Why There Should Be a Salary Cap in Baseball

Why There Should Be a Salary Cap in Baseball

Table of Contents
Introduction
1. Why did the Idea about Salary Cap in Baseball Appear?
2. Advantages and Disadvantages of Salary Cap in Baseball
Conclusion
Bibliography

Introduction
Nowadays modern professional sport is not only about competing to find out who is the fastest, the strongest or the most accurate one, but is also about big money. All modern kinds of sports, including football, soccer, basketball, baseball, tennis and other kinds of sports represent a huge business with unbelievable profits, which they bring to both sportsmen and their sponsors. Exactly the salaries that are paid to the players of Major League Baseball became a subject to some rather heated debates between baseball fans and veterans. Indeed, there is always an argument between those who are “overpaid” and those, who are “underpaid”, with the latter desiring to alter the position and become “overpaid”. However, nothing comes from nothing, and certain reasons determine why some sportsmen receive more money than others. Wage disparity between teams and team members has resulted in the need to consider this fact and to take certain measures to decrease the gap in salaries. This is how the term “salary cap” came into common usage. Objective necessity for salary cap in sports is explained by inequality that it provokes, when salaries of some sportsmen exceed 10-15 million dollars. Nowadays, MLB is the only professional sports league, which did not adopt salary cap approach in order to keep in balance the revenues of large and small market teems. Some people argue that salary cap is necessary, while others totally reject this idea. Famous baseball players, who receive extremely high salaries, are of course among those who do not support salary cap in baseball.
The main purpose of designing current study is to speak about such a phenomenon in the world of sports known as salary cap. The paper will focus on the necessity to implement salary cap in Major League Baseball, while discussing advantages and disadvantages of this approach.
Why did the Idea about Salary Cap in Baseball Appear?
There is no secret that MLB still does not have a salary cap; however, it does have a luxury tax which is imposed on those teams who spend more money on salaries, which is beyond the established minimum. The debate over salary cap started at the end of 1980s, when it became clear that teams offering large amount of money to talented players will make the teams with smaller budgets suffer a lack of talented players. Salary cap is the limit imposed on the amount of money a team is able to offer to players as their salaries. It can be a limit for an individual salary, or the amount of money paid to the whole team. Because salary cap imposes certain restrictions, it has been much argued by player’s unions. For example, in 1994 union of baseball players, known as The Major League Baseball Players Association (MLBPA), “rejected the salary cap and other major proposals” [6], which caused the longest in the history of professional sports strike, which lasted for 232 days [6]. However, the main purpose of salary cap is rather useful, as it is designed to “protect small market teams, like Milwaukee and Minnesota, from having their talented free agents bought up by big-market teams in New York and Los Angeles” [6]. Of course it is very tempting for young and talented players to be able to play in some famous baseball team and in addition to this pleasure receive a significant amount of money.
The beginning of 1990s marked the new era of extremely high wages for baseball players. For example in 1990, “the highest salary was $3.2 million per year, paid to Robin Yount by the Milwaukee Brewers, while the league minimum was $100,000” [1]. After that, baseball players salaries kept growing until 1998, when “Kevin Brown signed a contract with the Los Angeles Dodgers for $15 million and Mike Piazza signed with the New York Mets at a ‘bargain’ $13 million per year” [1]. However, this was not the limit, because some $20 million were offered later by Texas Rangers.
Facts provided above evidence about necessity to address the issue. Exactly the gap in revenues received by large market and small market baseball teams has become major problem, because it negatively affects the balance between the teams, which is very important as all teams have to be competitive. So-called large market teams usually win more often than so-called small market teams. Their games attract more visitors, which of course has its impact on revenue. So, what is left for small market teams: the remainders of the fame and wealth of large market teams? They cannot afford to sign contracts with super talented players, because the latter demand too much money; “these teams have losing seasons, do not make the playoffs, and have steadily lost attendance” [3]. Continuing to lose money, small market teams have even less opportunity to sign a contract with some young and talented baseball players. They dream about increasing price tickets to their games, however, they are unable to do that either giving more chances for large market teams to predominate both on the field and on TV.
It is well-known that professional sports league was not big business all the time. When it just began sportsmen used to earn regular salaries, however, the growing popularity of professional sports among American citizens has transformed sports leagues into a large industry which brings millions of dollars to those who work in it. Eventually, only those teams which were able to gain large television markets now can afford signing a contract with talented players, who demand higher and higher salaries. As it has been stated above, only Major League Baseball, in contrast to the National Football League, the National Basketball Association, and the National Hockey League, does not have a salary cap. Professional teams that have largely benefited from absence salary cap in MLB are New York Yankees, Florida Marlins, Texas Rangers, Baltimore Orioles and other teams. For example, New York Yankees are a “prime example of a dominant team taking advantage of not having a salary cap” [5]. They have become world champions twenty-six times. The Yankee’s players make more than 1 million dollar each (except the two players), while eight players in this team make more than ten million dollars per year [5]. In contrast to the Yankees, Kansas City Royals have only two players who earn more then $1million. And as it stated in the article “Major League Baseball Needs a Salary Cap” by Stephen A.: “While it’s probably true that the Yankee players aren’t necessarily worth the price they’re getting paid compared to other players, it’s definitely true that payroll has an effect on the performance of a team” [5].
2. Advantages and Disadvantages of Salary Cap in Baseball
Speaking about advantages and disadvantages of salary cap in baseball it is necessary to underline the fact that it is rather complicated to find out objective truth about either advantages or disadvantages of salary cap. Basically, complexity of such analysis lies in the following: what teams, players or baseball fans to have as respondents. It is obvious that large market teams, which have multi-million payrolls, will only think about disadvantages of salary cap, while small market teams will definitely find some significant advantages in the bringing in salary cap. “The increase in salaries has raised concerns that small market teams, with limited revenues and cash reserves, may be unable to field competitive teams” [1]; that’s why salary cap introduces the first important advantage for small market teams. Indeed, the most important advantage of salary cap is that it will help to restore competitive balance between large and small market teams. The main function of salary cap is that it “provides some measure of cost control because the cap imposes a spending constraint on teams” [3]. Salary cap is used to decrease players’ salaries, which are offered by famous baseball teams as the most enticing motive inducing talented players to transfer to a more successful team. Thus, the second advantage of salary cap is that it restricts players’ mobility [3]. Another important advantage of salary cap is that it can be used as means to restore team morale, which could have been damaged by wage disparity inside a team and result in decrease of team productivity. “This could occur if lower paid players feel they must make themselves as individually productive as possible, perhaps inconsistent with the team’s best interests” [1]. Indeed, salary cap is very effective at eliminating wage disparity among team members, which will result in the increase of team’s productivity, because the players will do their best when feeling that all of them are valued by the owner, but not only the most outstanding players. Establishing fairness inside the team will lead to improvement of team morale, which will also lead to more vivid and fascinating games providing baseball fans with greater pleasure. The last but not the least advantage of salary cap is that it “causes greater parity amongst teams” [5], which means that not only large market teams will able to participate and win in all major games, but small market teams also will be able to win as their talented players will not be attracted by fabulous salaries. Thus, salary cap provides players with fewer choices as for in what team to play, and it does not allow the teams to spend too much money on one player.
Speaking about disadvantages of salary cap it is necessary to underline the fact that players’ union see only them and no advantages, and for this reason, its members have been trying to resist the implementation of salary cap and will continue to do so in future. First disadvantage is that it will limit the maximum salary, which can be offered to talented baseball players. The following disadvantage is that salary cap will disturb free market in the sphere of professional sports. It might be true; however, disturbance of competitive balance in sports is more harmful.
Conclusion
In my opinion, the debates over salary cap will continue until it will be implemented for the fourth professional sports league – baseball, which is the only one for now that does not have it. The necessity of implementation of salary cap in baseball is conditioned by several reasons, among which is the necessity to restore competitive balance between large market and small market baseball teams and to improve morale inside teams containing players with significant disparity in salaries. It is important not to forget that sports are sports and not only large business, which brings significant profits to team owners and players. For centuries, sports have been about fair competition, that’s why all players and all teams should have the same opportunities, which can be established by means of salary cap. That’s why MLB should implement salary cap in order to control the balance between the teams; otherwise, there will be only few baseball teams, which can afford to stay on the field.

Bibliography
1. Depken C.A. “Wage Disparity and Team Productivity: Evidence from Major League Baseball”.1999. 4 Dec. 2006. www.andrew.cmu.edu/user/hzm/depken2000.pdf
2. Fisher, E. “MLB Can Learn from the NFL: The Game Would Benefit If Owners/players Emulated Their Football Counterparts” Insight on the News, Vol. 18, January 7, 2002.
3. Haupert, M., Knowles, G., Sherony, K. “Competitive Balance in Major League Baseball”. Nine,2000.
4. Keri, J., Click J. “Baseball Between the Numbers”. Prospectus Team of Experts. 2006.
5. Stephen A. “Major League Baseball Needs a Salary Cap”. 2005. 4 Dec. 2006. http://www.sportscolumn.com/story/2005/11/25/203112/55
6. Staudohar, P.D. “Salary Caps in Professional Team Sports”. 1998. 4 Dec. 2006. www.bls.gov/opub/cwc/archive/spring1998art1.pdf.