New York Yankees’ third baseman Alex Rodriguez will earn $29 million during the 2013 Major League Baseball season. The entire Houston Astros roster will make $25 million.
In fact, the Yankees currently employ four of the six highest-paid players in the league. Their team salary for this season is $228 million.
But the Bronx Bombers are well within their rights to pay Rodriguez and company such enormous sums: The MLB does not have a salary cap.
By contrast, the other four major American sports leagues do. The purpose of a cap is twofold: first, to ensure relative parity among the league’s teams. A cap on spending is protection against a rich owner simply offering the best players the most money. Second, a cap can help to keep down costs, wages, and ticket prices for teams.
There should be a salary cap in baseball, although not necessarily to level the playing field.
In the past 12 MLB seasons, even as disparity among the richest and poorest teams has grown, nine different teams have won the World Series. In the same time frame, the use of sabermetrics — “the search for objective knowledge about baseball” according to pioneer Bill James — has taken hold.
Sabermetrics are the tools that smaller-market teams use to combat the money of big-market teams like the Yankees. In refining statistical measures of baseball players and creating new ones, low-budget teams can save money by finding players who are undervalued on the market.
Over the past decade or so, the Oakland Athletics have been the trailblazers in this regard, just look at last season as a case-in-point. The A’s won the American League West Division with a $55 million payroll, beating out the Los Angeles Angels, who spent nearly three times as much.
It is difficult for the A’s to sustain success, though, because after an excellent season, the players that the A’s determined were undervalued are accuaretly revalued. That is, Oakland is no longer able to afford these players, but the Yankees are. A salary cap would address this issue of retaining players.
A similar problem exists in international soccer, where there is no salary cap and teams fluctuate between periods of despair and success depending on the wealth of their owner. Manchester City is a perfect example. Sheik Mansour, the Deputy Prime Minister of the United Arab Emirates and holder of a family fortune worth more than $100 billion, bought Manchester City in 2009. By offering exorbitant salaries, the team has risen to the top of European soccer and won the English Premier League last season.
Still, though, just as the Oakland A’s are able to succeed by redefining their strategy, small market teams in European leagues can outdo expectations by playing a daring style, or by recruiting players from a relatively untapped region such as Asia or America.
It is clear that financial inequality fuels innovation in sport, and that money doesn’t always translate to success.
Then why have a salary cap at all? The major reason is not to ensure parity, but rather as a value judgment about the relative importance of sports in society. I understand that many people are free-market ultra-enthusiasts and cannot stomach the idea of a salary cap. But there is plenty good reason to cap exorbitant spending in athletics.
Last year, the Yankees had trouble filling Yankee Stadium, even for major games during the American League Championship Series. The large swaths of empty seats were so noticeable on television that ushers were instructed to fill them with fans from higher-up sections. The lack of attendance that entire season was not due to disinterest; rather, the average ticket price at Yankee Stadium was $64.
The Steinbrenner family that owns the Yankees is more than happy with the current situation. According to Forbes’ 2013 MLB Team Valuations, the Yankees’ revenue is about twice their payroll. There will always be enough wealthy New Yorkers to go to Yankees games to make the Steinbrenners model profitable, even without other sources of revenue like brand ownership and television deals.
Many question whether sports teams are pure businesses. Even if making money is a substantial or primary goal of some owners, others know full well that they will lose money in efforts to improve their team. Even for those baseball owners who seek to turn a profit from their franchises, imposing a salary cap would not preclude them from doing so. They could still make tens, if not hundreds, of millions of dollars.
But the trend toward spending inequality harms the image of baseball, which itself is in a dangerous decline. Whereas baseball used to be the nation’s favorite pastime, now its popularity is waning in the face of challenges from football and basketball. People feel that the overpaid players are pampered and spoiled prima donnas. The recent steroid scandal tainted the sport for an entire generation of fans.
Monday was opening day, and the Yankees welcomed their archrivals, the Boston Red Sox, to town. While several other smaller-market teams sold out their less-prestigious opening day games (the Washington Nationals reported a crowd that was 8.1 percent overcapacity when hosting the lowly Miami Marlins) the New House That Ruth Built was more than 5 percent empty. Unless a salary cap is imposed, don’t expect a change anytime soon.