November 28, 2024 • 31 mins
The staggering payrolls of MLB’s wealthiest teams and the decline in attendance over the past two decades while the other professional sports with a salary cap rise point to need for a salary cap. In this episode of Baseball Classics Diamondcast we take you right into the heart of the controversy. We promise you'll gain a fresh perspective on how the absence of a salary cap is not just a financial imbalance but a threat to the sport's very excitement and fan engagement. Discover how a cap could level the playing field and rejuvenate a league that has seen attendance figures stagnate while other major sports soar.
But that's not all—imagine a world where player salaries are more than just set figures but a reflection of performance on the field. We reveal an innovative five-step plan for a performance-based salary cap system that could revolutionize how players are compensated. By establishing a fair base salary for all, supplemented by incentives linked to real achievements, teams could find more financial sustainability. Transition periods and oversight bodies are key components in our discussion, ensuring that this bold new approach maintains integrity and fairness. Join us for a conversation that is sure to spark debate and perhaps, even change the future of baseball.
Be sure to go to FREE Baseball Real-Time DiamondView to get all the latest going on in MLB in one website plus access to 2024 MLB player overall, lefty, and righty stats to sort, filter, and/or group!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Major League Baseball fans, get ready for a close-up
look from the top step of thedugout.
Welcome to the BaseballClassics Podcast.
Covering any season from 1901to the present, We'll explore
exciting pennant races, diveheadfirst, analyzing and even
doing some comparisons that arebound to settle an argument or
(00:24):
start one up.
And now here's your host, DeanPitino.
Speaker 2 (00:33):
Hello again, everybody.
Thanks so much for tuning in tothis Baseball Classics
Diamondcast.
Happy Thanksgiving.
It is going to be quite theepisode I have for you on the
case that I'm going to make whyMajor League Baseball needs to
incorporate a salary cap as soonas possible, and I'm going to
explain not only why but howthey could do it in this episode
(00:58):
.
So we'll get to that coming up.
But first I want to let you know, just before I recorded this
coming up, but first I want tolet you know, just before I
recorded this, I did a search inGoogle to see how many times
the search major league baseballsalary cap came up and
literally it's just a handful oftimes this year.
It's amazing that this is not atopic that many are talking
(01:20):
about.
This should be brought up timeand time again, so there has to
be some other reason behind itwhy all these other small market
teams aren't bringing this upover and over again.
Now I did that search and then,of course, I went over to
baseballclassicscom slashDiamond View again, where we
give you the full update ofwhat's happening every single
(01:42):
day in Major League Baseball.
If you go to the hot stove newssection, you'll see, of course
that Blake Snell did sign thatfive-year deal for $182 million
with the Dodgers.
So they just signed Otoni tothis whopping contract last year
.
Now they just signed BlakeSnell who knows who else they're
(02:05):
going to sign and the articlejust beneath that says that
Dodgers' creative accounting inBlake Snell's contract leaves
room for more moves.
So again, this is all inbaseballclassicscom slash
diamondview.
You won't find all of thisinformation in any one site.
You'll see it scattered indifferent places.
And then also, if you go to ourfree agent section, we have a
(02:28):
free agent tracker where you candownload a spreadsheet that you
can sort through with over 130free agents in there.
Now, to date, the total contractvalue for players signed here
we know early in the hot stoveleague 262 million 750 000, and
(02:49):
that ranges up to five-yeardeals, which, of course, is the
blake snell deal.
Now blake's 31 years old.
Congratulations to him to get agreat contract like this.
Now his contract value 182million dollars over the five
years and a big chunk of that isdeferred over time.
So this allows the Dodgers tobe able to continue to bring in
(03:11):
more big names and, of course,spend like mad.
Of course we've also reportedand we've seen this that Mets
owner Steve Cohen is alreadystating that, is already stating
that he will spend $50 millionmore to outbid any other team
for Juan Soto.
So these owners, with all thismoney and, again, good for them
(03:35):
to have it, but Major LeagueBaseball is allowing this to
happen without any kind of asalary cap.
So these small mid-market teams, if they don't have that kind
of financial resource, how couldthey possibly sign these
big-name stars, and let alonenot just one, but multiple stars
like this?
So I'm going to first againtell you why they need a Major
(03:58):
League Baseball salary cap, andI'm going to share some
information that I bet will bevery surprising to most baseball
fans out there, including youlistening in.
Okay, so let's get started.
So they must adopt a salary capto ensure, of course,
competitive balance and enhanceconsistent fan engagement and
(04:20):
promote financial sustainabilityacross all teams.
Major League Baseball has longbeen celebrated for its rich,
iconic moments and the paritythat a long, grueling season can
bring.
However, one issue that hasincreasingly come to the
forefront is the disparity inteam payrolls.
(04:42):
Unlike the NFL, the NBA and theNHL, major League Baseball, of
course, does not have a salarycap, so this absence has led to
significant imbalances, withwealthier teams consistently
outspending their rivals,creating a competitive
environment that is often skewedin favor of a few.
(05:05):
Introducing a salary cap inMajor League Baseball could be a
transformative step towardsachieving a more equitable and
competitive league.
Now get this part right hereAttendance has not been growing
in Major League Baseball overthe last 20 seasons.
(05:26):
So, covid season aside, itwould be generous to say fan
attendance is flat at best.
So we're covering the periodhere between 2003 to 2023.
So over those 20 years, againattendance flat.
But I will tell you that duringthose 20 years the NFL, the NBA
(05:50):
and the NHL have all seen anincrease in their attendance,
while Major League Baseball atbest is flat.
But I will say, actually it'sreally down over those years.
So that has to do, of course,with the competitive imbalance.
Where you have the otherleagues have the salary cap,
(06:10):
their attendance increases.
Major League Baseball is notincreasing in their attendance.
So it's been danced around thistopic by Major League Baseball
with a competitive balance tax,but of course that hasn't
deterred wealthy owners who canafford to do that and spend like
mad.
Now what about revenue sharing,so many baseball pundits claim?
(06:31):
A good number of small marketteams owners would just pocket
that money if there was revenueshare, and they would gladly do
so.
So, stating the obvious and topreason why Major League
Baseball needs to get thisstraightened out, and get it
straightened out right away theexorbitant payrolls.
(06:51):
So wealthier franchises such asthe New York Yankees, Los
Angeles Dodgers and Boston RedSox, amongst others,
consistently have payrolls thatfar exceed those of smaller
market teams, have payrolls thatfar exceed those of smaller
market teams.
For instance, in 2023, the NewYork Mets had a payroll that
(07:12):
surpassed $340 million $340million.
So, while teams like theOakland Athletics and Pittsburgh
Pirates struggled with theirpayrolls under $60 million.
So you have one team $340million, two teams together $120
(07:37):
million and not even that much.
So just dwarfing other teamsnot just a team, but teams in
Major League Baseball.
So this vast disparity infinancial resources enables
richer teams, of course, tostockpile talent, often leading
to an uneven playing field.
I mean, it just makes sense Ifyou can afford to buy the best
(07:59):
things that are out there in anykind of business versus a
company that cannot or companiesthat cannot, you're going to
outperform those companies.
So competitive imbalance.
This is another obvious, topreason of why there's financial
disparity.
The financial cloud of thesewealthier teams translates
(08:20):
directly into on-field success.
According to a study byFiveThirtyEight, teams with
higher payrolls have asignificantly better chance of
making the playoffs andcontending for championships.
Over the past decade, teams inthe top third of payroll
expenditures have dominatedpostseason appearances, leaving
(08:44):
smaller market teams with littlehope of sustained success.
So the impact on fan engagement?
So one.
There's fan delusion.
Fans of smaller market teamsoften feel disillusioned and
disconnected from the sport,knowing that their teams are at
a perpetual disadvantage.
The hope and excitement thatcome with the start of a new
(09:06):
season are quickly dashed by thereality of financial inequity.
This disenchantment can lead todecreased attendance, which, of
course, it has lower TV ratingsand we know there's a lot of
problems in Major LeagueBaseball when it comes to the TV
contracts and ratings anddiminished fan engagement.
So market inefficiencies withouta salary cap, there's little
(09:30):
incentive for teams to operateefficiently or develop talent
through their farm systems.
Instead, wealthier teams cansimply outbid others for top
free agents, leading to aconcentration of talent and a
less competitive market.
Concentration of talent and aless competitive market.
This inefficiency underminesthe spirit of competition that
is central, of course, to allprofessional sports.
(09:51):
Now let's talk about the brightside of this, the benefits of a
salary cap.
So, of course, we'll level theplaying field.
A salary cap do that by ensuringthat all teams have a more
equal opportunity to sign toptalent.
By limiting the amount eachteam can spend on player
(10:11):
salaries, a salary cap wouldencourage more strategic
decision making and resourceallocation.
This change would likely leadto greater parity across the
league, as seen in the NFL andNBA and NHL, where salary caps
have contributed to competitivebalance Enhanced competitive
balance.
Now, with a salary cap, smallmarket teams would no longer be
(10:35):
perpetually outgunned by theirwealthier counterparts.
More teams would have alegitimate chance to build
competitive rosters, leading toincreased competition and
unpredictability.
This competitive balance iscrucial for maintaining fan
interest and ensuring thelong-term health of the league.
(10:56):
And also the benefit of thesalary cap is the promotion of
player development.
A salary cap would incentivizeteams to invest more in player
development, and scouting Teamswould be encouraged to cultivate
talent from within theirorganizations, leading to a
stronger emphasis on farmsystems and minor league
(11:18):
development.
This focus on nurturinghomegrown talent would enrich
the overall quality of play andprovide a more sustainable model
for success.
Instead, of course, what'shappening is these teams that do
cultivate talent in thesesmaller markets or mid-sized
markets, at some point theycan't afford these players as
(11:38):
they become superstars and thenthey get cherry-picked by these
wealthy teams and then they'regone.
So all that they put into theseplayers to develop them, to
bring them up, they turn intosuperstars and then they're gone
before fans even know it.
Now, economic sustainability sotight team payroll ranges here.
(11:59):
So implementing a tight minimumand maximum player payroll
system in Major League Baseballwould foster economic
sustainability by promotingcompetitive balance and
preventing financialoverextension.
It would ensure that all teamshave an equal opportunity to
sign and retain top talent,increasing overall competition
(12:22):
and maintaining fan interestacross various markets.
Again, when you have this tightteam payroll range, they have
to work within.
Now.
This system would also protectteams from unsustainable
spending, encouraging investmentin player development and other
critical areas and enhancinglong-term financial stability
(12:42):
and strategic management withinthe league.
Also, protection againsteconomic downturns the salary
cap can also protect teams andthe league from economic
downturns.
By capping salaries, majorLeague Baseball can avoid
situations where teamsoverextend financially in
(13:03):
pursuit of short-term success,only to face financial
difficulties when revenuesdecline.
Financial difficulties whenrevenues decline.
This stability is essential forthe league's overall economic
health.
Now, implementing a salary capin Major League Baseball is not
just a matter of financialfairness.
It's an essential component forcompetitive integrity of the
(13:26):
sport.
By addressing the vastfinancial disparities between
teams, a salary cap would createa more level playing field.
Join other major professionalsports leagues in adopting a
salary cap, ensuring that theexcitement and unpredictability
of baseball are preserved for tocome.
(13:47):
Okay, now let's get to myproposed solution.
It's a five-step plan forimplementing a fair salary cap
in Major League Baseball.
So, major League Baseballexecutives, I am talking to you
and this is the five-step plan.
(14:08):
Here we go.
Number one establish anegotiation committee.
Form a committee composed ofrepresentatives from Major
League Baseball owners and theMajor League Baseball Players
Association and neutralarbitrators.
The purpose of it is to ensurethat all voices are heard and
(14:28):
facilitate an open dialogue.
Now, the committee shouldinclude a mix of large and small
market team owners, veteran andyounger players and experienced
negotiators from both sides.
So that's number one, right?
Get this negotiation committeetogether.
It reminds me of StephenCovey's book the Seven Habits of
(14:52):
Highly Effective People Seekfirst to be understood, then to
understand.
So let's have all these voicesunderstood first, okay.
Number two conduct acomprehensive financial analysis
, now that everybody's voiceshave been heard.
Perform an in-depth financialanalysis of the league's revenue
(15:14):
, expenses and economicdisparities between teams.
Provide a transparent financialpicture to both parties to
establish trust and a commonunderstanding.
So this analysis should coverticket sales, merchandise, media
rights and other revenuestreams.
Put it all on the table.
It should also examine teamexpenditures, including player
(15:38):
salaries and development costsand any others out there in that
realm.
Number one again establish anegotiation committee.
Number two conduct acomprehensive financial analysis
.
Number two conduct acomprehensive financial analysis
.
So now we're getting againgetting our arms around
everything so we can really seewhat Major League Baseball is
(15:58):
dealing with here.
Next step three define salarycap parameters with base and
performance pay.
Now I can only imagine how manypeople will be groaning about
this step, but this is a keystep in making a Major League
Baseball salary cap work.
(16:19):
You need to agree on keyparameters of the salary cap,
including the cap ceiling, themaximum payroll amount, the
floor, the minimum payroll and abase salary system.
So this is to ensure that thesalary cap is set at a level
(16:39):
that promotes competitivebalance while allowing teams to
remain financially viable.
Now you set a base salary of $1million for all players to
ensure a fair minimum income.
$1 million to play Major LeagueBaseball as a base salary.
(17:00):
What is wrong with that?
Now, sure, there's going to beplayers like Otani and so many
others, but they make far morethan that in their quote-unquote
base salary every year, and weget to that a little bit, you
know coming up here, so hang inthere for that part.
But the way that the salary capwould work is that each player
(17:23):
that plays major league baseballis going to be given that
million dollar salary and thenintroduce a performance-based
pay system where players canearn additional money based on
metrics like games played, wins,era, batting averages, home
runs, etc.
Right, I mean, there's a lot ofdifferent categories and, of
(17:44):
course, these are all trackedanyway, so now you can define
what the value is behind themthat contributes to a team.
Now, with baseball classics, wehave our diamond data, so we
score these players and it'scome out so accurate across all
these different categories, bothbatters and pitchers, and based
(18:05):
on their overall contributionto the team that season.
That's how their score isdetermined and calculated.
So, for example, this year, withour 2024 Diamond Data scoring
system.
We showed that Otani and Judgewere clearly most deserving of
(18:27):
an MVP, but we also picked outwho the rookie of the year
should be, based on the scoringsystem for the National League
and American League.
We also projected that ChrisSale should be the Cy Young of
the National League, and we justmissed the Cy Young for the
(18:47):
American League, which was close, and Scooble won it, and again,
congrats to him.
That's fine.
So my point is that there is away to do this, that you can
look at all of the differentmetrics that are out there, put
this performance-based paysystem behind it and let them
earn extra money based on that.
(19:10):
So it's no different thansalespeople earning more by
exceeding quotas, which has beenworking, of course, for
centuries.
So the cap ceiling should beset as a percentage of league
revenues to adjust with economicconditions.
Now, what about if a player getsinjured?
So let's say, let's even be asfar-fetched as okay.
(19:31):
So now they're starting theseason and it's opening day.
They get injured, so now theycan't and they're out for the
rest of the season.
We still have a million dollars.
What is wrong with that?
What's wrong with having amillion dollars and you don't
play the rest of the year, asopposed to, let's say, a player
that signed a $5 million deal ora $10 million deal for that
(19:52):
year and played in the openingday and then that was it.
Now that team is out to $5, $10million.
Now perhaps they have insuranceto cover it, but then you've
got to pay for that the milliondollars.
That makes it much moreaffordable for all of these
owners and much more reasonableis really a key point as well.
(20:13):
Okay, so that's defining stepthree defining salary cap
parameters with base andperformance pay.
Number four introduce atransition period.
Now, of course, this isessential for this to work as
well, because of course, allthese players have contracts and
of course, this is essentialfor this to work as well,
because of course, all theseplayers have contracts and of
course they're all differentamounts and, of course,
(20:33):
different terms on theircontract and length of time and
all of that.
So, implement a transitionperiod to gradually phase in the
salary cap system over severalyears.
Allow teams and players toadjust to the new system without
sudden disruptions.
So, during the transitionperiod, gradually tighten the
(20:55):
cap limits and provide teamswith flexibility through
mechanisms like salary capexceptions and amnesty clauses
for existing contracts.
So this period also allows forthe refinement of a
performance-based pay system.
Now, when you have a system,like really any business that's
out there for a long period oftime, like Major League Baseball
(21:18):
and the way that players havebeen paid, it takes a while to
transition out of that intosomething different.
I'm not suggesting Major LeagueBaseball just rips the band-aid
off and goes right to a salarycap.
That's impossible to do.
But if you introduce atransition period now this
transition period, it may takefive years before you can really
(21:39):
start to get to that salary cap, and yet still you're going to
have some players that aregrandfathered in, that are going
to continue to receive, ofcourse, the money from the
contracts that must be honored.
So, that aside, you're going tohave some players like beyond
five years, like Otani andothers, that sign these long
contracts.
But I think a five-year periodis pretty reasonable.
(22:01):
There won't be too many playersthat are beyond that and if
there are, again you cangrandfather those guys to keep
doing what they're doing.
Grandfather those guys to keepdoing what they're doing, but as
you implement this, you startto work towards that during this
transition period.
So that's step four.
(22:21):
And then step five implementmonitoring and enforcement
mechanisms.
So this is to establish robustmonitoring and enforcement
mechanisms to ensure compliancewith salary cap rules, and this
is to maintain the integrity ofthe salary cap system and
prevent circumvention.
(22:42):
So create an independentoversight body to audit team
finances and enforce penaltiesfor violations.
Ensure transparency andaccountability in reporting and
compliance.
No-transcript.
Okay, let's go through anexample scenario of how this
(23:07):
would work, this five-step plan.
Base salary every player in theleague receives a minimum base
salary of one million dollars.
And again, what is wrong with amillion dollars to play
baseball?
Okay, so that's number one.
You get the base salary.
Number two the performance payplayers can earn additional
(23:30):
compensation based on theirperformance metrics.
So pitchers additional pay forwins, strikeouts, era innings,
pitch, so on and so forth.
Yet it also subtracts fornegative performance, such as
walks allowed, home runs allowed, so on and so forth.
Batters additional pay for homeruns, batting average, rbi,
stolen bases, etc.
And subtracts for negativeperformance, such as grounding
(23:54):
into double plays, strikeouts,so on and so forth.
So that's how the performancepay system would work.
You're going to, of course, getrewarded when you do great
things.
You don't do great things andyou detract from the team.
Sorry, that's going to come outof your performance pay bonuses
(24:14):
, if you will.
Now you have to have a ceilingcap here where you set a
percentage of league revenues,ensuring that it adjusts to
economic conditions.
So the cap ceiling will bebased on that right A percentage
of the league revenues and thenthe cap floor ensures teams
(24:35):
invest adequately in theirrosters, preventing excessive
cost cutting.
So let's say, for example andagain you have to really dig
into these numbers but the capceiling for a team, let's say
that it's I don't know, I'm justgoing to use a number here $200
(24:55):
million.
And let's say the cap floor, itneeds to be really tight to
that.
It can't be like $200 millionand $100 million.
It has to be pretty tight.
So, whatever the cap ceilingand cap floor is, if it's $200
million, it has to be prettytight.
So, whatever the cap ceilingand cap floor is, if it's 200
million it needs to be like 180million, or if it's 150 million
it needs to be like 125 million.
For the ceiling and the floor,it needs to be tight.
(25:17):
It can't be this wide range.
So then these smaller marketteams and these owners always go
on the low end.
You got to really make themstay tight within that.
Now the paper for performance.
Of course, that should increaserevenues for all these teams
that have players that are doingwell, because of course it's
going to attract more faninterest and then it's going to
(25:38):
get more TV revenue and so onand so forth, so that'll all
balance out.
Now, implementing thisfive-step plan with a
combination of base salary andperformance pay would promote
competitive balance, preventfinancial overextension and
ensure fair compensation forplayers.
(25:59):
Let's talk about that for justa moment, the fair compensation
for players.
How many and this is a wholenother episode that could be
done here how many times have weseen free agent signings get
these enormous contracts andthen they are absolutely brutal
once they sign that free agentdeal.
I mean, that's faircompensation.
(26:22):
They're getting all this incomefrom the team and they're just
lousy.
Now there have been someexceptions to this, but too many
times free agents have beensigned to these gigantic
contracts and then they'reterrible.
This would ensure faircompensation for all players.
(26:43):
This approach encouragesstrategic management within
teams, enhances fan engagementand maintains long-term
financial stability across theleague.
Now, will Major League Baseballever go for a salary cap, let
alone Major League BaseballPlayers Association ever agree
to pay for a performance plan.
(27:03):
Well, attention, major LeagueBaseball, the three other major
American League sports have itAgain NFL, nba, nhl and, yes,
they all have this increase intheir attendance over the past
20 years.
So you haven't had a salary cap.
These other professional sportsorganizations have.
(27:23):
Their attendance has gone up.
Yours has been flat at best, ifnot down.
So you need to fix this problemwithin Major League Baseball.
Now, of course, major LeagueBaseball is still a great sport,
even without it, obviously, butit can be better is what I'm
suggesting here.
Now let's get back to again.
(27:45):
What about all the currentcontracts between clubs and
their players?
Again, naturally, as I saidbefore, they all must be honored
.
But there's no time, like thepresident, to begin at least
socializing this conversation ina serious manner today?
After all, the currentcollective bargaining agreement
between Major League Baseballand the Major League Baseball
(28:06):
Players Association expiresafter the 2026 season, so we're
getting pretty close to that, Imean a couple years away, you
know.
And of course, that agreement,as we know, has to be talked out
at least a year ahead of time,to you know, to get worked out
in time.
So will big market owners everwant their hands tied by a
(28:31):
salary cap Only if they want tosee attendance and revenues grow
across the entire sport.
This and many more questionssurround this complex topic, and
it is a complex one.
However, again, I believe itcan be fixed.
The other sports franchiseshave done it.
Major League Baseball, you cando it too, and you can set a
brand new standard with this payperformance, which would be so
(28:54):
much fun to watch.
It would be so great to seethese players really have to
step up and perform, and if theydon't do well, they're going to
get penalized.
Yet at the minimum, they allget a million dollars.
If you have the worst year ever, you still get a million
dollars.
And what is wrong for having acareer where, if you are just
(29:18):
absolutely brutal in your job,you still get one million
dollars?
What is wrong with that?
So there's so many otherquestions around this complex
topic.
However, something must be done.
Something must be responsiblefor the lack of growth for Major
League Baseball attendance overthe past 20 years, and boosting
(29:39):
fan attendance by speeding upand shortening the game was the
theory floated by Major LeagueBaseball Commissioner Rob
Manfred.
That hasn't panned out.
That's not the case, becausesince he's implemented this fan
attendance has not increased sosure.
Occasionally a small market teamwins the fall classic.
They may even be able to remaincompetitive enough for two
(30:01):
years in a row to get back tothe big show.
But what happens next is a sadstory because it's all too
familiar to all of us.
Star players who help themleave, because most small market
owners either can't or don'twant to pay them what the big
market team owners will pay them.
The once competitive smallmarket team fades back to the
(30:22):
bottom half of the standings foryears after.
Meanwhile, outside of bigmarket team owners who refuse to
invest in their team like therest of them, it's typically the
same big market teams, yearafter year, go back over the
past, even 50 years, and it'sthe Yankees, dodgers, braves,
(30:43):
giants and Red Sox with winningrecords.
The St Louis Cardinals are amid-market Major League Baseball
franchise that is also amongthat group, and you can narrow
it down to the past 10 years,and the mid-market Houston
Astros fit in as well, butthat's it.
Meanwhile, the Florida Panthersjust won their first Stanley
Cup, the Kansas City Chiefs havebeen winning Super Bowls like
(31:04):
there's no tomorrow, and theDenver Nuggets won the NBA
championship in 2023.
Barring significant playerinjuries.
A Major League Baseball salarycap gives franchise owners,
their executives and players anopportunity to shine, thus
putting more fans in the seats.
Come on, major League Baseball,you can do this, alright.
(31:27):
That's a wrap for this BaseballClassics Diamondcast.
Thanks again, so much fortuning in.
Write me.
I want to hear from you aboutthis topic and any others that
you would like covered on theDiamondcast Dean at
BaseballClassicscom.
Meanwhile, do yourself a favoragain and let all your friends
know who you know are baseballfans to go on over to
(31:48):
baseballclassicscom.
Slash diamond view.
We'll see you in the nextepisode of baseball classics,
diamond cats.
So long, everybody.
Major League Baseball fans, get ready for a close-up
look from the top step of thedugout.
Welcome to the BaseballClassics Podcast.
Covering any season from 1901to the present, We'll explore
exciting pennant races, diveheadfirst, analyzing and even
doing some comparisons that arebound to settle an argument or
(00:24):
start one up.
And now here's your host, DeanPitino.
Speaker 2 (00:33):
Hello again, everybody.
Thanks so much for tuning in tothis Baseball Classics
Diamondcast.
Happy Thanksgiving.
It is going to be quite theepisode I have for you on the
case that I'm going to make whyMajor League Baseball needs to
incorporate a salary cap as soonas possible, and I'm going to
explain not only why but howthey could do it in this episode
(00:58):
.
So we'll get to that coming up.
But first I want to let you know, just before I recorded this
coming up, but first I want tolet you know, just before I
recorded this, I did a search inGoogle to see how many times
the search major league baseballsalary cap came up and
literally it's just a handful oftimes this year.
It's amazing that this is not atopic that many are talking
(01:20):
about.
This should be brought up timeand time again, so there has to
be some other reason behind itwhy all these other small market
teams aren't bringing this upover and over again.
Now I did that search and then,of course, I went over to
baseballclassicscom slashDiamond View again, where we
give you the full update ofwhat's happening every single
(01:42):
day in Major League Baseball.
If you go to the hot stove newssection, you'll see, of course
that Blake Snell did sign thatfive-year deal for $182 million
with the Dodgers.
So they just signed Otoni tothis whopping contract last year
.
Now they just signed BlakeSnell who knows who else they're
(02:05):
going to sign and the articlejust beneath that says that
Dodgers' creative accounting inBlake Snell's contract leaves
room for more moves.
So again, this is all inbaseballclassicscom slash
diamondview.
You won't find all of thisinformation in any one site.
You'll see it scattered indifferent places.
And then also, if you go to ourfree agent section, we have a
(02:28):
free agent tracker where you candownload a spreadsheet that you
can sort through with over 130free agents in there.
Now, to date, the total contractvalue for players signed here
we know early in the hot stoveleague 262 million 750 000, and
(02:49):
that ranges up to five-yeardeals, which, of course, is the
blake snell deal.
Now blake's 31 years old.
Congratulations to him to get agreat contract like this.
Now his contract value 182million dollars over the five
years and a big chunk of that isdeferred over time.
So this allows the Dodgers tobe able to continue to bring in
(03:11):
more big names and, of course,spend like mad.
Of course we've also reportedand we've seen this that Mets
owner Steve Cohen is alreadystating that, is already stating
that he will spend $50 millionmore to outbid any other team
for Juan Soto.
So these owners, with all thismoney and, again, good for them
(03:35):
to have it, but Major LeagueBaseball is allowing this to
happen without any kind of asalary cap.
So these small mid-market teams, if they don't have that kind
of financial resource, how couldthey possibly sign these
big-name stars, and let alonenot just one, but multiple stars
like this?
So I'm going to first againtell you why they need a Major
(03:58):
League Baseball salary cap, andI'm going to share some
information that I bet will bevery surprising to most baseball
fans out there, including youlistening in.
Okay, so let's get started.
So they must adopt a salary capto ensure, of course,
competitive balance and enhanceconsistent fan engagement and
(04:20):
promote financial sustainabilityacross all teams.
Major League Baseball has longbeen celebrated for its rich,
iconic moments and the paritythat a long, grueling season can
bring.
However, one issue that hasincreasingly come to the
forefront is the disparity inteam payrolls.
(04:42):
Unlike the NFL, the NBA and theNHL, major League Baseball, of
course, does not have a salarycap, so this absence has led to
significant imbalances, withwealthier teams consistently
outspending their rivals,creating a competitive
environment that is often skewedin favor of a few.
(05:05):
Introducing a salary cap inMajor League Baseball could be a
transformative step towardsachieving a more equitable and
competitive league.
Now get this part right hereAttendance has not been growing
in Major League Baseball overthe last 20 seasons.
(05:26):
So, covid season aside, itwould be generous to say fan
attendance is flat at best.
So we're covering the periodhere between 2003 to 2023.
So over those 20 years, againattendance flat.
But I will tell you that duringthose 20 years the NFL, the NBA
(05:50):
and the NHL have all seen anincrease in their attendance,
while Major League Baseball atbest is flat.
But I will say, actually it'sreally down over those years.
So that has to do, of course,with the competitive imbalance.
Where you have the otherleagues have the salary cap,
(06:10):
their attendance increases.
Major League Baseball is notincreasing in their attendance.
So it's been danced around thistopic by Major League Baseball
with a competitive balance tax,but of course that hasn't
deterred wealthy owners who canafford to do that and spend like
mad.
Now what about revenue sharing,so many baseball pundits claim?
(06:31):
A good number of small marketteams owners would just pocket
that money if there was revenueshare, and they would gladly do
so.
So, stating the obvious and topreason why Major League
Baseball needs to get thisstraightened out, and get it
straightened out right away theexorbitant payrolls.
(06:51):
So wealthier franchises such asthe New York Yankees, Los
Angeles Dodgers and Boston RedSox, amongst others,
consistently have payrolls thatfar exceed those of smaller
market teams, have payrolls thatfar exceed those of smaller
market teams.
For instance, in 2023, the NewYork Mets had a payroll that
(07:12):
surpassed $340 million $340million.
So, while teams like theOakland Athletics and Pittsburgh
Pirates struggled with theirpayrolls under $60 million.
So you have one team $340million, two teams together $120
(07:37):
million and not even that much.
So just dwarfing other teamsnot just a team, but teams in
Major League Baseball.
So this vast disparity infinancial resources enables
richer teams, of course, tostockpile talent, often leading
to an uneven playing field.
I mean, it just makes sense Ifyou can afford to buy the best
(07:59):
things that are out there in anykind of business versus a
company that cannot or companiesthat cannot, you're going to
outperform those companies.
So competitive imbalance.
This is another obvious, topreason of why there's financial
disparity.
The financial cloud of thesewealthier teams translates
(08:20):
directly into on-field success.
According to a study byFiveThirtyEight, teams with
higher payrolls have asignificantly better chance of
making the playoffs andcontending for championships.
Over the past decade, teams inthe top third of payroll
expenditures have dominatedpostseason appearances, leaving
(08:44):
smaller market teams with littlehope of sustained success.
So the impact on fan engagement?
So one.
There's fan delusion.
Fans of smaller market teamsoften feel disillusioned and
disconnected from the sport,knowing that their teams are at
a perpetual disadvantage.
The hope and excitement thatcome with the start of a new
(09:06):
season are quickly dashed by thereality of financial inequity.
This disenchantment can lead todecreased attendance, which, of
course, it has lower TV ratingsand we know there's a lot of
problems in Major LeagueBaseball when it comes to the TV
contracts and ratings anddiminished fan engagement.
So market inefficiencies withouta salary cap, there's little
(09:30):
incentive for teams to operateefficiently or develop talent
through their farm systems.
Instead, wealthier teams cansimply outbid others for top
free agents, leading to aconcentration of talent and a
less competitive market.
Concentration of talent and aless competitive market.
This inefficiency underminesthe spirit of competition that
is central, of course, to allprofessional sports.
(09:51):
Now let's talk about the brightside of this, the benefits of a
salary cap.
So, of course, we'll level theplaying field.
A salary cap do that by ensuringthat all teams have a more
equal opportunity to sign toptalent.
By limiting the amount eachteam can spend on player
(10:11):
salaries, a salary cap wouldencourage more strategic
decision making and resourceallocation.
This change would likely leadto greater parity across the
league, as seen in the NFL andNBA and NHL, where salary caps
have contributed to competitivebalance Enhanced competitive
balance.
Now, with a salary cap, smallmarket teams would no longer be
(10:35):
perpetually outgunned by theirwealthier counterparts.
More teams would have alegitimate chance to build
competitive rosters, leading toincreased competition and
unpredictability.
This competitive balance iscrucial for maintaining fan
interest and ensuring thelong-term health of the league.
(10:56):
And also the benefit of thesalary cap is the promotion of
player development.
A salary cap would incentivizeteams to invest more in player
development, and scouting Teamswould be encouraged to cultivate
talent from within theirorganizations, leading to a
stronger emphasis on farmsystems and minor league
(11:18):
development.
This focus on nurturinghomegrown talent would enrich
the overall quality of play andprovide a more sustainable model
for success.
Instead, of course, what'shappening is these teams that do
cultivate talent in thesesmaller markets or mid-sized
markets, at some point theycan't afford these players as
(11:38):
they become superstars and thenthey get cherry-picked by these
wealthy teams and then they'regone.
So all that they put into theseplayers to develop them, to
bring them up, they turn intosuperstars and then they're gone
before fans even know it.
Now, economic sustainability sotight team payroll ranges here.
(11:59):
So implementing a tight minimumand maximum player payroll
system in Major League Baseballwould foster economic
sustainability by promotingcompetitive balance and
preventing financialoverextension.
It would ensure that all teamshave an equal opportunity to
sign and retain top talent,increasing overall competition
(12:22):
and maintaining fan interestacross various markets.
Again, when you have this tightteam payroll range, they have
to work within.
Now.
This system would also protectteams from unsustainable
spending, encouraging investmentin player development and other
critical areas and enhancinglong-term financial stability
(12:42):
and strategic management withinthe league.
Also, protection againsteconomic downturns the salary
cap can also protect teams andthe league from economic
downturns.
By capping salaries, majorLeague Baseball can avoid
situations where teamsoverextend financially in
(13:03):
pursuit of short-term success,only to face financial
difficulties when revenuesdecline.
Financial difficulties whenrevenues decline.
This stability is essential forthe league's overall economic
health.
Now, implementing a salary capin Major League Baseball is not
just a matter of financialfairness.
It's an essential component forcompetitive integrity of the
(13:26):
sport.
By addressing the vastfinancial disparities between
teams, a salary cap would createa more level playing field.
Join other major professionalsports leagues in adopting a
salary cap, ensuring that theexcitement and unpredictability
of baseball are preserved for tocome.
(13:47):
Okay, now let's get to myproposed solution.
It's a five-step plan forimplementing a fair salary cap
in Major League Baseball.
So, major League Baseballexecutives, I am talking to you
and this is the five-step plan.
(14:08):
Here we go.
Number one establish anegotiation committee.
Form a committee composed ofrepresentatives from Major
League Baseball owners and theMajor League Baseball Players
Association and neutralarbitrators.
The purpose of it is to ensurethat all voices are heard and
(14:28):
facilitate an open dialogue.
Now, the committee shouldinclude a mix of large and small
market team owners, veteran andyounger players and experienced
negotiators from both sides.
So that's number one, right?
Get this negotiation committeetogether.
It reminds me of StephenCovey's book the Seven Habits of
(14:52):
Highly Effective People Seekfirst to be understood, then to
understand.
So let's have all these voicesunderstood first, okay.
Number two conduct acomprehensive financial analysis
, now that everybody's voiceshave been heard.
Perform an in-depth financialanalysis of the league's revenue
(15:14):
, expenses and economicdisparities between teams.
Provide a transparent financialpicture to both parties to
establish trust and a commonunderstanding.
So this analysis should coverticket sales, merchandise, media
rights and other revenuestreams.
Put it all on the table.
It should also examine teamexpenditures, including player
(15:38):
salaries and development costsand any others out there in that
realm.
Number one again establish anegotiation committee.
Number two conduct acomprehensive financial analysis
.
Number two conduct acomprehensive financial analysis
.
So now we're getting againgetting our arms around
everything so we can really seewhat Major League Baseball is
(15:58):
dealing with here.
Next step three define salarycap parameters with base and
performance pay.
Now I can only imagine how manypeople will be groaning about
this step, but this is a keystep in making a Major League
Baseball salary cap work.
(16:19):
You need to agree on keyparameters of the salary cap,
including the cap ceiling, themaximum payroll amount, the
floor, the minimum payroll and abase salary system.
So this is to ensure that thesalary cap is set at a level
(16:39):
that promotes competitivebalance while allowing teams to
remain financially viable.
Now you set a base salary of $1million for all players to
ensure a fair minimum income.
$1 million to play Major LeagueBaseball as a base salary.
(17:00):
What is wrong with that?
Now, sure, there's going to beplayers like Otani and so many
others, but they make far morethan that in their quote-unquote
base salary every year, and weget to that a little bit, you
know coming up here, so hang inthere for that part.
But the way that the salary capwould work is that each player
(17:23):
that plays major league baseballis going to be given that
million dollar salary and thenintroduce a performance-based
pay system where players canearn additional money based on
metrics like games played, wins,era, batting averages, home
runs, etc.
Right, I mean, there's a lot ofdifferent categories and, of
(17:44):
course, these are all trackedanyway, so now you can define
what the value is behind themthat contributes to a team.
Now, with baseball classics, wehave our diamond data, so we
score these players and it'scome out so accurate across all
these different categories, bothbatters and pitchers, and based
(18:05):
on their overall contributionto the team that season.
That's how their score isdetermined and calculated.
So, for example, this year, withour 2024 Diamond Data scoring
system.
We showed that Otani and Judgewere clearly most deserving of
(18:27):
an MVP, but we also picked outwho the rookie of the year
should be, based on the scoringsystem for the National League
and American League.
We also projected that ChrisSale should be the Cy Young of
the National League, and we justmissed the Cy Young for the
(18:47):
American League, which was close, and Scooble won it, and again,
congrats to him.
That's fine.
So my point is that there is away to do this, that you can
look at all of the differentmetrics that are out there, put
this performance-based paysystem behind it and let them
earn extra money based on that.
(19:10):
So it's no different thansalespeople earning more by
exceeding quotas, which has beenworking, of course, for
centuries.
So the cap ceiling should beset as a percentage of league
revenues to adjust with economicconditions.
Now, what about if a player getsinjured?
So let's say, let's even be asfar-fetched as okay.
(19:31):
So now they're starting theseason and it's opening day.
They get injured, so now theycan't and they're out for the
rest of the season.
We still have a million dollars.
What is wrong with that?
What's wrong with having amillion dollars and you don't
play the rest of the year, asopposed to, let's say, a player
that signed a $5 million deal ora $10 million deal for that
(19:52):
year and played in the openingday and then that was it.
Now that team is out to $5, $10million.
Now perhaps they have insuranceto cover it, but then you've
got to pay for that the milliondollars.
That makes it much moreaffordable for all of these
owners and much more reasonableis really a key point as well.
(20:13):
Okay, so that's defining stepthree defining salary cap
parameters with base andperformance pay.
Number four introduce atransition period.
Now, of course, this isessential for this to work as
well, because of course, allthese players have contracts and
of course, this is essentialfor this to work as well,
because of course, all theseplayers have contracts and of
course they're all differentamounts and, of course,
(20:33):
different terms on theircontract and length of time and
all of that.
So, implement a transitionperiod to gradually phase in the
salary cap system over severalyears.
Allow teams and players toadjust to the new system without
sudden disruptions.
So, during the transitionperiod, gradually tighten the
(20:55):
cap limits and provide teamswith flexibility through
mechanisms like salary capexceptions and amnesty clauses
for existing contracts.
So this period also allows forthe refinement of a
performance-based pay system.
Now, when you have a system,like really any business that's
out there for a long period oftime, like Major League Baseball
(21:18):
and the way that players havebeen paid, it takes a while to
transition out of that intosomething different.
I'm not suggesting Major LeagueBaseball just rips the band-aid
off and goes right to a salarycap.
That's impossible to do.
But if you introduce atransition period now this
transition period, it may takefive years before you can really
(21:39):
start to get to that salary cap, and yet still you're going to
have some players that aregrandfathered in, that are going
to continue to receive, ofcourse, the money from the
contracts that must be honored.
So, that aside, you're going tohave some players like beyond
five years, like Otani andothers, that sign these long
contracts.
But I think a five-year periodis pretty reasonable.
(22:01):
There won't be too many playersthat are beyond that and if
there are, again you cangrandfather those guys to keep
doing what they're doing.
Grandfather those guys to keepdoing what they're doing, but as
you implement this, you startto work towards that during this
transition period.
So that's step four.
(22:21):
And then step five implementmonitoring and enforcement
mechanisms.
So this is to establish robustmonitoring and enforcement
mechanisms to ensure compliancewith salary cap rules, and this
is to maintain the integrity ofthe salary cap system and
prevent circumvention.
(22:42):
So create an independentoversight body to audit team
finances and enforce penaltiesfor violations.
Ensure transparency andaccountability in reporting and
compliance.
No-transcript.
Okay, let's go through anexample scenario of how this
(23:07):
would work, this five-step plan.
Base salary every player in theleague receives a minimum base
salary of one million dollars.
And again, what is wrong with amillion dollars to play
baseball?
Okay, so that's number one.
You get the base salary.
Number two the performance payplayers can earn additional
(23:30):
compensation based on theirperformance metrics.
So pitchers additional pay forwins, strikeouts, era innings,
pitch, so on and so forth.
Yet it also subtracts fornegative performance, such as
walks allowed, home runs allowed, so on and so forth.
Batters additional pay for homeruns, batting average, rbi,
stolen bases, etc.
And subtracts for negativeperformance, such as grounding
(23:54):
into double plays, strikeouts,so on and so forth.
So that's how the performancepay system would work.
You're going to, of course, getrewarded when you do great
things.
You don't do great things andyou detract from the team.
Sorry, that's going to come outof your performance pay bonuses
(24:14):
, if you will.
Now you have to have a ceilingcap here where you set a
percentage of league revenues,ensuring that it adjusts to
economic conditions.
So the cap ceiling will bebased on that right A percentage
of the league revenues and thenthe cap floor ensures teams
(24:35):
invest adequately in theirrosters, preventing excessive
cost cutting.
So let's say, for example andagain you have to really dig
into these numbers but the capceiling for a team, let's say
that it's I don't know, I'm justgoing to use a number here $200
(24:55):
million.
And let's say the cap floor, itneeds to be really tight to
that.
It can't be like $200 millionand $100 million.
It has to be pretty tight.
So, whatever the cap ceilingand cap floor is, if it's $200
million, it has to be prettytight.
So, whatever the cap ceilingand cap floor is, if it's 200
million it needs to be like 180million, or if it's 150 million
it needs to be like 125 million.
For the ceiling and the floor,it needs to be tight.
(25:17):
It can't be this wide range.
So then these smaller marketteams and these owners always go
on the low end.
You got to really make themstay tight within that.
Now the paper for performance.
Of course, that should increaserevenues for all these teams
that have players that are doingwell, because of course it's
going to attract more faninterest and then it's going to
(25:38):
get more TV revenue and so onand so forth, so that'll all
balance out.
Now, implementing thisfive-step plan with a
combination of base salary andperformance pay would promote
competitive balance, preventfinancial overextension and
ensure fair compensation forplayers.
(25:59):
Let's talk about that for justa moment, the fair compensation
for players.
How many and this is a wholenother episode that could be
done here how many times have weseen free agent signings get
these enormous contracts andthen they are absolutely brutal
once they sign that free agentdeal.
I mean, that's faircompensation.
(26:22):
They're getting all this incomefrom the team and they're just
lousy.
Now there have been someexceptions to this, but too many
times free agents have beensigned to these gigantic
contracts and then they'reterrible.
This would ensure faircompensation for all players.
(26:43):
This approach encouragesstrategic management within
teams, enhances fan engagementand maintains long-term
financial stability across theleague.
Now, will Major League Baseballever go for a salary cap, let
alone Major League BaseballPlayers Association ever agree
to pay for a performance plan.
(27:03):
Well, attention, major LeagueBaseball, the three other major
American League sports have itAgain NFL, nba, nhl and, yes,
they all have this increase intheir attendance over the past
20 years.
So you haven't had a salary cap.
These other professional sportsorganizations have.
(27:23):
Their attendance has gone up.
Yours has been flat at best, ifnot down.
So you need to fix this problemwithin Major League Baseball.
Now, of course, major LeagueBaseball is still a great sport,
even without it, obviously, butit can be better is what I'm
suggesting here.
Now let's get back to again.
(27:45):
What about all the currentcontracts between clubs and
their players?
Again, naturally, as I saidbefore, they all must be honored
.
But there's no time, like thepresident, to begin at least
socializing this conversation ina serious manner today?
After all, the currentcollective bargaining agreement
between Major League Baseballand the Major League Baseball
(28:06):
Players Association expiresafter the 2026 season, so we're
getting pretty close to that, Imean a couple years away, you
know.
And of course, that agreement,as we know, has to be talked out
at least a year ahead of time,to you know, to get worked out
in time.
So will big market owners everwant their hands tied by a
(28:31):
salary cap Only if they want tosee attendance and revenues grow
across the entire sport.
This and many more questionssurround this complex topic, and
it is a complex one.
However, again, I believe itcan be fixed.
The other sports franchiseshave done it.
Major League Baseball, you cando it too, and you can set a
brand new standard with this payperformance, which would be so
(28:54):
much fun to watch.
It would be so great to seethese players really have to
step up and perform, and if theydon't do well, they're going to
get penalized.
Yet at the minimum, they allget a million dollars.
If you have the worst year ever, you still get a million
dollars.
And what is wrong for having acareer where, if you are just
(29:18):
absolutely brutal in your job,you still get one million
dollars?
What is wrong with that?
So there's so many otherquestions around this complex
topic.
However, something must be done.
Something must be responsiblefor the lack of growth for Major
League Baseball attendance overthe past 20 years, and boosting
(29:39):
fan attendance by speeding upand shortening the game was the
theory floated by Major LeagueBaseball Commissioner Rob
Manfred.
That hasn't panned out.
That's not the case, becausesince he's implemented this fan
attendance has not increased sosure.
Occasionally a small market teamwins the fall classic.
They may even be able to remaincompetitive enough for two
(30:01):
years in a row to get back tothe big show.
But what happens next is a sadstory because it's all too
familiar to all of us.
Star players who help themleave, because most small market
owners either can't or don'twant to pay them what the big
market team owners will pay them.
The once competitive smallmarket team fades back to the
(30:22):
bottom half of the standings foryears after.
Meanwhile, outside of bigmarket team owners who refuse to
invest in their team like therest of them, it's typically the
same big market teams, yearafter year, go back over the
past, even 50 years, and it'sthe Yankees, dodgers, braves,
(30:43):
giants and Red Sox with winningrecords.
The St Louis Cardinals are amid-market Major League Baseball
franchise that is also amongthat group, and you can narrow
it down to the past 10 years,and the mid-market Houston
Astros fit in as well, butthat's it.
Meanwhile, the Florida Panthersjust won their first Stanley
Cup, the Kansas City Chiefs havebeen winning Super Bowls like
(31:04):
there's no tomorrow, and theDenver Nuggets won the NBA
championship in 2023.
Barring significant playerinjuries.
A Major League Baseball salarycap gives franchise owners,
their executives and players anopportunity to shine, thus
putting more fans in the seats.
Come on, major League Baseball,you can do this, alright.
(31:27):
That's a wrap for this BaseballClassics Diamondcast.
Thanks again, so much fortuning in.
Write me.
I want to hear from you aboutthis topic and any others that
you would like covered on theDiamondcast Dean at
BaseballClassicscom.
Meanwhile, do yourself a favoragain and let all your friends
know who you know are baseballfans to go on over to
(31:48):
baseballclassicscom.
Slash diamond view.
We'll see you in the nextepisode of baseball classics,
diamond cats.
So long, everybody.
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