I played baseball through HS. While I hit .389 my senior year of legion in a competitive division that had Boyertown – then a 21-time state title holder and 4 time national champion, I was not going to the next level. At 5’10” and chunky and John Kruk as my spirit animal – and my home to first base time measured in minutes and not seconds, I have been relegated to being a fan. That being said, just a few years ago I wrote about how I thought Brandon Marsh was to become a breakout star – as soon as he leveled his swing and fixed the hole in his swing with the high inside fastballs. Looks like he might do OK this year!

I have always academically been a baseball guy. Situations. Holes. Bat speed. Line drives. Fundamentals. Base running. But I also have an MBA and am a die-hard stats and metrics guy and would have loved to be one of those Theo-like GMs. Today, I will put my baseball business hat on and play commissioner to come up with ideas that work for everyone.

I have seen Bryce coming out hard and advocating for players with “never having a salary cap”. But Bryce has been in the majors since he was 19 and with all due respect to him, he has no concept of how the average person struggles to even see him play. My wife is a die hard Yankees fan, and I’m a Phillies fan going back to Rose, Schmidt, and Carlton. She wanted to go to a game in Philly this year when the Yankees visited. It’s 2 hours away from me. I looked up “decent” seats I took my oldest son to 5 years ago. For the yankees game, it came out to be roughly $2000 for those seats for a family of four. Then add $100-200 for food, parking, gas, and incidentals, and you are looking at roughly $2200. What you then don’t factor into this is – what if it rains? I can’t get my family out there on some random Tuesday night in September for a makeup game. Can’t do it. So here I am risking $2000 for the possibility of a rain out. When I came with my oldest a few years ago, some of the stars were sitting out and I was watching a 5 hole starter pitch. If I’m buying those tickets for $2000, I have no assurances Bryce will start. I want to see Bryce. Sanchez. Schwarber. However, in all likelihood, I may be stuck with a bullpen game and Otto Kemp. No disrespect to Mr. Kemp, but $2000 means I want the show. Not the back up players.

Likewise, I moved off of Comcast a few years ago and can’t see the Phillies. So if I were to buy an expensive MLB package, half the games could be blacked out because they could be carried on different networks or local markets, or I’m traveling – etc. So, I’m a rabid Phillies fan that says, “no” to the current business model. And, there are millions like me. As there may be a downturn in the stock market ahead, it’s also possible the fans start to dry up due to the outlandish prices. Harper means well to protect his fellow baseball players, but he’s also clueless about how Ryne Sandberg was getting massive shade for his $7m per year contract back in the 1980s. Now, we are seeing half a billion dollar contracts with no assurances that player will be anywhere near where he is playing now a decade from now. You then have the Shohei deals where salary is deferred, janking up current salary allocations and kicking that can down the road for another day.

Let’s understand the problems.

Payroll disparity

The Mets have a payroll at $328m as the highest and Cleveland at the lowest at $79m. Shrewd businessmen may say – “small market and Billy Beane” to field teams on a budget to then be competitive through the draft and scouting. And, international contracts. Then you have the NYY fan base that outspends everyone every year and if they do not win the World Series every year, it’s an identity crisis for them.

But if you average out all of these payrolls, you are looking at $257m. Give or take. Let’s use $250m for our number to keep it round.

To me, I see many teams “going for it all” and spending to buy wins. The best HR hitter. The best pitchers. To counter this, smaller market teams have to be outstanding with scouting to even be remotely competitive.

While there is no “hard cap” today, there is a luxury tax on dollars spent over x. To me, I think teams should have a soft cap and a soft floor. That is, for example, a soft cap at $260 million and perhaps a soft floor at $240 million. This provides some semblance of financial parity and does not change the amount of total salaries being spent.

Caps?

Where there is a “luxury tax system” now, my suggestion is a pretty steep penalty for anyone that spends over the soft cap. Those who spend OVER the soft cap then are penalized $1 for every $1 they are over. This money then is re-distributed to teams that meet the floor. And, this money that comes into them doesn’t penalize them for cap purposes.

Assume the soft cap is $260m and soft floor is $240m. If the Yankees are at $260m and want to pay a guy $15m a year over this cap, they are penalized $15m. If 15 teams meet the floor, they then share this $15m amongst themselves. But this MUST go to payroll, whether to pay more for a backup catcher or a bonus to a player who outperformed. Ownership cannot pocket this money.

But what if you do not meet the floor? This means you are in danger of losing your team. If you do not meet the floor for 2 years in a row, MLB puts the team into admin and brokers a sale to a new buyer. If you do not meet 75% of the floor, the next year your team is put up for admin. This means teams are incentivized to meet the floor or else they lose the team.

“But what about small markets like Oakland”. Well, pay, or lose your team to LV. Or Sacramento. Or North Carolina. Or CA. Or NY.

But….what? How do you protect small markets?

Shared TV revenue. Yankees have YES network. Philly goes through Comcast. These TV revenues and subscriptions are how they can afford this. The “solution” is the MLB network owns rights to everything, and all of these rights are then shared amongst all of the teams. Comcast can buy rights to Phillies games. The YES network can buy rights to games, then sell local advertising. The YES network has tons of programming and this then allows MLB to get paid for all of the rights. The MLB network owns all rights to all games. So I can then buy the MLB package and see every Phillies or Yankees game. No “exclusive” rights deals.

This means, in theory, the smaller markets share TV revenues so they aren’t penalized for a smaller KC market. The gate money is all to the local teams, as is all of the food and like 80% of the merch. This can then allow teams to profit a LOT locally, but still allow small market teams to meet the soft floors.

Player performance incentives

I feel WAR is a really interesting metric to use numbers to show how they compare to other players – AT their respective positions. So it doesn’t make sense to compare the WAR of a left fielder to a DH.

Let’s look at how I would incentive players and protect teams.

Assume you sign a player for $100 million over 5 years. I believe this was the Nick Castellanos deal that I hated almost from the start. The player MAX can earn $100 million BASED upon:

  1. comparative WAR
  2. participation

Let’s assume Nick signed that deal where he was EXPECTED to put up a WAR of +4 and play in every game. This WAR could have put him in perhaps the top 10% of outfielders. The deviation for this is perhaps 20%. And, a player is expected to play in 95% of games.

Assume Casty had a WAR of 6. He “outperformed”. Well, the deal was 5 years and $100m, so his BASE year was $20m. For next year, since his WAR is now in the top 5%, he is then shifted to the top 5% of right fielders. The team that “owns” him has the RIGHT to give him a raise to match his new WAR level which approximates at $25m per year. This would count against the cap. If the team could not afford that raise, he then becomes a free agent and teams will potentially pay him $25m per year on a new contract. As he ages, the likelihood of longer contracts lessens.

But what if he only played in 50% of games? Maybe for his next year, his base is knocked down by 50%.

Different example. Let’s say his WAR was 0. He was an AVG player. For the next year of his deal, the TEAM has the option of paying him the AVG salary for that position for the next year OR cutting him. While this may hurt the player’s salary, this protects teams from signing people for 10 years and $250m to then have a dog in year 2 of the contract, then the entire franchise is SCREWED for a decade because a player just failed to live up to his contract. If this player fails to live up to that large contract, it can disenfranchise millions of fans for almost a decade.

So let’s try this with your average player.

He has an avg salary of $5m and a WAR of 0. But this player played in Oakland and didn’t get a ton of attention. He had some injury issues and a coach that screwed up his swing. He signs for 5 years and $25m total and now he’s more or less set for life. But he goes to NY, and a coach there fixes his swing and suddenly he has a breakout season in the first year of his contract. He massively overperforms and has a WAR of 8, makes the all star team, and takes his team to a World Series championship and MVP of the world series. He makes league MVP.

But how is that fair he’s now only paid the league average for the next 4 years? His team should have the right then to pay him what a WAR of +8 would get. If they do not want to pay him, he is then able to sign with another team.

The exact flip side is my boy Casty. You pay someone who underperforms. By a lot. This person is a liability now. You sit him. At the end of the year, he only played in 50% of the games. The team can offer him 50% of his last year’s salary as they like the player, but he’s just not THE answer. Likewise, his WAR was 0, so he should in theory make what an avg player should make, and have 50% of that salary based on playing time. While this sounds unfair – the player in his first contract year made $20 million and is set for life. If he takes that money and performs like a dog, you need to protect MLB franchises from those who sign the big dollar amounts and then do not give a shit anymore. OR, just no longer have the hustle to perform because they are now set for life.

Net results

This fixes everything.

  1. Large market teams can “go get that one piece they need” and thoughtfully spend higher than the soft salary cap. As long as they have the money, they can always spend more.
  2. Small market teams get revenue sharing like in football and can more easily make the salary “floor”. They are incentivized to spend, or lose their team. None of this “Major League” type of stuff where someone tries to tank a season or 5 so they can then blame the small market to move the team and make billions. MLB will take over teams that refuse to spend, and sell these teams to owners who will spend. Even if that’s in another market. you can’t have teams that are not competitive for decades continue to be minor league teams for the big teams.
  3. Players can make SERIOUS money, as long as they perform.
  4. Players can outperform contracts and get raises from their home teams. Home teams can make the decision if they want to give them a raise, but if not, the player is permitted to hit free agency.
  5. As a fan, when I buy tickets, I know players are incentivized to play 95% of their games. This reduces my anxiety over paying $2000 to see Bryce and then seeing Otto Kemp instead.
  6. If players do not perform, teams can offer a reduction in pay if they like the player. If not, they are able to cut bait on a mistake IF the player did not meet their metrics. But what if the player is doing OK and a new player comes up in August and overshadows them? The player is doing a good job, but is benched for a cheaper player. The player thus only played in 60% of games. This will trigger the team to offer lower amounts. The player then opts out and can play where he is wanted, and this is free agency – so that player can make out like a bandit in a good way and the host team can bring up a young stud to shave $20m in payroll.

Bryce says “no” to a salary cap. But, that’s a HARD cap. And, the idea with this is that the AVG today is $250 million and the owners CAP it at $200m. That means $50m x 30 teams is $1.5B that is not paid to the players that go to the owners. However, if the “soft” cap is an avg of all teams, and there is a soft cap and soft floor, you allow a variation between big market and small market teams in terms of paying a little better. But smaller team are then able to field more competitive teams. While PARITY may be an end result, this then prioritizes scouting and strategy over just outspending everyone for a $50m player to mash 60 HRs.

To me, I find zero interest in watching the Yankees beat the tar out of Oakland. Yawn. I liked watching Boston and NY – not only due to the rivalry, but the teams seemed to be highly competitive. I felt that a Casty or Harper or Turner deal would go south after a few years in. Harper is performing. Turner is performing. Casty did not, and we are still paying him to sit on a couch somewhere. Nola’s contract now looks like another 4 years of doom.

Players should not be penalized for 5 years for signing a deal and then over performing. Teams should not be penalized for signing someone for a decade and them not performing after 5 years.