Parity In Baseball: Second Suggestion For MLB

Here is my second suggestion on how to fix the current system in Major League Baseball. The best idea in my opinion is to fix the current system. Bud Selig has mentioned their needs to be tweaks to the current system and here are the tweaks I would make to the current luxury tax system in baseball. 

Model 2:  Modify the current system in place

The current system Major League Baseball has in place that utilizes the luxury tax will work as long as it is handled correctly by Major League Baseball and associated teams. Currently the luxury tax is not being used correctly by major league teams especially those in the small markets. The Pittsburgh Pirates, Cincinnati Reds and Tampa Rays have been pocketing their luxury tax money and using that money as a profit. According to Forbes Magazine the Pittsburgh Pirates have had an average profit of $18,600,000 per season since 2005 and most recently earned $16,000,000 in 2009. The Pirates are a classic example of the luxury tax being misused.  Major League Baseball should question the Pirates, asking. "Why isn't the luxury tax being used to develop quality talent?  The Pirates have not had a winning season in 17 years but have turned a profit during those losing seasons. I prospect that the current system be fixed to make sure the small market teams use their luxury tax money to improve the product that they put on the field. An obvious enforcement penalty would be to fine the teams in violation of the luxury tax policy but what about suspending the teams General Manger or fining the team owner a significant amount of money?   The fines on the owners would continue until the luxury tax money is used to purchase talent.  If an owner continues to fail to comply then Major League Baseball should take control of the team and buyout the current owner.  The team would then be put on the market for sale. Major League Baseball would control the team until another owners  is found. This extreme measure would most likely force the owners to at least attempt to put a good product on the field.  A good product on the field would eventually help that team sell tickets and increase revenues over time.  I see this as the first issue that needs to be addressed with the current system.

     The second problem with the current system is that teams like the Yankee’s are not sufficiently penalized for going over the payroll limit. The current salary threshold for a team is $155,000,000 in 2009. If a team exceeds the threshold they must pay a tax of 22% for the first offense, 30% for the second offense, 40% for the third time, and 40% for each subsequent violation. What baseball needs to accept is that these penalties do not work when applied to the Yankees. What needs to be done is to increase the fines:  the first offense could remain 30% but then increase the fine to 50% for the second offense, 70% for the third offense, and a fourth offense would be a fine of 90%. 

First thing that would come out of this is teams that violate would fork over a big check to the smaller market teams that are now forced to use that money towards talent. It would make big market teams think twice about going above the 155 million thresholds. Another result of increasing fines for violating the luxury tax would be to bring down the salaries for big stars and make these players more affordable to the smaller market team. If smaller markets bring in big stars that again will likely fill seats and bring more revenue into the city. Increasing fines and making big name players available to the smaller markets must occur in order for the luxury tax to work. I think this could be a solution that possibly could become a reality when the next collective bargaining agreement is signed. Under this plan there still isn't a salary cap but just more an increase in the penalties for violating the policy. Something similar to this proposal is likely to be included in the next Collective Bargaining Agreement signed by major league baseball and the players union.