From the Windup: Is It Time for a Salary Cap?

From the Windup is FanHouse's extended look at a particular portion of America's pastime.

Salary Cap. There's not a more controversial phrase in baseball economics. The prospect of one hung over the strike of 1994 and 1995 before the owners and players managed to settle without implementing a true cap. Since then, baseball has instituted a luxury tax that acts as a sort of soft cap, but it's set high enough that it only really affects the Yankees annually, and they regard it in the same manner that a rhinoceros regards a mosquito.

For the most part, a salary cap hasn't been part of the conversation in baseball for several years. The Yankees ridiculous spending spree this winter, however, has changed things. In the days and weeks since their signings of CC Sabathia and Mark Teixeira, Brewers owner Mark Attanasio and Astros owner Drayton McLane have once again begun to call for a salary cap. They're the only two owners to have spoken directly on this issue, but it's hard to think they're alone.

A salary cap in baseball is not a simple thing. In most sports, there's only one line in labor negotiations: the line between the players and the owners. In baseball, there's actually a three-way divide between the players, the "big-market" owners (for lack of a better term), and the "small-market" owners. The MLBPA isn't the only thing that stands in the way of a cap. Some of the owners (think John Henry, the Steinbrenners, naturally, the Wilpons, Frank McCourt, Arte Moreno) would likely be opposed to one as well. After the jump, we'll look at all the obstacles and problems with implementing a cap.

I'll start this by being entirely up front. I'm a Pirate fan. Obviously, I think a salary cap would be a nice thing. But I don't think it is absolutely necessary, I don't think it's a cure-all, and I don't think it's something that's going to happen anytime soon. With that out of the way, here we go.

Money does not equal success

First things first, let's look at the Yankees. This winter they've lost Mike Mussina, Jason Giambi, Bobby Abreu, and probably Andy Pettitte. They've added Sabathia, Teixeira and A.J. Burnett. It's an upgrade, yes, but it's not as dramatic as the huge salaries attached to it would seem to indicate. As we stand today, I'm not really convinced they're the favorites in the AL East and I'm not convinced they're better than either of the teams that finished ahead of them in the standings last year. Rebuilding through free agency is always going to result in sinking huge sums of money into players that are in or past their prime. It's just not the best method to build a team.

It's certainly true that teams in smaller markets are at a disadvantage, but the teams that haven't had success in recent years can't blame that on the lack of a cap. The Rays and Brewers were awful for decades, but lately they have embraced true rebuilding plans and stocked their minor league systems with talent. In 2008, both clubs made the postseason. The Pirates, on the other hand, let Dave Littlefield run their team for seven years and they're still losing. The same can be said for the Royals and Allard Baird.

Money is clearly a big part of success in baseball, but the past few years have shown that being well-run is more important than how much you spend.

A salary cap is not a cure-all

Where, exactly, do you set a salary cap in baseball? Do you set it at $100 million? Because 13 teams were more than $25 million under that threshold and six were more than $40 million under that number. Setting a salary cap in baseball won't mean that the Pirates or Marlins or even the Rays will meet that cap. It might rein-in the highest spenders, but it won't necessarily level the playing field.

Many baseball fans point to the NFL as the paradigm of the parity that they would like to see in baseball. This year's Atlanta Falcons are a great example of how quickly a team can turn around in the NFL. Last year, their franchise player got sent to jail, they hired a bad coach and things looked generally hopeless. A year later, a new coach and some shrewd personnel decisions helped them reach the playoffs. My question is this: Would they be in the position they're in now if they were still saddled with Mike Vick's contract? Because baseball contracts are not easily voided and the player's union would be fighting something like what the Falcons did with Vick every step of the way.

A salary cap is a useful thing. Every other major sport in America uses one and reaps the benefits from it. The problem that baseball has at the moment is that the environment that it operates in is so extremely different from every other sport, that a salary cap probably wouldn't even start to chip away at the competitive imbalance that exists. The well-run teams would continue to have success and the poorly-run teams would continue to fail.

The majority of the involved parties don't want a cap

The obvious problem with actually implementing a cap is that there are three sides to all labor negotiations (the MLBPA, the ulta-rich owners, and the much less rich owners) and only one of those groups (the less rich owners) really desire a cap. The players would oppose a cap on all fronts like they did in '9. Hank Steinbrenner isn't going to care what Bob Nutting or David Samson wants when it comes to a new labor pact because what benefits them certainly won't benefit him. The small-market owners don't have anything to hold over the larger-market owners as leverage because most of the money the league brings in from things like TV contracts etc. is generated by the large-market clubs. The small-market owners in turn pocket an even share of that money.

Even if a salary cap is somehow agreed upon, we just loop back up to the second problem listed above. It's unlikely to be set at a level which will help the clubs that most need it. And if the MLBPA somehow were to acquiesce to a salary cap, it's unfathomable that they'll make any other allowances (say, a system that limits contract ceilings like in the NHL and NBA, or non-guaranteed contracts like in the NFL) to help encourage parity.

The bottom line is this: People are upset by the Yankees spending spree, but that's going to subside. For now, having a good front office is generally enough for small-market clubs to compete with the outrageous spending of the Yankees. Unless the Red Sox win eight of 10 World Series because they both have money and knowhow to spend it (unlike their divisional counterparts in New York), that's not going to change. It's not necessarily a fair system, but it's not as unfair as people think. Implementing a salary cap wouldn't be nearly as effective in creating greater competitive balance as people think it would be.