What Are The Standings In The National Football League Does Major League Baseball Really Need a Salary Cap?

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Does Major League Baseball Really Need a Salary Cap?

Parite actually made it to Major League Baseball. Incredibly, nine teams in the National League are within striking distance of a playoff spot. Eight teams in the American League have a legitimate shot at making the postseason. That’s 17 of the 30 teams overall with meaningful baseball to be played during the final two and a half months of the season. However, there are still many people who insist that baseball needs a minimum salary. They cry that MLB does not provide a level playing field for all teams. But does the salary cap really improve Major League Baseball?

Over the past 15 years, MLB has witnessed tremendous changes in major league competitiveness. Much of this can be attributed to the realignment and new playoff system that was developed after the 1994 strike. As most of you know, each league went from two divisions to three divisions. Four new playoff teams have been added – two in each league. As a result, the pennant competition became more interesting. The redesign did exactly what MLB wanted it to do; more teams alive and kicking for the greater part of the season. This, in turn, created more fan interest, leading to more ticket sales and higher TV ratings. Of course, other rules were introduced that helped make the regular season more meaningful and dramatic.

While there is no salary cap in MLB, there are new ways the league has created more balance between big-, mid-, and small-market teams; for example, the creation of Major League Baseball Advanced Media (mlb.com). Launched in 2001, baseball’s digital arm has found success in generating new sources of revenue for all teams, as the money generated from their efforts is shared equally among the 30 MLB clubs. Additionally, MLB implemented a luxury tax whereby teams that spend money over a certain threshold must pay a tax that is then distributed among the other teams. These, along with several other revenue sharing methods, allowed mid- and small-market teams to sign their young talent to long-term contracts. Of course, not all teams invest this money in their teams, as we will explore in future articles.

As I pointed out on this blog two weeks ago, parity in baseball is also being achieved through an infusion of young talent, with the Major Leagues more ready than ever. Teams with lower wages were willing and able to take advantage of this cheap labor, thus becoming more competitive and more financially efficient at the same time. Even teams that are out of the pennant race generate excitement thanks to young phenoms who give fans hope for a bright future. Just think Stephen Strasburg in Washington and Mike Stanton in Florida.

When talking about those who favor a salary cap for baseball, they often point to the success of the National Football League, which has a strict cap on how much money each team is allowed to spend on players (see excluding next season). The evidence suggests that if richer teams can’t spend disproportionately more than poorer teams, then talent will be more widely spread among the 32 teams. While this is true, it is far from the only reason for the NFL’s parity and success. For example, the NFL benefits from a shorter schedule, which naturally creates closer entries on the schedule. Additionally, injuries, along with the general nature of the game itself, provide more uncertainty and add an element of unpredictability to the season.

But let’s get back to the original argument; Does baseball need a minimum wage? There are legal cases for both sides of the argument. As you can probably tell, I don’t think there is a hard cap like the NFL (Yes, I’m a Yankees fan, but that’s not really why I think so). I believe that through creativity and the development of terrific young talent, Major League Baseball will continue to see major pennant races and league-wide parity.

Over the next few days and weeks, I’ll be checking out several teams from around the league. I will try and show how teams in different markets – small, medium and large – thrive or fail in today’s economic environment. Baseball is on the rise without a salary cap. Don’t let anyone make you feel different.

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