Is a Salary Cap Inevitable for Major League Baseball?

Mike JonesCorrespondent IDecember 16, 2008

The two gentlemen celebrating are Miguel Cabrera and Magglio Ordoñez. Last year, they made a combined $27 million. That's 23 percent of the Detroit Tigers' payroll. Granted, it's only 10 percent of the New York Yankees', but then again it would be 77 percent of the Florida Marlins', and were you to photoshop Gary Sheffield and Carlos Guillen into the photo, their salaries would have exceeded the A.L. champion Tampa Bay Rays combined payroll with $2 million to spare (or to put in Tampa terms, four times that of Evan Longoria's salary).

When the Tigers traded for Cabrera (and Dontrelle Willis), the general consensus was that of a common mantra in baseball: It takes money to make money. While the Billy Beanes of the world can have books heralding their genius, what matters is winning in the Fall. So while the Florida and Tampa Bay's are feel-good stories for the writers to peddle in October, the odds are that the perpetual competitive franchises are the ones with nine-figure payrolls.

Florida might win every once in a while, but they'll only have one swing every four years, while their N.L. East counterparts, the Mets, would have three or so. And you don't need to be a sabermetrician to like three for four over one for four.

The cries of imbalance and unfairness were met with two arguments. One, the revenue-sharing plan redistributes a ridiculous amount of wealth to everyone, provided the fans keep attending in record droves as they had been since Big Mac and Swingin' Sammy (and their "friends") made the home run a beautiful thing after the 1994 strike.

Second, the rich teams were held in check by a luxury tax which would heavily penalize those who overspend. This is a quaint idea, to allow baseball franchises police their own spending. And as long as revenues rose, no one paid much heed to the imbalance outside of the Milwaukees and Oaklands of the MLB.

However, the environment which tolerated the Cabrera trade happened before everyone's grandmother and five-year old daughter understood the terms "credit default swaps," "mortgage-backed securities" and "Ponzi schemes." In the new economic environment that baseball faces, it's not just a simple matter of everyone taking a hit, from theSteinbrenners to the Pohlads.

Minnesota, even before the economic crisis, had a low payroll, so telling GM Bud Smith that the payroll would have to be low isn't a come-to-Jesus moment in Minneapolis.

The problem resides for the teams which have invested the high-eight and nine-figure payrolls in cities that simply can't sustain it. Tigers owner Mike Illitch now has to convince a city in the midst of a manufacturing-industry meltdown to pony up the cash to watch Cabrera and Ordoñez play on a regular basis.

St. Louis, one of the royal cities of baseball, is still a manufacturing-based city hard-hit by a stagnant economy. Can they sustain a team around Pujols?

Some teams would be relatively safe if ticket sales drastically dropped like Mike Singletary's pants in a pep-talk. But a majority of teams don't have a YES or NESN network for advertising revenue streams. The Brewers (in another manufacturing city) just lost Mercedes Benz as a sponsor.

The Yankees or Red Sox can take the hit, but for the Brewers, that might affect their ability to give Prince Fielder or J.J. Hardy a competitive deal. 

The problem isn't that the Yankees would simply buy every free agent (as they have thus far). It's that these mid-level teams, regardless of competitiveness during the season, can't afford their Jake Peavys or Prince Fielders. And since the rich teams don't exactly need to cut payroll as drastically as the struggling teams, they can leverage that into one-sided trades with fewer prospects.

It's already happening. The Yankees and Brewers are at a stalemate over a trade swapping Mike Cameron for Melky Cabrera and Kei Igawa. Cameron was a valuable veteran presence, both in center field and in the clubhouse. However, his $10 million salary is too high for Milwaukee to justify.

But the Yankees (according to Jon Heyman) want the Brewers to eat Cameron's salary before the trade goes through—a ridiculous request considering his salary is the primary reason for the trade in the first place. However, the Yankees are less desperate for Cameron's services than the Brewers are to rid of his salary. 

If this trend continues, with rich teams taking on players without eating up most of the salary and not sacrificing the prospects which would make a small-market team competitive in a couple years, the $235 million disparity between the rich and poor will only increase. 

The other major sports have salary caps, so as the economic crisis might reduce their luxury boxes or employees, the talent on the field would relatively be just as stable as it was two years ago as every team is beholden to a uniform level. The same cannot be said for baseball. 

Commissioner Bud Selig's argument against a salary cap is that the market will always adjust, either through the soft limits on spending helping everyone's bottom line or that the draft and trades will always mean teams will have talent even if the money isn't there.

That same argument holds little water in this economy. Either the "haves" will play the market to drive the "have nots" into contraction (just ask the Minnesota Twins about the reality of that situation) or a salary cap would be an inevitable solution to keep some certain franchises competitive in poor times. 

The players, in during the 2002 CBA session, argued against the cap, saying it would give more money to the owners while limiting the players' bargaining leverage. An owner retorted in the Wall Street Journal:

"Perhaps 12 of 30 Major League teams have any possibility of reaching postseason play, and fewer still have a realistic hope of winning a pennant. Unless baseball changes the way it does business, it risks seeing its fans drift away, tired of their teams' futility."

That owner was John Moores of the San Diego Padres. That would be the same John Moores currently trying to trade or sell half of his team in the wake of a costly divorce with his wife. Owners can't predict the entire future, but even they can see the writing on the wall.