Yesterday, Red Sox ownership publicly supported a salary cap for Major League Baseball. This is interesting news, as Boston owns one of the highest payrolls in baseball. Fans of teams like the Pirates seem encouraged by this support from one of the big boys, and are hopeful that this could lead to a fairer salary structure down the road. But would a salary cap really help the Pirates?
One of the most common misconceptions is that a higher major league payroll leads to winning. This is not always the case. To win, a team needs good players, regardless of their salary. The 2008 Rays are a perfect example of how a team made up of inexpensive talent is just as competitive as a team full of costly talent. Yes, the Yankees have a huge advantage over teams like the Rays and the Pirates. With their resources, the Yankees can afford to make mistakes that would cripple the Pirates for years. If CC Sabathia’s arm falls off this summer, the Yankees will simply shrug and pick up a new pitcher next year. That is a foreign situation to Pittsburgh fans. However, the current salary structure actually favors lower spending teams. A team controls a player’s rights for the first six years of his career. This usually occurs when a player is in his mid to late twenties. A player’s peak is generally between the ages of 26 and 29. That means that when a player reaches free agency, he is usually past his prime. When the Yankees sign a 30-year-old free agent to a large contract, they are often paying for past performance.
The key to winning is not the major league payroll; it is the talent on the team. Bringing impact talent into the league is a much healthier approach to winning than buying that talent right before it begins to decline. Thus, the way to win is to draft well and properly develop the players that come from the draft. This is where a salary cap hurts the Pirates. Right now, low revenue teams like the Pirates have one area of talent acquisition where they can compete financially with big spenders like the Yankees. That is the amateur draft. In 2008, the Pirates were among the top teams in draft expenditures. If payrolls are capped at somewhere around $140 million, the Yankees suddenly have an extra $70 million laying around. If they sink only $10 million of that into the draft, the Pirates cannot compete. They will have lost one of their largest advantages.
When a salary cap is being discussed, the topic of a salary floor usually surfaces as well. This is particularly true in Pittsburgh, which is understandable. Ownership has kept the payroll low for years, despite reports that the organization is making a large annual profit. But a salary floor also would hurt the Pirates more than it would help them, especially in their current situation. The team is rebuilding. Consequently, management is spending little at the major league level while pouring resources into the draft, player development, and international scouting. If the Pirates were forced to add another $20 million or so to the major league payroll, the rebuilding process would suffer greatly. For one, it would take resources away from areas that are much more important right now. In addition, it would force the team to add free agents that may not fit with the current roster and/or long-term plan, simply to meet the payroll requirement. In essence, it removes financial flexibility from the type of franchise that needs that flexibility the most.
Baseball’s current economic system is not perfect by any means, but a salary cap would not solve anything. In the end, it would give high-revenue teams a huge advantage in acquiring amateur talent. The draft was originally instituted to protect against just that situation. A salary cap may help the Red Sox, as it would bring the Yankees payroll down to a realistic level. But it would put the Pirates, Rays and other low-revenue teams at a major disadvantage. If we want to improve competitive balance, increased revenue sharing is the way to go.