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Salary Cap? No Way.

By Gary Armida

Contrary to popular belief, the Yankees are not ruining Major League Baseball. It has become a popular winter ritual to discuss the Yankee gluttonous free agent behavior. It hit an all-time high last week when they inked Mark Teixeira to an eight year, $180, million dollar contract. This, of course, came on the heels of their signing pitchers CC Sabathia (7 years, $161 million) and AJ Burnett (5 years, $82.5 million) to big money contracts. In total, the Yankees have spent $423.5 million dollars on those three additions. This predictably spawned the typical media (and annual story) reaction of “The Yankees are ruining Baseball…salary cap will come and is needed.” Ordinarily, those stories run their course and fade away. But, when an intelligent businessman speaks for a salary cap, one has to listen for a second. Brewers’ owner Mark Anastasio stated, “They are on a completely different economic playing field. I paid $220 million for my team; now they get three players for $420 million. At some point it gets to be absurd when a team has a $200 million payroll.” Now, Anastasio is a great owner (read FCP’s take here), but he is absolutely incorrect in his statements. In fact, more credence can be given to the argument that Baseball does not need a salary cap, even if the Yankees left side of the infield makes more money than the entire Marlins or Nationals team. In fact, recent history has proven this.

On the Field Argument

Yes, the Yankees have the four most expensive players on their team. But, that is not a guarantee of success. In fact, it has not been successful for them over the past eight seasons. Their aggressiveness in free agency finally backfired on them in 2008 as they missed the playoffs with an aging roster with many players receiving balloon payments at the end of their long term contracts. It was bound to happen and will likely happen in another seven or eight seasons when the current crop of long-term contracts (Rodriguez, Sabathia, Teixeira, and Jeter, assuming he re-signs) enter their final seasons. During the late 90’s when the Yankees were in the midst of winning four titles in five seasons, they were not the free agent mercenary team that they resemble today. As they began to add players like Mike Mussina, Jason Giambi, Gary Sheffield, Carl Pavano, and a myriad of others in a quest for another title, their bloated payroll netted them luxury tax bills not World Championships.

While the Yankees have led the league in payroll, the post season has seen quite a few teams make their way in for some fall baseball. In fact, since 2001, 23 different teams have qualified for the post season. In case you were wondering, there are 30 teams in baseball. That’s right; just seven teams have failed to make the playoffs: Orioles, Blue Jays, Royals, Rangers, Nationals, Reds, and Pirates. Of those seven teams, only the Royals, Reds, and Pirates can be considered as true small market teams.

Taking that a step further, there have been seven different World Series winners since 2001. Only the Boston Red Sox have two titles during that span. Compare that to the NFL and NBA, the poster children for salary caps, and one sees that Major League Baseball actually has more excitement come playoff time. Since 2001, the NFL has just four different Super Bowl Winners (to be fair, their 2008 season is not over, but the Giants, Steelers, and Colts all qualified for the playoffs). The NBA has just five different title winners during that span as the Lakers won two titles and Spurs have won three. Both salary cap leagues have actual less competitive balance than baseball when speaking of the respective post seasons.

Management over Money

As recent history has proven, good baseball management is quite a bit better than a large payroll. The Tampa Rays finally found a front office combination of Gerry Hunsicker and Andrew Freidman who valued the minor league system and paid attention to the draft. Thus, the Rays have a young, talented group of players who have been signed to relatively low cost contracts that buyout at least a year of free agency.

The Minnesota Twins are another prime example of excellent management. Since 2001, they have had just one losing season and have made four playoff appearances while fifth could’ve been made in 2008 if they had won the one game playoff against the White Sox. The Twins’ average payroll over that span was $52.7 million dollars. In fact, in their lone losing season (2007), their payroll was $71.4 million dollars, their highest payroll over the past eight years. Why are the Twins successful? They have developed their own pitching and the core of their offense. When a pitcher or player becomes too expensive they either trade him for a package of young players ala the Johan Santana trade or they simply collect the draft picks from a free agent who signs elsewhere like Torii Hunter.

The St. Louis Cardinals have had a similar run to the Twins. They have just one losing season in the past eight years (also 2007). They have never been a top payroll team, but have always invested wisely into the right players. They have never had a payroll above $100 million dollars, with last year’s total coming close at $99 million. They are a team built from within and through trades. Homegrown talents Albert Pujols and Adam Wainwright are both signed to relatively bargain deals. Yes, Pujols’ $100 million dollar contract is a bargain considering he is the best hitter in the game. The Cardinals biggest free agent signing over the past two seasons has been Adam Kennedy (3 years, $10 million). Sure, they have retained players at bigger contracts, but they have never been active in big ticket free agency. By the way, the Cardinals have five playoff appearances and one World Series title since 2001. That’s not too bad for a mid-market team that plays in a division with the large market Chicago Cubs and the historically aggressive Houston Astros (Carlos Lee signed for more than $100 million dollars).

And, there are even large market teams who spend wisely rather than just spend. The Boston Red Sox are the only team in the last eight seasons to have more than one World Series title. They do operate on a larger budget than most teams, but they are far below the Yankees’ payroll (almost by $80 million dollars). The Red Sox are the model organization that uses its resources wisely. Yes, they will go get a big ticket item like a Diasuke Matsuzaka, JD Drew, or a Manny Ramirez. Yes, they will attempt to sign the biggest hitter on the market as they did with Mark Teixeira. But, a look at their roster shows a nucleus of homegrown, young talent (Lester, Ellsbury, Pedroia) and players acquired in trades (Bay, Beckett, Youkilis). In fact, one of their biggest offensive stars from the past four years, David Ortiz, was signed for just $1.25 million dollars in 2003 as an afterthought. It was just a season later where the persona of “Big Papi” began to develop. Obviously, the Red Sox evaluated him correctly. This year, instead of signing a high priced injury risk for their rotation, they took a gamble with Brad Penny. While the Red Sox have the means to spend, they simply make wise decisions and place a value on developing young talent, acquiring young talent, and keeping some sort of fiscal responsibility. For the Red Sox, it is not the money. It is Theo Epstein and Bill James (along with many others) who evaluate talent well.

The list of each team could go on and on, but that would be pointless. The fact is that good management is the true indication of success. Poor management has stunted the growth of the Royals, Orioles, and Nationals. They simply do not draft well nor do they sign the proper players during free agency. The Royals committed $55 million dollars to Gil Meche. Then, they signed the often troubled Jose Guillen for $36 million. This year, they gave $9.5 million dollars to Kyle Farnsworth. By simple math, one could see that the Royals could’ve invested their $100 million dollars into better, more talented players (or player). The Orioles have signed Kevin Millar, Jay Payton, Miguel Tejada, and now, Cesar Izturis as their big free agent haul over the past few seasons. Is it a wonder why they haven’t had a winning season since 1997? The Nationals? Well, let’s just say that they have signed more outfielders than they have roster spots over the past couple of years. Poor decisions lead to poor results.

Taking the Hypocrites to Task

Many fans, writers, and owners are quite hypocritical when it comes discussing the “evils” of the Yankees spending. First, not many fans were complaining when the Yankees were spending quite poorly like they did in 2004. By adding Carl Pavano, Jaret Wright, and Kevin Brown, the Yankees assured themselves of having a high payroll with little result. Their ineptitude became a joke around baseball and in the media. How many times has it been said, “How can the Yankees lose with that payroll?”? Even last season, their $200 million dollar payroll was a bust as they saw the Rays pass them and eventually go to the World Series. The Yankees weren’t bad for Baseball then, were they?

No, they weren’t. But, now that Brian Cashman is making good investments in young, proven talent like Sabathia and Teixeira, suddenly they are the Evil Empire again. Meanwhile players like Miguel Cabrera, Carlos Lee, Todd Helton, Johan Santana, Alfonso Soriano, Vernon Wells, Barry Zito, Albert Pujols, and Carlos Beltran all have $100 million dollar or greater contracts. In the cases of Wells, Zito, Helton, and Lee, they all play for supposedly small market teams. Sure, some of those players represent the best in Baseball (Pujols, Santana, Cabrera), but the rest are simply overvalued. Why aren’t the Pirates, Brewers, Royals, and the morally righteous media upset with these teams for these ridiculous contracts? One could say that it is because the Yankees own the four largest current contracts. There is validity to that argument, but CC Sabathia did receive a $100+ million dollar contract offer from the Brewers while the Nationals, Red Sox, and Orioles were all competing for Teixeira’s services. In the case of AJ Burnett, the fiscally responsible Atlanta Braves had a similar offer on the table to the right hander that he accepted from the Yankees.  It seems that many teams were in play for these free agents and all at similar numbers. With the exception of Sabathia, it is not as if the Yankees severely outbid their competitors for their free agent acquisitions.

The Brewers are, as stated, especially hypocritical as they did make an offer for Sabathia. Would the Brewers have cried poor if they had signed Sabathia for a shorter term deal that still paid him close to $25 million per season? The answer is a resounding no. The fact is that the Brewers did have the financial resources necessary to make a competitive offer. Given the fact that Ben Sheets’ $11 million dollars, Eric Gagne’s $10 Million dollars, and Sabathia’s $4.5 million (the remainder of money owed to him) all came off the books, they did have $25 million to spend. So, after they lost out on Sabathia (something they had to know when they traded away their best offensive prospect to land him), the Brewers decided to do…absolutely nothing. They have not signed one free agent starting pitcher in this depressed market. They are banking on a healthy return of the young Yovani Gallardo (a good bet), and a rotation of the likes of Jeff Suppan, David Bush,  and some spare parts to lead them to a return to the playoffs. Instead of their owner crying poverty and injustice, the Brewers should go out and fill in their rotation with a solid, cost effective starter (Randy Wolf, Jon Garland, Paul Byrd, Braden Looper), bring back Ben Sheets, or invest in Oliver Perez. The money is there for an organization that has developed talent quite well and has signed some valuable free agents over the past couple of seasons. Quite frankly, Anastasio is too good of an owner to cry for a salary cap. Perhaps it was out of frustration of losing his best pitcher and arguably his most marketable player.

Salary Cap Misconceptions

Many fans have quite a few misconceptions when it comes to the idea of a salary cap. First, a salary cap will not reduce cost. A look at ticket prices for a NFL or NBA game can clearly illustrate that point. In fact, on average, it is cheaper to attend a Major League Baseball game. The other two sports have a salary cap, but still require fans to pay an exorbitant amount of money to attend a game. Second, while salaries could be lowered and some teams like the Brewers or Rays may benefit, the wealth of Baseball would not change. Instead of the players receiving the money, the owners would get even richer. So, what one is left with is a league where the players have lesser salaries, the owners getting even more money stuffed into their pockets, and the fans still have to take out a second mortgage to attend a game. That doesn’t sound appealing at all.

A salary cap does not guarantee competitiveness. The NFL still has historically poor franchises. The Cardinals are hosting their first home playoff game since the 1940’s. The Browns, well, they haven’t been in the playoffs since Bernie Kosar was taking snaps. The Lions just went 0-16 in a league where they have the same spending power and limits as all of the other teams in the league. The Jets? Joe Namath is still their greatest achievement. The NBA offers a similar story. The Clippers are one of the worst organizations in sports. The New York Knicks are just now making their way out of a 10 year malaise. The point is that despite the supposedly equal economic footing, there are still completely inept organizations that either spend poorly or do not spend at all.

The Real Problem

The real problem in Baseball is that there is not a minimum spending limit. Teams like the Marlins, Royals, Pirates, Nationals, and now the Padres can slash their payroll to $20 million dollars. There are absolutely zero repercussions for a team throwing in the towel before the season starts by sending out glorified triple-A teams while fans pay full prices at the ticket booth and concession stand.

Competitive balance is achieved when all teams try to make proper personnel decisions. Simply put, there are a group of teams in Baseball that do not do that on a consistent basis. Yet, they will take a share of the Yankees’ $26.9 million dollar luxury tax bill. What they do with that money is up to the individual team. Many simple put it right into their pockets and do not improve their team. The true travesty in baseball is that teams are permitted to get away with this, robbing their paying, loyal fans from an honest effort. Teams like the Yankees, Mets, Angels, Cubs, and Red Sox (among many others) at least give their teams an opportunity to compete. Teams like the Brewers, Rays, Twins, and Indians all build from within and use their money to sign their players earlier to avoid arbitration. Thus, they give their fans a reason to hope and to see a plan. Their payrolls are rising a bit, but they are staying competitive. Teams that do not invest into themselves are doomed to fail. That is why the Royals and Pirates have no chance at a title this season. The Yankees have nothing to do with them having yet another losing season.

Salary Cap Issues

While it makes for moderately entertaining reading when a writer cries about the need for a salary cap, that writer is simply not thinking of the ramifications of such a cap. First, the entire structure of baseball would have to be changed, from the draft to free agency. With so much money already involved, the process of placing a salary cap is many years away. Also, the Player’s Union would have to approve it. That is not happening in our lifetime unless Baseball completely stops making money.

But, there are more practical issues with a salary cap. First, does a fan really want it to become like the NFL or NBA? One of Baseball’s best attributes is its player movement, especially in trades. In fact, it is the only sport that has a nickname for its offseason, the “Hot stove”. A salary cap severely limits trades. A look at the NFL proves this. How many trades are made in the NFL each season? There are not many. In fact, this year was the first in quite some time where a “name” player, Roy Williams, was traded during the season. The salary cap simply limits that trade as money limits sound player movement. Money should not dictate trades; team needs should.

The integrity of trades is also impacted with a salary cap. The NBA is the worst offender. The Knicks traded their two highest scorers for a group of players who have expiring contracts by 2010. This will allow them to have enough salary cap room to attempt to sign LeBron James. To make matters worse, one of the players acquired, Cuttino Mobley, had a heart condition that forced him to retire. The Knicks could’ve have voided the deal. They didn’t because of salary cap ramifications-they wanted to clear that salary. So, the team gets worse and the fans still have to pay top dollar. Yes, there are salary dump trades in baseball, but they are becoming less common as teams now value their minor league system. Simply, one of the best traits of baseball would be diminished. A team in contention would not be able to acquire that missing piece. A team out of the playoff hunt, like the 2008 Indians, would not be able to receive a key part of their future for a pitcher who won’t be with them next season.

Closing Thoughts

It is ridiculous that the Yankees have spent over $400 million dollars this off season. However, it is not a reason for a salary cap. The Yankees have always had an economic advantage, even from the days of Ruth and Gehrig. This offseason is really just the perfect storm as the Yankees lost quite a bit of salary with departing free agents and signed good players instead of following their recent questionable history. The notion that Baseball has a competitive balance issue is laughable. With 76 percent of the teams making the playoffs at least once over the past eight seasons, it can be argued that Baseball is more competitive than ever and more competitive than the other two major sports. The final argument is this: even with the Yankees paying all of that money for their players, are they guaranteed to be better than the Rays or Red Sox? Yes, they acquired good players, but their opponents are both well managed organizations that have made wise baseball decisions. The Yankees will be competitive this season, but they will face legitimate challenges from the Rays and Red Sox for the division crown. It’s management that makes a contending team, not money. The historically bad teams lack that management. A salary cap cannot solve that problem.

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