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Saturday, December 02, 2017

MLB Players Ought to Fight for a Payroll Floor | FanGraphs Baseball

Will players support a system where their top salaries are effectively capped?

Scott Boras said during the 2015 offseason that revenues had dropped to 43% when including MLBAM revenue — about a 10-point difference from MLB’s numbers. Boras knows how efficiently teams are being run, as he has developed a practice in recent years of doing an end-around of front offices and appealing directly to ownership.

Disputes between millionaires and billionaires typically don’t engender much sympathy from the public at large, but when it involves a public institution, like Major League Baseball, it should have our attention, because there is perhaps a growing threat to labor peace.

Jim Furtado Posted: December 02, 2017 at 07:00 AM | 9 comment(s) Login to Bookmark
  Tags: cba, economics

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   1. cardsfanboy Posted: December 02, 2017 at 09:13 AM (#5584665)
Decent article, but I still hate the concept of a hard cap of any type and a floor system doesn't really seem necessary with the current ml payroll system, people have in the past proposed better ways to force teams to try and be competitive. Some of those systems I like.

Example if a team doesn't reach a certain number of wins two years in a row and have a payroll below a certain amount, then they lose their revenue sharing (or a portion of it) As an example, say the we set the payroll limit to 100 mil, and the win total at 140 games over two seasons(or you could do 70 per season, but I like the idea of a rolling target...although hitting .500 regardless of your record the previous season should make you exempt from this penalty) There are lots of ways to modify this for different desires.

I mean depending on what you are trying to accomplish as a league/owner/mlbpa you could have a lot of subtle ways to encourage spending on quality players, and you can even incentivize teams to not tank, if you think that is a potential issue. For the sake of a basic argument we'll use 70 wins as the goal a team must accomplish to avoid a penalty for a low salary. You set it up that if a team wins less than 70 games they lose a percentage of their revenue sharing based upon a multiplier of how many games below 70 they get. You could decide on a 10% multiplier, so that if a team wins 65 games they lose 50% of their share revenue(5 games below the 70 game target) And for fun, that lost revenue sharing money doesn't go back to the league, instead it's dumped into a player community pool (just like the license money)

The baseline for salary could be set higher, maybe set similar to the way this article came up with 134mil (maybe use 40% or 38% instead of 44.7% that the article used. And instead of taking from revenue sharing directly, tie it into the difference between the 'recommended' payroll and the teams payroll, subtract the difference and if the team fails to make the requisite win goal, they pay are fined a percentage difference based upon their won loss record below the win threshold.... using the example of 10% for every loss below 70(and you have to assume there will be some type of cap on this penalty) and using the 134mil payroll recommended in this article, a team that won 65 games with a 100 mil payroll would be subject to a 50% fine on the difference between 100mil and 134 mil. (obviously these numbers can be tweaked, just putting out different possibilities on how to encourage teams to keep their payroll up OR win games....both of which I think are good for the sport and good for the fans)
   2. BDC Posted: December 02, 2017 at 09:36 AM (#5584668)
It's often pointed out that the minimum salary does ensure a floor. And given that star players under team control often make close to that minimum for a few years, increasing the minimum salary would both compensate them and reduce how far a team could "tank" by cutting away veteran salaries.

A higher minimum salary might take some money away from dubious mid-career free agents. But that seems preferable to me to an arrangement that would force some teams to arbitrarily over-spend on those veterans just to get above the floor.
   3. cardsfanboy Posted: December 02, 2017 at 11:05 AM (#5584699)
I know people like to point out that there are plenty of high payroll teams that didn't do well, which is true, but at least the team looks like it's trying. And I'll wager that pretty much every high payroll team that didn't do well, was expected to do well going into the season. Things just didn't turn out as expected, but their fans at least started the season with hopes.
   4. cardsfanboy Posted: December 02, 2017 at 11:08 AM (#5584703)
It's often pointed out that the minimum salary does ensure a floor. And given that star players under team control often make close to that minimum for a few years, increasing the minimum salary would both compensate them and reduce how far a team could "tank" by cutting away veteran salaries.

A higher minimum salary might take some money away from dubious mid-career free agents. But that seems preferable to me to an arrangement that would force some teams to arbitrarily over-spend on those veterans just to get above the floor.

I just don't see a purpose of a higher minimum salary, it's high enough that you 25th player enjoys the benefit, and there is no realistic way to increase it that it would make a difference. Unless you move it up to over a mil a year, it wouldn't make any practical difference on a team level. It's high enough to motivate a guy in the minors who is never going to be a star, to work to make the team, and low enough that that teams will continue to promote players.

Edit: you would have to raise it to over a million per year for it to make any difference.
   5. snapper (history's 42nd greatest monster) Posted: December 02, 2017 at 12:45 PM (#5584755)
The answer here is simple. If a team's player-related expenses (40-man roster payroll plus benefits) don't exceed their central revenue (central TV, MLBAM, and revenue sharing) that central revenue is reduced dollar for dollar.

This would effectively place a payroll minimum of $60M (or higher for revenue sharing recipients). You can still tank, but you can't make a profit while tanking.

That's the dirty secret of tanking. It's as much about profits as it is getting better. To wit, most of the recent tank jobs have immediately followed highly leveraged purchases of the team.
   6. cardsfanboy Posted: December 02, 2017 at 12:52 PM (#5584758)
That's the dirty secret of tanking. It's as much about profits as it is getting better.

I'm not sure that is a secret at all.
   7. snapper (history's 42nd greatest monster) Posted: December 02, 2017 at 01:41 PM (#5584789)
I'm not sure that is a secret at all.

Not to us, but that's the team marketing spin they hope the average fan will buy.
   8. Walt Davis Posted: December 02, 2017 at 04:20 PM (#5584899)
#4 ... sure, but I think a min salary around $1 M is what folks are talking about. Probably a system that simply had more automatic large bumps based on some mix of service time and playing time. Maybe something like:

Base salaries based purely on service time:

$500 for year 1
$750 for year 2
$1 M for year 3

"Bonus" based on some PT threshold -- maybe qualified seasons (appearances for relievers), maybe a pro-rated PT system (e.g. different bumps for 400/500/600 PAs), etc. But with the basic idea:

$500 if you were a "starting" player in year 1
$750 if you were a starting player in year 2
$1 if you were a starting player in year 3

Your young starting-quality players then make $4.5 M before entering the arb system. Obviously you want to try to find some system to dis-incentivize teams from playing PT games along with service time games, how does time on the DL count, etc.

You could possibly make that disincentive act as a floor. For example you don't want you dumpster-diving Marlins to play one bunch of kids for the first half, send them all back to the minors and start a second bunch of kids in the 2nd half, all so they can keep their salary at $500 K per roster slot. So possibly the "bonuses" are handled on a pro-rated basis -- an extra $100,000 for every 100 PA by a year 1 player; $150 for year 2; $200 for year 3 say.


Batters: 100/150/200 per 100 PA
SPs: 20/30/40 per start
RPs: 50/75/100 per 10 appearances

A typical team has about 6300 PA, 162 starts, 520 relief appearances. So, assuming that a tanking team roughly equally apportions roster and playing time among year 1-3 players, this leads to a quasi minimum of:

$4.5 M in year 1 base (9 roster slots filled by a mix of year 1 players)
$6 M in year 2 base (8 slots)
$8 M in year 3 base (8 slots)

$2.1 M in year 1 batter bonus
$3.2 M in year 2 batter bonus
$4.2 M in year 3 batter bonus

$1.1 M in year 1 SP bonus
$1.6 M in year 2 SP bonus
$2.2 M in year 3 SP bonus

$0.9 M in year 1 RP bonus
$1.3 M in year 2 RP bonus
$1.7 M in year 3 RP bonus

I think that comes to a $37 M "minimum" payroll. Adjust as necessary. Sticking points like what to do with players who don't get the 100 PA, etc. threshold, DL players, do we pay NL pitchers for PAs. Note, $37 M is already about the lowest we ever see anymore but even tanking teams usually have a few vets around making a few million here or there. I think even if you went with all first-year, we're talking a minimum around $25 which is about double the current absolute minimum.

A nice aspect, at least if it works the way I think it does, is that most of those bonuses go to starting players (or heavily used relievers) and also that using a lower-talent young player costs as much as using a better young player (if equal service time) so you might as well play your best young players (super-2 and Bryant games aside). The extra durable (700 PA hitters, 30-start pitchers) are getting extra large bonuses and would surpass the upper thresholds I suggested earlier and might make over $5 M before arb.

We could boost the team minimum a bit higher by adding some sort of 40-man roster minimum salary which might help to control service time machinations a bit too.
   9. John Northey Posted: December 04, 2017 at 02:15 AM (#5585452)
I like the generic minimum for all players vs one for certain service time as that might end careers earlier than necessary. I was shocked the MLBPA didn't demand a $1 mil minimum in the last negotiations and really should be working up from there. The higher the minimum is the easier it is for teams to justify keeping older players around (and for those players to keep kicking). Given 1 WAR is estimated to be around $9-10 mil in value a ML minimum anywhere below that makes sense imo. Even around $5 mil could work (around 1/2 a win expected from the player) and would make the payroll floor $5 mil x 25 = $125 million vs the $25 mil a $1 mil minimum salary does. So $1 mil slowly rising to $2 by the next contract would've made sense imo ($25-50 mil minimum payroll). Instead it is still under $600k.

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