Jeremy Greenhouse | Follow the Money

     The Yankees are ruining baseball. Well, no, they're not. The Yankees are exploiting a financial advantage that exists in the league's rules. But isn't the point of sport to have all its participants competing on an equal playing field? Sure, and that's why every team in baseball is bound by the same rules. So how then do we fix the problem that allows the Yankees to purchase Mark Teixeira, A.J. Burnett and CC Sabathia in the same offseason? By limiting team spending, and herein lies the idea of a salary cap.
    The news that baseball owners in Milwaukee, Houston, Pittsburgh and Oakland advocate a cap is not, in fact, news. You're telling me employers want to keep costs down? What's next? Will owners start looking to finance stadiums with public funds? The possibility of a cap is near nil, simply because the Player's Association would never go for it. Baseball players remain underpaid, and a salary cap would further limit their income.
    Yet all the other major sport leagues have salary caps in place, and they all seem to be working. Let's take a look at those other caps.
    The NFL works as the most successful sports league on several levels for several reasons. The main source of league revenue comes from national television contracts, which are divided equally among teams. In baseball, Boston and New York have the respective cash cows of NESN and YES. Washington's local TV audience drew approximately 9,000 viewers per Nationals game last season, which was less than a third of any other team.
    Local revenues are also distributed much more evenly in football than in baseball. Every home team fills its stadium with at least 55,000 fans per football game. In baseball, the difference between the Yankees' and Marlins' average attendance is around 35,000 fans per game, and that's strung across 162 games, not 16. The NFL is able to use a hard salary cap that treats all teams equally because all teams are relatively equal.
    The NBA and NHL have similar problems to MLB in that so much of the league's revenue is generated by specific markets. The NBA uses a soft salary cap that allows teams to go over the cap to retain star players. Big markets like New York can go way over the cap, but they have to pay a luxury tax.
    Compared to baseball, the NBA's soft cap is a disaster. Some owners refuse to pay a luxury tax and therefore sacrifice players and draft picks to get under the cap. This structure also requires teams making a trade to have matching salaries pass between sides, creating a situation in which players with pricey expiring contracts become assets.
    The NHL's collective bargaining agreement has been rather successful since the lockout, as the league has had record revenues. The NHL's cap is a similar concept to the NFL's, but hockey has a major problem. Small-market clubs are forced to spend an impossible percentage of their local revenue on player salaries. So while the small-market Phoenix Coyotes may be a playoff competitor, they're going bankrupt. This flaw would likely exist within a baseball hard cap.
    For baseball, my solution would be to limit team spending by imposing revenue sharing and a luxury tax but without a salary cap. If certain markets generate excess revenues, then they should distribute that money around the league as well as to their players. Teams that face this luxury tax on exorbitant payrolls would experience diminishing returns and would be discouraged from signing too many free agents. Small-market teams would be able to spend their revenue as necessary without the impediment of a floor.
    Of course, this is the system already in place. The problem is that the Steinbrenner family that owns the Yankees is willing to dip into its own pockets and, at times, operate at a deficit. Meanwhile, Marlins owner Jeffrey Loria is willing to pocket his stake in revenue sharing instead of reinvesting it in his team. One change I'd make is to require teams that benefit from revenue sharing to spend that money on maintaining or improving their rosters, be it on drafting, international signings or arbitration cases. With this provision in place, I would also increase the luxury tax and the number of teams that face it.
    Yes, there is a problem. But a salary cap isn't the answer.