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Does MLB Need a Salary Cap? The Numbers Say Otherwise PDF Print E-mail
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Articles & Opinion
Written by Maury Brown   
Monday, 15 December 2008 12:03

MLB

Does MLB need a salary cap?

Sunday evening, I had the enjoyable experience (as it always is) of being on XM 175 to talk the business of baseball. As I went on-air, the host was making a good case for why MLB needed a salary cap. As he completed his case for the hard cap, he asked me what I thought.

“It’s always a great topic of discussion,” I said. “But, as much as there is talk about a cap in MLB, I don’t see the need.”

The host and I then had a friendly debate about the matter, both of us sticking to our beliefs, and eventually moving on to other topics.

Today, there seems to be even more reasons for me to hold to my beliefs.

Liz Mullen of the SportsBusiness Journal reports today that according to Rob Manfred, MLB’s executive VP for labor relations, 52 percent of league revenues are dedicated to player payroll, by far the lowest of the Big-4 sports leagues in the U.S.

As Mullen reports, “Under their respective collective-bargaining agreements, NHL players received 56.7 percent last season, NBA players about 57 percent and NFL players about 59 percent.”

Manfred said that the introduction of the Competitive Balance Tax, or as it is more commonly known as, Luxury Tax, has been the driving factor – a soft cap of sorts that has been exceeded only by three clubs: the Yankees, Red Sox, and Angels. Of these three, the Yankees have paid the lion’s share into the tax, doling out each of the years since the system was collectively bargained in 2003. The Angels have passed the threshold once, while the Red Sox have paid the tax four consecutive years (see the table below showing how much each of the clubs have paid in Luxury Tax up through 2007).

To add credence to MLB’s model, there has been talk of the NFL moving forward without a cap.

In 2011, the current NFL CBA expires. If the NFL does not negotiate an extension to the collective-bargaining agreement before the 2010 league year, the 2010 season will operate without a salary cap.

With revenues at an all-time high, the second highest attendance level on record, and as of late, the most parity, it seems a hard sell to say MLB needs a salary cap.

What do you think? Don't forget to leave your comments.

Luxury Tax Figures: 2003-2007
Club
2003
2004
2005
2006
2007
Total
Yanks $11,798,357 $25,964,060 $33,978,702 $26,009,039 $23,881,386 $121,631,544
R. Sox   $3,148,962 $4,148,981 $497,549 $6,064,287 $13,859,779
Angels   $927,059       $927,059
Total $11,798,357 $30,040,081 $38,127,683 $26,506,587 $29,945,673 $136,418,382


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is contributor to Baseball Prospectus, and is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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