In the wake of the Major League Baseball’s leaked financial documents, Patrick Rishe of Forbes.com is the latest to call for the institution of minimum payrolls, often referred to as a “salary floor,” as a way to force teams to reinvest money received from revenue sharing…

Imposing league minimum team payrolls would ensure that money received through MLB’s general fund is re-invested into the major league product in a very direct way…The revenue sharing system in MLB was instituted to create a greater degree of competitive balance. Low payroll teams with persistently poor on-field performance that have the means circa their shared revenues to add $10-20M dollars in payroll – but don’t – are doing the system, and their fan bases, a major disservice.

First of all, Major League Baseball already has a salary floor of $10 million (25 player roster, $400K minimum salary per player).

Beyond that, what if MLB and the player’s union agreed to raise the salary floor? The theory sounds great. And for the first couple of seasons, it might actually work. But eventually, it will cause a problem bigger than the one it is attempting to fix.

In short, raising the salary floor will only serve to artificially increase the salaries of average and marginal players. MLB would be forcing teams to spend more money on the same pool of players. In other words, the average player salary would immediately increase. And the difference between the haves and the have-nots, will at best, remain the same, and at worst, the gap will actually grow.

Teams forced to increase their payrolls will either invest that money in free agents, increasing the number of teams bidding for those services and thus increasing the money those players will receive. Or, if they don’t/can’t sign free agents, those teams will be forced to invest the money in players currently on their roster, giving marginal players more money than they would be entitled to under the current system.

On a broader scale, the total amount of money being spent on player salaries will increase. This will raise the average salary of big league players. And as players move into free agency, they will see others making more, and will demand more themselves.

After a couple of seasons, we will see that nothing had changed. Players will be demanding more money. And as players demand more money, the have-nots will still not be able to afford those players. And the gap between the haves and have-nots will still be in place.

And in the end, the only thing that will change is that the players will be making more money. And nobody wants to live in a world where Gabe Kapler makes more money.

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2 Comments

  1. Instead of a minimum salary cap, which only looks at the product at the big league level, when not mandate a certain percentage of a team's income be dedicated to player-related costs (salary, development, etc)? This way it is a percentage, not a hard amount. And so teams can spend on the draft instead of on marginal free agents.

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