Salary caps stink yet MLB owners faring quite well without one

My football team is the Vikings and they need a lot of help. Unfortunately, they are roughly $15 million over the salary cap and that’s before signing any draft picks or free agents. They’re going to have to part ways with players they’d rather keep, along with renegotiating contracts on players they will keep, just to get under the cap.

Their QB is Kirk Cousins, who is at least an average and likely an above-average player at the position. The problem is that his salary is higher than it should be, a result of an earlier extension to get under the cap in a previous year. If the Vikings keep him on the last year of his contract, his cap hit will be a whopping $45 million. If they trade him, they’ll be able to get under the cap. But no other team wants that contract, so the Vikings will likely have to eat a bunch of money. And they won’t be able to have a QB anywhere near as good.

The Vikings whole offseason has been a question of “what to do with Cousins and the salary cap?” And it stinks. Meanwhile, the Vikings are hardly alone in this situation, as each year numerous teams are faced with similar dilemmas on how to get under the cap. It’s one thing to have a budget. It’s another thing entirely to have the money to spend and a willingness to spend it yet being kept from that because of a salary cap.

Most everyone hated the Wilpons because they wouldn’t spend due to the Madoff fiasco. But as their financial picture improved, they spent more money. At the height of the uncertainty with how the Madoff clawback suits would unfold, the Mets’ Opening Day payroll was under $85 million and ranked 25th in the majors in 2014. In their last full season as owners, their payroll was 8th in the majors. Perhaps lower than it should have been yet substantially better than what it was six years earlier.

The Mets under Wilpon ownership operated with a budget. We didn’t like the budget but there was a reason spending wasn’t as high in 2014 as it was either a few years before or a few years after. Maybe you didn’t like the reason, or thought that it shouldn’t have resulted in cuts as deep as they were. But at least it wasn’t a league-wide artificial impediment created to limit how much players could make.

Players have fought tooth and nail to keep a salary cap from being introduced into baseball. But with the Competitive Balance Tax (CBT) they essentially have one anyway. Steve Cohen has been a breath of fresh air with his willingness to spend beyond the CBT and pay the tax. But there are only a handful of clubs willing to do that. Even the Yankees aim to stay below the CBT these days.

Since the CBT acts more like a salary cap and less like an inducement to achieve competitive balance, it’s why the players are insisting on a significant raise to the tax threshold. And at least four owners are dug in just as tightly in their resolve to keep it as low as possible. It’s important to note that the Rays are not one of the four clubs.

The Rays have won 90 or more games in the last three full season and in the Covid year of 2020, they won 40 games, a pace that would have produced 108 wins over a full season. The Rays have done this while operating one of the lowest – if not the lowest – payrolls in the game. They’re not scared of competing in a freer market like the owners of the Angels, Diamondbacks, Reds and Tigers are.

It seems like the owners want guaranteed profits at any cost. But since we know every facet of every player’s contract but have extremely limited information on the same thing from owners, it’s hard to know if owners are raking it in or barely surviving. It’s clear they’re not losing money year after year. If that was the case – they would sell their team and get into a more financially rewarding endeavor. No team is currently for sale.

My opinion is that salary caps stink. But I’m equally upset with fat-cat owners who continually cry poor yet fail to open their books so we can accurately see how much money they make or lose in a normal year.

So, here’s my proposal.

Teams sign players to contracts just like normal. At the end of the year, independent auditors determine how much revenue a team took in. That revenue gets split 50-50 with the players. If the salaries that the team paid out was less than 50% of the team’s revenue, the players get the extra money, given out on a proportional basis. If Max Scherzer makes 20% of the team’s salary expenditure, he would get 20% of the extra money that players would get paid at the end of the year. And the opposite would be true, too. If the Mets’ salaries exceeded half of the club’s revenue, Scherzer would have to give back 20% of the total to make the Mets whole.

This solution comes with no cap that prevents a team from keeping a player that it really wants. And if owners are really losing money in any season, this gives them protection from taking a beating, as the players will share in the loss. It gives a reason for the players and owners to work together to grow the game, as the bottom line for both would be tied at the hip.

But the owners would never agree to any system like this because what they have now is so much better for their bottom line.

We have somewhat good financial information for the Braves, whose parent company is publicly traded and therefore has to disclose information that the other teams do not. In a very good year that ended in a World Series win, the Braves reported revenue of $568 million. Their year-end, 40-man payroll was $148.5 million. Half of $568 million is $284 million. So, the Braves would owe the players $135.5 million.

In 2020, a very bad year due to Covid, the Braves’ revenue was $178 million. Their year-end, 40-man payroll was $62.9 million. Half of their revenue would be $89 million so they would owe the players $17.1 million after the season was over. The Braves were middle of the pack – 14th in year-end salaries paid in both 2020 and 2021

Perhaps you’re thinking that a 50% split of revenue is too high. Well, that’s essentially the split in the NBA and in the NFL, players get 55% of the revenue and in the NHL, players get roughly 57%.

At the end of the day, MLB owners have it better than owners in any of the other major sports and they’re still not happy. If the owners accepted the player’s CBT proposals, and each team actually spent to that level, their expenditures on player salaries would still be below 50% of revenue.

Not making money as an MLB owner? Cry me a river.