Why Major League Baseball (still) doesn’t need a salary cap

Last month, 30-year old David Price became the richest pitcher in baseball history after he signed a record-shattering deal with the Boston Red Sox. And just days later, right-hander Zack Greinke nearly topped that contract in his pact with the Arizona Diamondbacks through his 38th birthday.

Price will earn $215 million over 7 years, while Greinke will collect $205 through 6 seasons. When compared to other leagues, it’s shocking how many MLB teams are willing to offer nine-figure contracts lasting almost a decade. Even in the realm of professional sports, these contracts are simply colossal.

Of course, both pitchers are perennial Cy Young contenders and phenomenal athletes in their primes. But it’s not difficult to determine that neither are the best player in baseball or even the best pitcher in baseball, and each will collect more money than every single player in the NFL and NBA. Of course, this is old news: 27 of the top 30 highest paid contracts in sports belong to baseball players, according to Wikipedia.

Why? Baseball’s overwhelming affluence is almost entirely due to MLB’s lack of restrictions on teams’ budgets. In the NFL and NBA, each team has a salary cap in which under no circumstances they can exceed. But in Major League Baseball, each team’s payroll is determined by their fan support, ticket sales, and owner’s wealth, and consequently can balloon to hundreds of millions of dollars without penalties from the league. Hence, the Dodgers.

Surprisingly, this fact appears to irk some sports fans. There is a portion of America convinced that Major League Baseball should have salary cap restrictions just like every other professional sport does. Many complain about baseball’s lack of a “competitive balance” or a “level playing field.”

But in polite terms, that’s a load of garbage. Baseball was assembled with diverse fiscal resources and has still remained one of America’s most popular pastimes for over a century. The only people who should be annoyed over the size of MLB contracts are athletes playing other sports.

Unlike many other leagues, baseball teams can offer free agents as much money as they want, and there is no salary cap to prevent them from doing so. However, this is considering that quite a few MLB organizations toil in poverty while others control the market by means of billionaire owners and heaps of cash.

Then, in theory, the richer baseball teams should almost always defeat the poorer teams because of their ability to buy the best players, right?

In theory, sure. But in reality, absolutely not.

Just look at this past season, where a Kansas City Royals team who only spent $113.6 million on payroll (16th) won the World Series. And the NL Champion New York Mets made their World Series Appearance on even less, only $101.4 million (22nd).

Meanwhile, the five richest teams fizzled out long before then. The powerhouse New York Yankees dropped a Wild Card matchup to the lowly Houston Astros while the Boston Red Sox loitered in the cellar of the AL East for another season. The Detroit Tigers have the fourth-highest payroll in MLB, yet finished 20 games back in their division. And although the Dodgers and Giants played in October, both were defeated by poorer teams and once again failed to attain their World Series aspirations.

Of course, that’s just one season. But history also points in this direction: A study run by Thomas Boswell of the Washington Post found that teams in 2012 with the top 15 payrolls in baseball averaged 81.4 wins while the bottom 15 had 80.6 wins. Or in other words, the correlation between a team’s payroll and their success was nearly indistinguishable.

Of course, I won’t go as far as saying that having more money doesn’t give a team some advantages. Payroll matters to some degree, and money will always help achieve success. The 27-time champion Pinstripes can exemplify that easily enough. But just because a team is loaded with cash doesn’t mean their trophy case is loaded with rings.

So, while there is a slight advantage in having the economic flexibility to sign high-end free agents, it’s not an overwhelming one. The Royals began their season with payroll in the bottom half and finished it uncorking beer.

It’s also worth mentioning that a salary cap rule in MLB would only put more money in the pockets of the billionaire owners. The average MLB athlete earns $4.4 million per year– but in fact, baseball players are earning a considerably smaller share of revenue than the league owners compared to 20 years ago.

Fans criticize MLB along with its players — professional entertainers at the top of their game who endure an exhausting schedule — for making millions while playing a “child’s game”. But whether it’s buying tickets or a cable package, the majority participate in one way or another, even if they dislike the financial system. The industry is only as successful as the market is willing to invest, and right now, the market is investing.

Baseball is a business, and as long as the money keeps pouring in, players like Price and Greinke are only going to keep becoming richer and richer. Contracts like theirs are only a reflection of the game’s popularity and not of its financial inequality.

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