During the 1994-95 players’ strike, Steve Somers used to play this bit on WFAN. He had a recording of “the negotiations.” What listeners then heard was two WFAN staffers taking turns yelling at each other:
SALARY CAP!
NO!
SALARY CAP!
NO!
SALARY CAP!
NO!
SALARY CAP!
NO!
Baseball never did enact a salary cap. Except that the Competitive Balance Tax that exists now functions like a salary cap, and the renewed battle over the CBT is the biggest reason why the first week of games were actually canceled following lengthy, but ultimately stalled, negotiating.
These are the first games lost to labor strife since…how long has it been? Well, let’s just say that instead of watching baseball back then you could just turn your attention to the hot new show “Friends.” It’s okay if you missed it on Thursday, you could easily program your VCR and tape it.
So while MLB is the last major sports league without a true salary cap, is it really a bad idea? Anyone associated with the players union would immediately say, “Yes, it is a very bad idea.”
But is it really? And are you sure the owners wouldn’t be the ones to reject it first?
Let’s start by accepting as fact that the current system acts like a cap. The Yankees and Red Sox routinely treat it as such because of the penalties involved, and the league has been trying hard to make those penalties even stiffer.
But baseball is hailed as a $10 billion industry, one that Scott Boras once famously called “recession proof.” Tremendous growth in technology and TV deals would seem to indicate he’s right.
So why then has player payroll gone down? Total player salaries equaled a little more than $4 billion last season, its lowest level since 2015. Four billion divided by 30 teams is roughly $133 million per team, although there is admittedly a staggering disparity between the top and the bottom payroll teams.
What’s the solution? One agent actually told me, “Propose a cap and dare the owners to accept it.”
Huh? For as long as I can remember it’s been the owners screaming “Salary Cap!” and the players screaming “No!”
This has been the union’s standing ground since Marvin Miller organized it over 50 years ago—players are entitled to shop their services in a market free of restrictions, and a cap of any kind is not an acceptable negotiating position. The problem is that “free market” has already been compromised by the first addition of the luxury tax twenty years ago and the current CBT system. Call it a soft cap, call it a strong deterrent, call it whatever you want. It’s a cap and it’s here to stay.
But what would happen if the union were to propose a true cap system? It would put an extra billion dollars into players’ pockets. Yes, I said billion with a b…to the players.
If the union proposed a cap similar to the NFL or NBA it would start with the premise of a 50-50 split in total revenue. So that’s roughly $5 billion committed to player payroll—up from the $4 billion spent in 2021—and equal to about $167 million per team.
And this is where it gets tricky for the owners. With this deal would have to come expanded revenue sharing, so smaller market teams could compete near that average payroll number. It wouldn’t matter what the “cap” would be—call it $175M if you want—because the total player payout would have to equal $5 billion, so there’s your built-in ceiling. And the floor could be similar to the NFL model where a team has to spend within 95% of the cap. That number could be negotiated also, but again the total payroll output would be a set figure based on revenues.
One thing we don’t hear enough about is the great divide between large market and small market owners. Mostly because the owners rarely speak in public and outside of Steve Cohen they don’t own twitter accounts. But subsidizing their lesser spending competitors has long gnawed at big market teams like the Yankees and Red Sox. This would force an even greater amount of revenue sharing so teams like Tampa Bay and Pittsburgh could meet the payroll requirements.
But if it’s all in the name of competitive balance, shouldn’t both parties agree? Lesser spending teams would now be spending competitively and tanking would die out. The free agent market might see slower spending at the top, but the other sports continue to show us that no matter how you slice the pie, the elite players always get paid and the rest fall in line because that money has to be spent.
Even if owners agreed to the principle of a salary cap, the extra billion dollars they would have to cough up in a 50-50 split would likely cause them to gag and bring them back to the negotiating table. And it is quite possible that the first thing owners ask for is a more favorable split. How exactly would that go over?
“We thank you for finally agreeing to a salary cap. We propose 60% of revenues for us and 40% for you. No? How about 55-45? That’s our last and best offer.”
Sorry. Owners would have to fall in line with the other salary cap leagues where players get 50 or 51% of total revenues. And that means total revenues like local and national TV deals, internet rights, technology, sponsorship deals, etc.
All of this while big market teams realize they are footing a larger chunk of the bill for teams they are supposedly trying to beat on the field. The NFL pulled off this magic trick long ago and somehow make it work, although the lack of local TV revenues in football always make this an apples to oranges comparison.
But, if the players made such a proposal it could eliminate the haggling over thresholds and the like because once you agree to the split—50-50 or 51-49 or whatever—then the dollar figures fall into line. And they would grow accordingly when new revenue streams like BAM Tech bring huge windfalls. Both sides automatically would make more money instead of having to fight about it after the fact. They would, in fact, have considerable incentive to come up with new revenue streams together in this new world as, gulp, partners.
However, the owners are the ones whose unity would be tested here because they are not all created equal, unlike the players who all started at the same place—at the bottom of the minor league and major league pay scales.
Now, I don’t for a second believe this is a possible outcome. We are nowhere near the acceptance of such radical ideas. But imagine this paradigm shift and what the effects would be. And now imagine that same radio bit, with both sides screaming endlessly.
SALARY CAP!
NO!
SALARY CAP!
NO!
Are you sure you know which side is which?