Saturday, February 9, 2013

Payroll Flexibility Is Just Fine

Earlier this week it was reported that the Houston Astros opening day payroll will be around $20 million. This is less than Barry Zito, Vernon Wells, and a dozen others will make this season. Predictably this has lead to a chorus of people demanding reform. This is not surprising, but it is 100% wrong. In an effort to combat ignorance I am here to explain why baseball is doing just fine the way it is and should avoid reacting to this.

The largest complaint, somewhat surprisingly, has been using the Astros payroll as proof that MLB needs a salary cap. If anything the low payroll should be a call for a salary floor, but even that is not needed. Baseball is unique in being a major sport that does not have a salary cap with both a floor and a ceiling. Baseball also has the longest run without major strife. These are not unrelated. Baseball's open payroll, albeit with a luxury tax at $189 million (or 9.5 Astros teams), allows teams to get creative with their payroll and operate within their means. The Royals and Rays do not operate in a similar market to New York, Philadelphia, or Los Angeles, demanding that they match payrolls would put a strain on the smaller markets while the larger markets make profits.

Another benefit comes in teams keeping players long term. Ray Lewis notably just capped a 17 year career with the Baltimore Ravens, but aside from quarterbacks star players generally get traded to free agency. An open market entices all players to get their perceived fair share, but the realities of a salary cap limit how often the drafting team can match what the market can bear. Some of you are probably considering the Royals and their long term perception as a feeder system for other teams. I am not trying to say that small market teams do not face their own challenges, just that when they want to get it done it is easier in MLB than other major sports. Joey Votto and Evan Longoria recently signed monster extensions for teams with limited funds. Fans appreciate knowing who will be playing year after year, it brings stability and reinforces the notion of "our team".

The last benefit I will mention is the creative ways teams operate within their means. The Rays are perennial contenders with a shoestring budget. The Royals GM has been telling the fan base for years that they were building through the draft for a competitive window somewhere beginning in 2013-2014, that talent is now at the major league level. The Athletics are determined not to spend heavily until they get a new stadium, that did not stop them from winning the AL West last season. In fact it was only last season when teams on the bottom half of opening day payroll accounted for half (5 of 10) of the playoff teams. Parity is alive and well in baseball. The NBA and NHL's recent strikes were centered on the issue of teams tied to unsustainable markets and the teams were losing money hand over fist. While the Rays are threatening to move due to lack of attendance, no other team is complaining about losing money.

The Astros have a new owner who promised to gut his team, slash payroll, and build in the Rays mold. Let us see what develops. It was not too long ago when the Astros, with the killer B's 2.0, were making deep postseason runs and spending their share. They may not reach the Guggenheim (German for fist-fulls of dollars) heights of LA, but it is more about strategy than the almighty dollar. Strategy has been at the core of what makes baseball fun, there is no reason to change for the sake of conformity.