[Ed. note: Banished to the Pen contributor Mike Moriarty passed away on April 28, 2019. This was a piece submitted shortly before his passing, and we’re running it today as a tribute to Mike. He was a past contributor here at Banished to the Pen, as well as his own website, Soxsided. He also poured countless hours into editing the Effectively Wild Wiki. Please join the Banished to the Pen/Effectively Wild family in donating to his family’s GoFundMe page.]
Baseball’s offseason was broken, and a part of the fix might be instituting a salary floor. How could it work? Well, I’ve already looked at how the Competitive Balance Tax tries to act as a de facto salary cap (if you haven’t read it, check out the primer here at Soxsided). With penalties levied against teams spending too much, one has to wonder: why isn’t there a salary floor, or a minimum payroll, that teams have to reach? With the prospects of another baseball work stoppage looming, and the last two free agency periods not doing anything to make things better, there has to be a way to balance the scales. There are many issues that face the MLBPA and owners, but this may be a way to help increase free agent salaries. Front offices are seeing the value in bringing up their own homegrown talent and paying a salary close to the major league minimum instead of signing free agents at a market rate. It is also taking good players too long to sign — that’s bad for players, bad for coaches, bad for GMs, agents, and most of all, fans, as I think we were all a bit fatigued with the Manny and Bryce saga over the offseason. So, maybe making teams spend a certain amount would appease all parties.
Baseball would not be setting a new precedent by instituting a cap floor — in fact, it’s actually the only major league based in the United States without one. The NFL has a floor set to 90 percent of the cap, while the NBA is set to 89 percent of the cap. The NFL and NBA have the highest floors, and ones that are percentages of the upper cap limit. The NHL adopted a floor that was originally 55 percent but has since been adjusted to a set $16 million under the cap.
Now that we know a cap floor is possible and seemingly works, some of the issues with regard to free agency that seem to plague baseball aren’t spoken about in other leagues. How would a floor be integrated into Major League Baseball, a league that, again, doesn’t have a hard salary cap? How would a team be able to rebuild in the way made popular by the Cubs, Astros, and currently the White Sox? What if an owner is in financial trouble or a team stops drawing fans? Who are we to decide what an owner does with his money? There are many questions and intricacies to address but let’s try to solve them anyway.
First things first, why do we need a floor?
As stated above, a cap floor would act as a minimum to the amount of spending each ownership group is expected to pay to the players in the form of player salaries. Major League Baseball works under a revenue-sharing plan where at its base level the bigger market (rich) teams share an amount of revenue with the smaller market (less rich) teams, but that system works best when teams actually spend the money they receive from revenue sharing. That’s the problem. Joe Sheehan reported that the Pirates are guaranteed $60 million via revenue from the national broadcast contract, and that’s before opening a gate or selling a single hot dog. It seems a little unfair that they will then receive some revenue sharing money when their projected 2019 player salaries payroll is $68 million. There was an outcry about the Pirates going into last season, and they still carried a modest payroll of just over $91 million after they went on their trade deadline shopping spree. The Rays and White Sox were lower than the Pirates, and the Oakland A’s already had revenue sharing penalties levied against them in this CBA for not spending.
So, what should the floor be?
I tried many different percentages while keeping in mind that not every team is worth $4 billion like the New York Yankees. According to Forbes 2018 team valuations the Rays are worth the least at $900 million, while a team like the White Sox are closer to the middle of the pack, estimated to be worth $1.5 billion. I also looked at the last five years of team salary information on Spotrac.com, and I started tinkering with them in a spreadsheet. I wanted a number that was concrete and didn’t leave the need for guessing, and that can’t be swayed by one team’s spending. So I looked to the CBA: let’s find some numbers that are written in ink and won’t be changed, like the Competitive Balance Tax threshold. So what percent of the Competitive Balance Tax should we use? It has to be something that gets us over the baseline national media revenue but not so high as to price-out small-market teams (baseball is still a for-profit business, after all). I settled at 50 percent of the CBT threshold. For 2018 that would be $98.5 million, and 2019 would have us at a minimum of $103 million, as the CBT threshold is $206 million.
What are the penalties and when do they kick in?
I propose that if a team falls under the cap floor for more than two consecutive seasons, you lose 50 percent of your portion of the revenue sharing that next year, which rises each subsequent year. There has to be more than a financial penalty, so let’s penalize the non-spending teams with draft capital too. After a team falls short for the third consecutive year their highest draft pick falls 10 slots and skips the supplemental round. Each subsequent year after that you drop 10 more spots. I laid out a chart below.
|Year under floor||After 2nd year||After 3rd year||After 4th year||After 5th year||After 6th year||After 7th year|
|Draft pick loss||—||10 spots||20 spots||30 spots||40 spots||50 spots|
To reset your cap floor penalty you must be over the floor for as many years as you were under the floor. For example, looking back at the past five years, only four teams would have incurred a penalty. The Rays and the aforementioned Oakland Athletics have been under the floor for the last five years. The Brewers spent three years under the floor, 2015-2017, so the only penalty they would incur is a loss of 50 percent of their revenue sharing money. They were over the floor in 2018 and to completely reset they would need two more years over the floor while incurring no penalties in the reset period. The Marlins are a team that was under the floor from 2014-2016, got over the proposed floor in 2017, then fell under again in 2018. So their penalty picks up as if it is the 4th consecutive season. They need to be above the floor for four consecutive years to reset their penalty.
Tampa Bay Rays
This could also improve the revenue split between the players and the owners closer to what it was at the start of this current CBA — what was once close to a half-and-half split is now about 58 percent towards the owners. The owners got a revenue boost from the recent re-signing of a national broadcast deal and the sale of one-third of the BAMtech stake to Disney corporation for $1 billion, split between all the owners, before the 2018 season.
Like I said at the top, baseball’s financial system is broken. Establishing a salary floor is merely one possible remedy. Are there kinks in the system? I’m sure. Am I missing something? Maybe! Should I be spending Derek Jeter’s money? No — but someone has to, and in this current financial landscape of baseball and labor relations there has to be an answer and this could be part of one. While imperfect, this system guarantees money that is being given to smaller market teams by the larger market ones is spent and not hoarded.Next post: Franmil Reyes Is Being the Beast Who Was Promised
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