"At the rate the Yankees are going, I'm not sure anyone can compete with them. Frankly, the sport might need a salary cap." -- Milwaukee Brewers owner Mark Attanasio
Oh, the problems I have with that statement. But before I go on to show that the only cap Mr. Attanasio should be concerned with is the one on his mouth, let's establish the context under which he said it.
As the real-world economy has sunk, so has baseball's, which affects how much teams can spend and, consequently, the salaries and guaranteed years that players are receiving. And yet, the Yankees do not seem to be affected by it. They signed three players to contracts worth a guaranteed $424 million this offseason, which, last I checked, was more than the other 29 teams had spent on free agents combined.
So, as you can see, Mr. Attanasio probably has some cause to be upset. But quite honestly, the only thing the Brewers should be upset about is how the Yankees' signing of Mark Teixeira robbed them of a first-round compensatory draft pick for losing C.C. Sabathia. Only two $100-million teams have ever won the World Series (the '04 and '07 Red Sox) and over the past nine years, eight different teams have won it all. The NBA and NFL can't say that; indeed, it's quite possible that baseball has more competitive balance than any other American sport. But if Mr. Attanasio actually believes that the baseball's uncapped salary system needs a change, let's break out the calculator and do some math.
First, let's examine the current system, which requires teams to pay a luxury tax for surpassing a certain salary threshold and a revenue-sharing tax for, well, making revenue. Following the 2008 season, the Yankees paid $26.9 million in luxury tax for exceeding the $155-million threshold. That brings their tax total to $148.3 million over the six seasons since the tax was implemented, or 90 percent of the total pool. Not only that, but they are required to surrender 34 percent of their net local revenue. The Yankees' final financial numbers for the 2008 season are not yet available, but considering their revenue was $327 million AFTER revenue sharing in 2007, it's safe to say they'll be forking over well over $100 million.
And do teams take that money and put it back into their product, as the Yankees do with their income? No. In 2006, the Marlins' payroll was $15 million -- less than half of the $31 million they received in revenue sharing that year. Between 2002 and 2006, the Rays' average payroll was $29 million -- the lowest in baseball over that span -- but they received an average of $32 million in revenue sharing. By not putting that money back into the team, the Rays averaged around a $20 million profit per season. And the Yankees? They lost an average of $15.6 million. So don't tell me that that they're the only ones with money. Maybe Mr. Attanasio should recall the $19 million his team made following the '07 season, compared with the $47 million lost by the Yankees -- both almost completely due to revenue sharing -- and revise his stance.
But I don't think he would. Presumably, Mr. Attanasio would respond to my argument by saying that the Yankees can afford to run at a negative operating cost and that, even with revenue sharing, their large market gives them a competitive advantage. So his ingenious solution is to implement a salary cap. Well, OK, he's the multi-millionaire, right? Let's contemplate what would happen.
Following the '07 season in baseball, players took 55 percent of the revenue. Considering the backbone of the MLB Players Association -- it's not only the most formidable union in sports, but arguably the strongest labor union in the country -- and that the NFL, NBA and NHL all give at least 57 percent of revenue to player salaries, it's hard to imagine the union agreeing to anything less than that 55 percent. With all 30 teams making a combined $5.5 billion in '07, the players' cut would come out to an even $100 million per team.
Now, if Mr. Attanasio were reading this, he would probably be jumping for joy at this point, screaming that the Yankees would have to cut $100 million in payroll in order to sneak under the proposed cap number. But remember, that number is just an average.
Which brings me to this sweet, oh-so-beautiful point, Mr. Attanasio: Leagues with a salary cap also must have a salary floor. Last year, the NFL's salary cap was $116 million, and the floor was 85 percent of that, or just about $99 million. If MLB put the cap at $110 million, the floor would have to be around $90 million, or 82 percent of the cap, to ensure that the players still get their slice. So while teams like the Yankees would have to significantly decrease payroll, other teams would have to significantly increase payroll. Last year, the Brewers' opening-day payroll was a franchise-record $81 million. Maybe they could afford the extra $9 million, but could the Padres, who are trying to cut payroll, add $17 million to their $73 million payroll? Could the Athletics add $42 million to their $48 million payroll? How about the Marlins and the near-$70 million they'd need to add to their $22 million payroll? Clearly, a salary cap isn't realistic.
But, just for fun, let's consider this completely hypothetical, off-the-top-of-my-head situation: Suppose that the economy is in the gutter, and a small-market team like oh, say, the Brewers, ends up losing money over the course of the season. Now, let's suppose that at the same time, two incredibly large-market teams open new stadiums and see immense increases in profits. In turn, MLB's overall revenues go up, and the salary cap and floor increase. As a result, the Brewers would have to increase payroll even though they turned a loss on the year. Now how do you think the owner of that team would feel? Do you think he would be pretty angry and bitter, especially if the team was not performing well? Would he be so outraged that he'd speak out publicly about how stupid it is to have a salary cap in baseball? Probably.
But no need to worry, Mr. Attanasio. Nothing like that could ever happen -- at least not when the rest of baseball has so much more foresight than you do.
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David Heck is a junior majoring in philosophy. He can be reached at David.Heck@tufts.edu.
