Twins Video
Matt Trueblood: So, first of all, I want to hear whether any of you changed what policy prescriptions (if any) you advocate or oppose now that you didn’t before digging into this. Did anyone see a new dynamic in the positions of big- and small-market teams or the union that they could particularly appreciate, or an unintended consequence of a change they didn’t expect?
Brandon Glick: I went into this project expecting to advocate—hard—for a salary cap and floor. The NFL operates pretty strongly with it, and the NBA is probably the paradigm example of a league that has year-round player movement and strong parity sourcing from a (soft) salary cap.
What I found was that not only does baseball have much stronger parity, both in terms of playoff performers and champion variety, but that it also spawns more trade and free-agent activity thanks to its existing systems that make up for not having a salary cap and floor (like the qualifying offer and prospect industry). There’s obviously a push and pull with this discussion—owners would want a hard cap with no floor, while the players would want the opposite—and that extends to the players as well, where superstar players are willing to give up the safety of a floor for the avoidance of a cap, while role players would suggest the opposite. Now, I feel pretty strongly that baseball needs tweaking, rather than a seismic overhaul to its economics.
Matthew Lenz: This project required me to adopt a more objective perspective, moving away from a fan's viewpoint. Before my research, I was of the (partially educated… and that might be generous) opinion that there needed to be a complete overhaul of MLB's Competitive Balance Tax (CBT) and revenue-sharing systems. My perspective was dually flawed, as I was only thinking of the implications of any change from a fan’s point of view and, moreover, as a fan of a small- to mid-market team. Now, after my research and reading Brandon and Jake’s articles, my (more educated) opinion is that the current system just needs some tweaks, specifically related to stiffer CBT penalties and deferrals.
Like Brandon, I think the parity in the league speaks for itself. That said, while deferrals aren’t new, the amount being deferred in some cases is unprecedented. We also have back-to-back seasons where there have been a record number of teams willing to pay the luxury tax, so my question back to the group would be: how long can we expect this parity to last, and will only minor tweaks maintain this level of it?
BG: Look, spending money DOES help you win. Objectively speaking, buying better talent makes your team more talented. And when your team is more talented, you can start to attract guys like Roki Sasaki, who is very talented and also very cheap.
I think the parity of baseball exists mostly because of the randomness of it. No matter how good a pitcher on a mound is, any hitter can run into one against him. And even the best hitters can get unlucky against the worst pitchers. Unlike the NBA, where singular stars can fundamentally alter the course of an entire franchise, and the NFL, where the “haves” and “have-nots” are separated merely by the quality of their quarterback, individual stars cannot propel teams to championships in baseball. Over a 162-game season, they absolutely do—given a large enough sample size, the cream of the crop will rise to the top. But in a seven-game series, there’s just too much randomness to ever guarantee an outcome.
I think a reckoning is coming for baseball, not in terms of parity, but in terms of fan interest. There’s a palpable sense of burnout among fans this offseason as they watch the Dodgers nab every superstar on the market. If revenues start to dip, or television ratings start to decline, the league may be forced into action.
MT: Let’s imagine that we do achieve a measure of financial parity, where spending power differences between teams shrink significantly. We’d still want a way to discourage players from forming super-teams and clustering up to chase rings at the expense of everyone else, right? Does anyone have an interesting idea in that vein?
Jake McKibbin: One of the beautiful things about baseball is that any team can win on any given day. I have no problems with players chasing rings in free agency. This can be offset by strong drafting and development of players. Six or seven seasons of team control is a lot to work with, if you have the right talent coming through, so the main thing I’d want to see is every team have the ability to have three players locked into $20-million AAV deals and beyond. That’s not a huge sum, in this market, but I think it’s an achievable one. If players want to take reduced/deferred salaries to join one particular organization, that should be their right, but the cyclical nature of baseball powerhouses will likely result in a period in which these teams are paying heavily for aging, underperforming veterans.
ML: Totally agree with Jake here. An idyllic world in sports, as unachievable as it might be, is one where nobody cares about money and everyone just cares about winning. At the end of the day, there will be some balance between players who prioritize money and those who prioritize winning. While that balance may not be even close to 50/50, I don’t think we can force players into a spot where they have to go play for poverty organizations like the Chicago White Sox because the Los Angeles Dodgers and New York City teams are too stacked.
I think the other thing that will help balance is that these guys are competitors and want to play ball. Unless their skills are worsening and a smaller role is warranted, their ego and natural competitive edge aren’t going to allow them to join a super team just to sit on the bench—although the Dodgers' starting rotation may be a counterpoint to this argument.
MT: To have a cap and floor, we’d have to define the baseball revenues of the game to the satisfaction of both the owners and the union. Can the owners be trusted to honestly report what they make, and how, such that players would accept their estimates? Should owners have to count money made from real estate and other investments whose value clearly derives from the baseball venture as revenue of which a percentage must go to players? Would certain teams demand that, at the expense of others who make especially gaudy amounts outside the gates of the park? How do you solve that problem?
BG: Yet again, Matt throws me a curveball while I’m sitting on the heater (clearly, Matt never played for Lou Brown).
I could wax poetic about this topic for a while, but the short of it is, no, you obviously cannot trust owners to properly report what they’re making, whether it’s purely team revenue or their entire portfolio. By day I’m a sportswriter, but by night I moonlight as a filmmaker, so trust me when I say this: There is no industry more corrupt than “Hollywood Accounting”. Those studio executives are the greediest people to ever walk the face of the earth. They make the biblical version of avarice look like a child who won’t share his Play-Doh. Behind them are politicians, and in a close third in the greedy column are sports team owners.
As a Cubs fan, I know all too well about Tom Ricketts’s habit of claiming that all team revenue is funneled back into baseball operations. No, it isn’t. The Cubs have an annual payroll in the $200-$250 million range. Their revenue exceeded $500 million last year. Accounting for all the other expenses that go into owning a baseball team, like paying employee salaries and upkeep for the stadium,, doesn’t come close to making up that $250-300 million gap. Insofar as a salary cap and floor would require revenue reports—which they would, seeing as the figures for those parameters are percentages of the total league revenue—there just isn’t a good way to implement them into the modern age of baseball, where owners have made a business out of lying to their fans.
JM: A revenue report would be fascinating. In the UK, all entities above a certain size are required to submit annual accounts to Companies House, where it can be accessed free of charge by anyone. Sports teams are held accountable, and it prevents any of the siphoning of funds that we suspect happens in baseball while giving a true cost of the operations of running an organization. This system obviously isn’t in place in the US.
Brandon, can you see any way in which the owners could be tempted to air their dirty laundry in public? Or even to an independent adjudicator, perhaps, who reviews total revenue, its source, and dictates how much each team is liable for into the revenue-sharing pool?
BG: Putting aside my (some would say staunch) beliefs that billionaires should be the most public people about their finances, rather than the most private, I want to believe that it’s possible that the league could coerce each owner into sharing information, at least between each other.
Here’s the thing, though: I don’t actually know that a salary cap would be of benefit to baseball in the way some think. Think of what your reaction was when you saw Juan Soto’s contract with the Mets this offseason. If I were to look into my crystal ball and guess, it was probably some variation of “Holy S**t!”. If Soto was locked into signing a max contract of, for example, 10 years and $400 million, it would still boggle the mind, but it wouldn’t come as a surprise. Baseball’s current system is flawed, but I don’t think implementing a salary cap would’ve pushed Soto to the Athletics or Rays or anything, even if there was a maximum he was allowed to earn on his contract. If anything, it may have even led him back to the Yankees or even (gulp) the Dodgers.
Unless a wave of benevolence washes over the ruling class of MLB, I don’t anticipate that we (or even the league) will ever have enough information to properly assess where a cap and floor should lie, and which teams should be responsible for paying what. In that case, I guess we can all just enjoy the funniness of watching people with more money than the human mind can comprehend measure which of their wallets can stretch wider.
MT: Expanding revenue sharing is always easier to swallow when revenues are growing, but because of the slow deflation of the regional sports TV bubble, that hasn’t been the case—or at least, it hasn’t clearly been the case, with a robust and impressive rate of growth—over the last handful of years. Do you think a change in how money is distributed throughout the league has to wait until teams have a clearer collective picture of their future earnings from broadcasts—or should those revenues be shaped and their path forward be set based on a known arrangement with regard to revenue sharing?
ML: Based on what Jake laid out in his article, I think that any changes to the revenue-sharing system need to wait until teams have a better understanding of their revenue from broadcasts. Another miscalculation of team revenue, like the one that has happened before, risks a hundreds-of-millions shortfall for teams to share. While that was in part to bail out a team facing bankruptcy, it’s baffling to me that the situation has never been fully rectified by MLB, in what will end up being a multi-billion dollar blunder.
MT: A major factor in the future financial structure of the game will be the league’s efforts to expand. Now that the A’s are out of Oakland and (they hope) en route to Las Vegas, there’s a bit more certainty to that situation, but the Rays’ sticky stadium situation could create another relocation fight in the near future. Expansion would bring billions to the sport in new franchise expansion fees and increased earnings from televising an expanded postseason, but it will probably also create two new small-market teams. Should that future consideration shape decisions about whether or how to change the fundamental financial structure of the sport?
JM: I think it’s a very apt point, but they should be treated as two separate issues. The challenges of a startup franchise, and the volatility they’ll face (which should ease as they develop their fan base, infrastructure, drafting, etc) are almost entirely separate from creating a balanced ecosystem in the here and now. Exceptional items will need to be made to facilitate any expansion plans, but the benefits of tweaking the revenue-sharing setup at the next CBA to create a more balanced playing field should help those newer, small-market franchises after their initial growth phase.
ML: I agree with Jake. Regardless of the sport and its financial structure, start-up franchises face hurdles that they must overcome through development and time. I don’t know that the financial structure of the league, especially in baseball, has a major impact on the short-term success of a new organization. While you don’t want to make long-term success so much of an uphill battle that it deters new owners from investing, I think you need to prioritize making the best version of the game you can with the existing franchises.
MT: Finally, we know that all of this conversation is happening in the shadow of the next CBA negotiations. A lockout seems likely; lost games seem possible. Which of these possible approaches reduces the friction in labor negotiations best? Would leaning into one approach make it more likely that all parties find something palatable on which to agree and spare us a long, quiet, nervous winter? And is that an overweening consideration, or is getting to the best solution worth big labor trouble?
ML: Referencing my first comment in this roundtable, while the fan in me thought a major overhaul would be best, I think the more objective opinion of “minor tweaks” is the best solution to avoid or minimize a work stoppage. I don’t see how two parties with financial goals on opposite sides of the spectrum would ever be able to come to an agreement to move quickly from where we are to that grand destination, even if it’s the “best solution” for baseball. I do think change needs to happen, but I think everyone (owners, players, fans) needs to be realistic about how much change will actually happen, if the priority is to play ball on Opening Day 2027.
BG: I agree wholeheartedly with Matt (Lenz) here, and I want to remind readers what happened during the last CBA lockout and the COVID-induced “lockout” in 2020. The players go into negotiations with specific goals, and the owners refuse to budge. It’s only once the threat of losing revenue starts to hit home that their side begins to negotiate in “good faith”—and, from the players’ perspective, the threat of losing salary convinces them to move the goalposts on their own wishes.
Unless baseball is willing to punt on an entire season (or more), there just isn’t the time and space to completely revamp how the system works. And while that may sound defeatist to those hoping to see significant change, that’s also the reason why we won’t see baseball cancel a season or postseason again, like it did in 1994. This conversation is, ultimately, about money, and both sides want it. They may not see eye-to-eye on most things, but they do understand each other on that matter. Needling and prodding the status quo may not be in the best interests of the long-term health of the game, but in an effort to keep eyes focused on the field rather than risk ears pressed up against the closed doors of the CBA negotiations, I firmly believe both sides will continue to kick this timebomb of a can down the road.
Recommended Comments
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now