Fixing Baseball’s Competitive Imbalance- Not as easy as I thought

I hate it when an idea gets derailed before it has a chance to become something good.  I think derailed is the right term as I haven’t given up on the idea; I’ve just had my spirit broken for today.

The idea was fixing the competitive balance in Major League Baseball.  It is a topic covered by 100’s of better baseball minds than mine, but my hope was that I might take a slightly different angle to the problem.  Perhaps my not being an American might help me out.  Perhaps my love of hockey would allow me to develop some insight that the typical baseball fan might not have.  

Fundamentally, I thought that I could strike down the prevailing arguments against a salary cap in baseball.  These include arguments include the wide revenue disparity between the rich clubs and the small clubs.  How can you force them to spend the same amount of money?  Walmart is much bigger than the local hardware store; you can’t force Walmart to raise its prices to give up its competitive advantage.

My counterargument was to focus on situations where there was a cap with a similar fact pattern to baseball.   The NHL and NBA are two good examples where they have moved to a cap system while having significant differences between the top revenue generators and the lower tier teams.   None of the three leagues have a major national television deal as is the case in the NFL.   Perhaps some hybrid of the NHL and NBA deals might work for baseball.

I have to credit this Baseball Prospectus article for killing my mojo.    It makes the argument that baseball is fine as is and that there are significant issues with the cap structures of the other leagues.  I don’t agree with the author’s reasoning that a crapshoot playoff system of a best of seven series adequately rectifies the great economically injustices of the league.*  Baseball does need fixing.

*A few months ago, I did read somewhere, perhaps on Baseball Prospectus, a proposal to rectify the playoff crapshoot.  Essentially the length of the series and relative number of home dates would be determined based on the relative records of the two teams involved.  If a 100 win team played an 87 win team, it might be a six game series with four games played at the 100 win team’s park.  The 87 win team needs to win four games, while the 100 win team only needs to win 3.  The article was much more precise in the math but it is an interesting, if not confusing idea.

The author’s views on the impact of a salary cap floor on small market teams is what stopped me in my tracks.  He correctly points out that the NHL floor has caused financial strain to several NHL teams and that a floor would create a similar strain on small market baseball teams.   I would argue that the number and geographic location of NHL teams creates much of the issue.  An NHL team in Phoenix or Florida or Atlanta will always struggle to generate the revenues necessary to turn a profit while spending within the cap framework.  

For MLB, half of the salary cap issue seems pretty easy to me.  They put a ceiling to the maximum payroll and decide if it is a hard cap (NHL) or a soft cap (NBA).  It is the floor of the cap that gives me pause.  The Small market teams currently come to the plate with meager team payrolls despite revenue sharing and luxury tax mechanisms already in place.  How can MLB institute a floor which might be unattainable to 8-10 teams unless they incurring significant operating losses?   More importantly, would the cap actually solve the competitiveness imbalance?  I will let those questions percolate for awhile and come back to this topic another time.


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