Manfred has also talked directly to the players about the economics of the game. And while he has been careful not to mention a cap, he has tried to express that if salaries were tied to league revenues, using the past as an example, overall, the players would have made more. The operative word is \u201coverall.\u201d Maybe it should come as no surprise that Bryce Harper got in Manfred\u2019s face<\/a> when addressing the Phillies over the comments, given that the star players with the highest salaries in an uncapped system would be the ones to get hit the hardest under a salary cap.<\/p>\n As I\u2019ve written previously<\/a>, there is an illusion that a salary cap in Major League Baseball would create competitive parity from top to bottom. From the players’ perspective, they ask, if the system is so great for the players, why have they been willing to accept labor stoppages as something acceptable?<\/p>\n As much as there has been made about the likes of the Dodgers and Mets at the top of the player salary scale, a salary floor has been seen by many as more problematic. A cap system would force clubs such as the Pirates, Rays, and A\u2019s to spend more, but would likely only do the minimum, just as they are now.<\/p>\n \u201cThere are things you can do to incentivize teams to spend,\u201d said Bruce Meyer the MLBPA\u2019s deputy director, on \u201cFoul Territory.\u201d<\/a> \u201cLast time in bargaining, we proposed numerous changes to the revenue-sharing system. We said, \u2018Look, it doesn\u2019t make sense right now. You\u2019re giving all this money to certain teams, and they\u2019re not spending it, and they\u2019re basically putting the money away.\u2019 And what we heard from the league was, \u2018We don\u2019t disagree on some of these things, but we can\u2019t change it. We won\u2019t change it.\u2019\u201d<\/p>\n