Owners proposing exchanging current arbitration process to base salaries on WAR

[M2]

Caps aren't the answer. The answer is that the large market teams share more revenue with the smaller market teams and then a salary bottom is put into place so the smaller market teams can't just take their share of the revenue and not put a competitive team in place.

This will never happen, not because the players won't sign on, but the rich owners and the poor owners will never agree to do this in the first place. Instead, they'll try to suck the players dry (and cause the fans of smaller teams (us) to "hope" our teams can figure out how to be competitive once in a while).

I'll just add, serious revenue sharing, raising the floor and letting teams pursue era-defining squads is how you grow the popularity of the game (30 teams trying to figure out how to win). If you're just capping spending to placate the poorest teams in the league what you get is a league that's structurally stuck in place.

[backbencher]

Caps aren't the answer. The answer is that the large market teams share more revenue with the smaller market teams and then a salary bottom is put into place so the smaller market teams can't just take their share of the revenue and not put a competitive team in place.

This will never happen, not because the players won't sign on, but the rich owners and the poor owners will never agree to do this in the first place. Instead, they'll try to suck the players dry (and cause the fans of smaller teams (us) to "hope" our teams can figure out how to be competitive once in a while).

Half credit.

Caps/floors and revenue sharing work, as shown in the NBA (championships for Milwaukee, Toronto, Cleveland) and NFL (the very existence of the Packers).

Baseball finance has three issues.

One is structural. With 162 games and local media, too much revenue is local and locally variable.
Two is history. The sport grew up with the disparities, which are baked into franchise values for the current owners. This is where the bigs won't give up to the small, and it's a hard issue to solve.
Three is players. The players recognize that most new owners see teams as playthings, and each year's greater fool (in 2020: Steven Cohen) will reset the market for everyone.

[wlf WV]

Half credit.

Caps/floors and revenue sharing work, as shown in the NBA (championships for Milwaukee, Toronto, Cleveland) and NFL (the very existence of the Packers).

Baseball finance has three issues.

One is structural. With 162 games and local media, too much revenue is local and locally variable.
Two is history. The sport grew up with the disparities, which are baked into franchise values for the current owners. This is where the bigs won't give up to the small, and it's a hard issue to solve.
Three is players. The players recognize that most new owners see teams as playthings, and each year's greater fool (in 2020: Steven Cohen) will reset the market for everyone.

Your exactly right, and number two is almost insurmountable.

[RedsManRick]

So the Marlins, for example, would have to spend X amount on salaries before being cut a check?

How is that different than the salary floor?

Short-term, in regards to the total league-wide salary spend, it may not make a difference. But I'm trying to solve the problem from a different angle. Instead of mandating spending to get to a certain minimum level, I'm trying to address the underlying dynamics that make teams decide that it's not worthwhile to invest in their teams.

It's not just that the Dodgers have $200M to spend and the Marlins have $50M. Yes, at any given point in time there's a baseline level of available payroll resources related to market-based revenue + redistribution payments. Revenue sharing can help level that field and salary floors can help enforce a certain amount of it going to payroll. But this takes us to the the fungibility point I made earlier -- a team that could spend 60 and has to spend 80 and which gets 50 in revenue sharing is going only spend 80. Whether or not they spend the "extra" 30 is a question of ROI.

So you can solve the minimum spend issue through redistribution and mandates. But that doesn't fix the market imbalance which is fundamentally driven by the fact that it pays much more to win in LA than it does in Miami (or Milwaukee or Cincinnati or Pittsburgh). Teams are generally run by businessmen who would like make money. But if they don't have a path to making money by spending money, they're going to spend as little as possible. And crucially, wins don't payout equally. Wins 50-80 may pay out virtually nothing. Wins 80-90 payout reasonably well. And wins 90+ payout very well, especially if they result in playoff appearances. And evidence suggests sustained winning builds ROI through activation of your fanbase realized through bigger media contracts, corporate sponsorship, and yes, attendance. So if you can't get to a point where you can sustain a competitive organization with a solid ROI, the smart thing to do is just suck and cash revenue sharing checks.

The idea of the matching is to address that ROI imbalance. Sure, mandate that teams have to spend a certain amount of their own money on payroll and link that to their revenue. But if you want to support competitive balance, you need to make it worthwhile for them to continue to invest.

So if you have an $80 payroll floor, make it so that every dollar you spend above your market mandated pre-sharing minimum (e.g. $40M), you get a %match based on your market. If you get a 50% match you'd have to spend $60M of your own to hit the $80M payroll floor. But you could still invest another $10M and get $20M more in talent. And maybe that total sharing still caps out at some amount. But the idea is to support spending that brings teams into a level of supports actually competitiveness without just scaling up the handout and letting them sit at the same level of their own spending. If the Marlins or Pirates could sign a star FA for essentially half the price of the Dodgers, you may very well see them starting to try and build that sustained winner and get a virtuous cycle going.

[InsaneinthBrame]

For one the local revenue is is shared much more than the average fan of baseball realizes that is one reason why the owners of rich teams get mad at the small teams that do not spend.

I for one like the locals with their spending determining a teams fate.

Fun fact Reds were 16th in payroll and 16 in attendance in 2021.

The Rays Indians Brewers and A's show that winning is not all about payroll. Part of that is because players get paid mostly for past production in the MLB since most players do hit FA until 30. The 6 years of control really levels playing field.

[InsaneinthBrame]

How is that different than the salary floor?

Short-term, in regards to the total league-wide salary spend, it may not make a difference. But I'm trying to solve the problem from a different angle. Instead of mandating spending to get to a certain minimum level, I'm trying to address the underlying dynamics that make teams decide that it's not worthwhile to invest in their teams.

It's not just that the Dodgers have $200M to spend and the Marlins have $50M. Yes, at any given point in time there's a baseline level of available payroll resources related to market-based revenue + redistribution payments. Revenue sharing can help level that field and salary floors can help enforce a certain amount of it going to payroll. But this takes us to the the fungibility point I made earlier -- a team that could spend 60 and has to spend 80 and which gets 50 in revenue sharing is going only spend 80. Whether or not they spend the "extra" 30 is a question of ROI.

So you can solve the minimum spend issue through redistribution and mandates. But that doesn't fix the market imbalance which is fundamentally driven by the fact that it pays much more to win in LA than it does in Miami (or Milwaukee or Cincinnati or Pittsburgh). Teams are generally run by businessmen who would like make money. But if they don't have a path to making money by spending money, they're going to spend as little as possible. And crucially, wins don't payout equally. Wins 50-80 may pay out virtually nothing. Wins 80-90 payout reasonably well. And wins 90+ payout very well, especially if they result in playoff appearances. And evidence suggests sustained winning builds ROI through activation of your fanbase realized through bigger media contracts, corporate sponsorship, and yes, attendance. So if you can't get to a point where you can sustain a competitive organization with a solid ROI, the smart thing to do is just suck and cash revenue sharing checks.

The idea of the matching is to address that ROI imbalance. Sure, mandate that teams have to spend a certain amount of their own money on payroll and link that to their revenue. But if you want to support competitive balance, you need to make it worthwhile for them to continue to invest.

So if you have an $80 payroll floor, make it so that every dollar you spend above your market mandated pre-sharing minimum (e.g. $40M), you get a %match based on your market. If you get a 50% match you'd have to spend $60M of your own to hit the $80M payroll floor. But you could still invest another $10M and get $20M more in talent. And maybe that total sharing still caps out at some amount. But the idea is to support spending that brings teams into a level of supports actually competitiveness without just scaling up the handout and letting them sit at the same level of their own spending. If the Marlins or Pirates could sign a star FA for essentially half the price of the Dodgers, you may very well see them starting to try and build that sustained winner and get a virtuous cycle going.[/QUOTE]

Actually the ROI is better for the smaller markets. The Dodgers put in a ton ton more money to get very little more money that winning actually generates. Look at small market like the Cardinals they get large attendance and have received more post season money revenue than the Dodgers in say last 15 years but they are spending way lower. People also forget that a team like the Dodgers are in a way higher cost of living area so the expenses for them are higher compared to a St Louis or a Cincinnati.

[RedsManRick]

Short-term, in regards to the total league-wide salary spend, it may not make a difference. But I'm trying to solve the problem from a different angle. Instead of mandating spending to get to a certain minimum level, I'm trying to address the underlying dynamics that make teams decide that it's not worthwhile to invest in their teams.

It's not just that the Dodgers have $200M to spend and the Marlins have $50M. Yes, at any given point in time there's a baseline level of available payroll resources related to market-based revenue + redistribution payments. Revenue sharing can help level that field and salary floors can help enforce a certain amount of it going to payroll. But this takes us to the the fungibility point I made earlier -- a team that could spend 60 and has to spend 80 and which gets 50 in revenue sharing is going only spend 80. Whether or not they spend the "extra" 30 is a question of ROI.

So you can solve the minimum spend issue through redistribution and mandates. But that doesn't fix the market imbalance which is fundamentally driven by the fact that it pays much more to win in LA than it does in Miami (or Milwaukee or Cincinnati or Pittsburgh). Teams are generally run by businessmen who would like make money. But if they don't have a path to making money by spending money, they're going to spend as little as possible. And crucially, wins don't payout equally. Wins 50-80 may pay out virtually nothing. Wins 80-90 payout reasonably well. And wins 90+ payout very well, especially if they result in playoff appearances. And evidence suggests sustained winning builds ROI through activation of your fanbase realized through bigger media contracts, corporate sponsorship, and yes, attendance. So if you can't get to a point where you can sustain a competitive organization with a solid ROI, the smart thing to do is just suck and cash revenue sharing checks.

The idea of the matching is to address that ROI imbalance. Sure, mandate that teams have to spend a certain amount of their own money on payroll and link that to their revenue. But if you want to support competitive balance, you need to make it worthwhile for them to continue to invest.

So if you have an $80 payroll floor, make it so that every dollar you spend above your market mandated pre-sharing minimum (e.g. $40M), you get a %match based on your market. If you get a 50% match you'd have to spend $60M of your own to hit the $80M payroll floor. But you could still invest another $10M and get $20M more in talent. And maybe that total sharing still caps out at some amount. But the idea is to support spending that brings teams into a level of supports actually competitiveness without just scaling up the handout and letting them sit at the same level of their own spending. If the Marlins or Pirates could sign a star FA for essentially half the price of the Dodgers, you may very well see them starting to try and build that sustained winner and get a virtuous cycle going.

Actually the ROI is better for the smaller markets. The Dodgers put in a ton ton more money to get very little more money that winning actually generates. Look at small market like the Cardinals they get large attendance and have received more post season money revenue than the Dodgers in say last 15 years but they are spending way lower. People also forget that a team like the Dodgers are in a way higher cost of living area so the expenses for them are higher compared to a St Louis or a Cincinnati.

I suppose that's largely a question of how you view a few questions.

1) How much revenue is essentially fixed by virtue of simply being a team in a given market?
2) How much revenue is variable, tied to how well you perform? What's the time horizon on that?
3) How are these two things related? Does a period of sustained success boost the more-or-less static value of your market to any meaningful degree?

I think you're right in that a win moves the needle more for a smaller market team. But the needle is smaller. Attendance brings in less $ per fan in smaller markets. Media contracts increase by smaller amounts. Corporations pay less for box suites. And yet, the wins cost the same. So I think it's true that big market teams can sustain larger payrolls while sucking, I don't think there's any amount of winning the Reds or Marlins could do to justifiably sustain a payroll like the Dodgers have. So if you want them to compete for wins, you need to do something to bring the cost of a win to closer alignment. My problem with the salary floor is that it only does that alignment for the wins that don't really generate real marginal revenue. Forcing small market teams to spend to the equivalent of a 70 win team payroll may put more money in players pockets, but it doesn't do anything to help competitive balance.

[Z-Fly]

If only one of the other Pro Leagues had figured out this Salary Cap thing first.

[InsaneinthBrame]

Forcing small market teams to spend to the equivalent of a 70 win team payroll may put more money in players pockets, but it doesn't do anything to help competitive balance.

This I believe is 100% correct and will stop baseball from having a salary floor.

[CaiGuy]

Reverse the draft.

Playoff teams still pick last, but the rest pick from the best record (of the team that missed the playoffs) to worse.

No longer a good reason to tank, and gives a reason to try even if you know you'll probably come up short.

Also increases the teams competing for players or even trying, which should benefit the players.