Parity truly has arrived in Major League Baseball. Amazingly, nine teams in the National League are within striking distance of a playoff spot. In the American League, eight teams have a legitimate shot at reaching the post-season. That's 17 of 30 total teams with meaningful baseball to play over the last two and a half months of the season. However, there are still many people who insist baseball needs a salary cap. They cry that MLB does not provide a level playing field for all teams. But would a salary cap really improve Major League Baseball?
Over the past 15 years, MLB has witnessed a tremendous change in league wide competitiveness. Most of this can be attributed to realignment and a new playoff system that was devised after the strike in 1994. As most of you know, each league went from having two divisions to having three. Four new playoff teams were added - two in each league. As a result, pennant races have become more exciting. The realignment accomplished exactly what MLB wanted; more teams alive and kicking for a longer portion of the season. This, in turn, has generated more fan interest leading to more ticket sales and higher TV ratings. Of course, there were other rules introduced which helped make the regular season more meaningful and dramatic.
Even though there is no specific salary cap in MLB, there are new ways in which the league has created more balance amongst the big, medium, and small market teams; for example, the creation of Major League Baseball Advanced Media (mlb.com). Started in 2001, baseball's digital arm has found success in generating new sources of income for all teams, since the money made by their endeavors are split evenly amongst MLB's 30 clubs. Furthermore, MLB implemented a luxury tax whereby teams that spend money over a specific threshold must pay a tax that is then divided up amongst the other teams. These, along with a few other revenue sharing methods, have allowed medium and small market teams to sign their young talent to longer-term contracts. Of course, not all teams reinvest this money into their teams, as we will explore in future posts.
As I mentioned on this blog two weeks ago, parity in baseball is also being achieved by an infusion of young talent that is more Major League ready than ever before. Teams with smaller payrolls have been willing and able to take advantage of this cheap labor, therefore becoming more competitive and financially efficient at the same time. Even teams who have fallen out of the pennant race are generating excitement thanks to young phenoms who give fans hope of a bright future. Just think Stephen Strasburg in Washington, and Mike Stanton in Florida.
When it comes to those who favor a salary cap for baseball, they often point to the success of the National Football League, which implements a strict ceiling on how much money each team is allowed to spend on players (excluding this upcoming season). The reasoning holds that if richer teams cannot outspend poorer ones in a disproportionate way, then talent will be more widely dispersed amongst the 32 teams. While there is some truth to this, it is far from the only reason for the NFL's parity and success. For example, the NFL benefits from a shorter schedule, which naturally creates closer records in the standings. In addition, injuries, along with the overall nature of the game itself, provide more uncertainty and add an element of unpredictability to the season.
But let's go back to the original debate; does baseball need a salary cap? There are legitimate cases to be made for both sides of the argument. As you can probably tell, I don't think there needs to be a hard cap similar to the NFL (Yes, I am a Yankee fan, but really that's not why I think this way). I believe through creativity and the development of terrific young talent, Major League Baseball will continue seeing great pennant races and league wide parity.
Going forward over the next few days and weeks, I will examine several teams from around the league. I will try and show how teams from different markets - small, medium, and large - thrive or fail in today's economic environment. Baseball is on the upswing without a salary cap. Don't let anyone tell you different.
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