Arguing About Baseball Economics, from the Worst Possible Vantage Point; a Pirates Fan

11-30-24 – By Gary Morgan – @garymo2007 on Twitter

The Dodgers continue to add talent, and they continue to add deferred payments to their methodology for doing so. Blake Snell, Teoscar Hernandez, and honestly, whoever else they want, do you truly think they’re out on Juan Soto?

We here in Pittsburgh, well we’d just like something like a 34 year old first baseman with some power and tread left on the tires for a year or two.

To pretend the Pirates can catch up simply by having the owner sell is to ignore the reality of this league at this point.

The problem is, because of Bob Nutting, the Pirates and their fans are just about the worst messenger for this reality.

There are teams trying as hard as they can out there in similar markets and they paint a very clear picture of not only how little Bob spends, but also a good approximation for how much more he could.

Those are the teams who should feel hard done by. More than that, the Dodgers contemporaries who seemingly have a ton of money themselves but lack the funding mechanism to defer dollars under the current MLB rules that state a team must be able to produce the entire amount of deferred money once every year.

The Yankees can’t do that. Sure, they can defer contracts partially, but they can’t afford to liquidate 500-600 million once a year. No, you’d need to be owned by a hedge fund for that type of thing. Lucky for the Dodgers, that’s exactly their situation.

In fact, as much as we know that Nutting could easily spend another 75-100 million, we also know they’d still be in the bottom half of payroll and with no respected ceiling, meaning essentially the faux cap, or luxury threshold, isn’t doing anything to restrict spending for the biggest of the big, we’re basically begging for Bob to get us to the point where we only lag the top spenders by 300-400 million. Oh, that’s right, with the deferred money, it doesn’t look like quite that much does it?

Listen.

Most of you don’t grasp this situation. I know that sounds harsh but I can only gauge it by what I see on social media or our own commenting section. So let’s do some learning.

It’s also not your fault, it’s not like the National media is going to tell you, they get a lot more out of just telling you 20 of the 30 teams simply don’t want to win enough. Again, we live in a market with an owner who does us no favors in this argument, but just because he is the worst example of a poopy owner, doesn’t mean the reality of what is happening in this league are false, it just means “we” probably aren’t the best people to deliver the message.

This League Needs a Salary Floor!

Yeah, it probably does. But you can’t have a salary floor in any league without the elements that make it possible. You need an entire system that includes a floor, ceiling and aggressive revenue sharing.

Yes, yes, the Pirates already get revenue sharing, and yes, they also don’t spend all of it on players. They live by the rules of this CBA, and this owner in particular does the bare minimum. Think league, not about how butt hurt you are over your own favorite franchise. It’s unproductive to focus on the bad apples, like I said, think through the lens of a team like Milwaukee who does everything they can just to stall at 1/3 the salary of the other division winners they compete with.

You can’t have a floor without the other two elements simply because you can’t ask teams to spend what they don’t have. More accurately, you can’t ask 1 owner to spend 75% of their revenue on payroll in a league that has teams where that same amount of cash would be 25% of theirs. Essentially, you can’t tell some owners they get to keep making a crap ton of money, while others have to operate a zero sum budget.

What this scenario would most likely create is a situation where most of the best players still go to the big spenders, but now the bottom feeders are forced to overpay for inferior talent just to make sure they eclipse the floor.

Would it help lower tier teams hold onto players longer? Maybe, but it wouldn’t help them compete, not in the way you hope.

Well What Numbers Would You Put on a Cap and Floor?

The numbers aren’t important, the spread is. From top to bottom there should be a relatively low spread. For instance, in the NFL teams must spend 90% of the projected Salary cap every year. Failure to do so is fined approximately 5 million per infraction and loss of draft picks, some punishments will go as far as voiding of contracts.

So again, the numbers don’t matter. Use percentages. If the cap is 400 Million, the floor should be somewhere around 375 Million, and yes, you have to have revenue sharing to make it possible.

MLB’s biggest challenge here is not having national TV, at least not enough. See, NFL teams don’t “feel” market size because Green Bay makes the same money from TV that the Giants do.

Regional cable distribution that we’ve watched slowly die over the past half decade or so, will need to completely die first, and the biggest spenders own their distribution channels, so convincing them to either share most of it or surrender to the will of the league won’t be easy, even if the Dodgers have pissed off the Yankees, Red Sox and Cubs.

So no, you can’t just have a floor. Unless you just want to slap a little lipstick on this pig, but telling Bob he has to spend 120 million or whatever, I mean, look around, what difference is that making?

Other Teams Spend Because They’re Providing a Great Product and Making More

Of course this is true to a degree. The Dodgers have built an international brand, fortified by their Japanese superstar and surrounding him with a team that almost guarantees his inclusion in the playoffs every year.

They’re a bed example though. Again, they own their regional sports network, they’re owned by a hedge fund, and if you want to talk salary, they’re the only team that could pay him sand deferrals and still field a team of all stars around him.

The Padres did though, and legitimately. They have a smaller market than LA by a country mile and recent developments have made them the only team in town professionally speaking. The Padres made two decisions, one, build up around the park and improve revenue streams to be able to put a better product on the field, and second, their dearly departed owner put the money up first. In other words, he spend money to make money.

Bob could do this too. He could buy up parking near the ball park. He could invest in real estate near the park and profit off the rent business proprietors pay. But to get the rent and parking revenue to a meaningful place, he’d have to invest in the team to try to increase traffic around the park.

I’m not smart enough to put numbers to this, or talk about roadblocks the city might put up to this type of investment. I just know it hasn’t happened enough to matter. Not that I trust him to allocate the dollars anyway.

The Brewers have done all this stuff and they’re going to have to let Willy Adames walk, they had to trade Corbin Burnes, you know, it hasn’t exactly helped them “compete”.

Now that San Diego’s owner passed, we’ll see what the new one does but I’d expect them to stop trying to flirt with the luxury threshold in a division with a team that can lap them without losing a dollar.

How can you compete with a franchise that won’t ever write Ohtani a check that wasn’t funded by interest from the deferred money they have sitting around making more money. In other words, they can’t compete with a team that won’t pay a dime for the services of the best player in baseball.

It would be like you buying a car, deferring the payments for 5 years. You drive it for Uber and every dollar you make you throw in an interest bearing account and when the 5 years are up, you pay it with nothing more than interest earnings, keeping all the profits you made during those 5 years. Now make it a whole fleet, a Chevy Snell, and a Ford Hernandez along with a Porche Betts.

Now tell your friend with poor credit about your brilliant idea and see if they can pull it off too. Yeah. It’s like that.

Well, the League Has Great Parody, So Who Cares?

Well, mostly teams that accept the parody of who wins the championship in exchange for damn near assurance they’ll make the playoffs most years.

In other words, everyone accepts that once you make the playoffs anything can happen, but the top spenders, they accept this premise based on the fact they’ll be in that dance a whole hell of a lot more and the law of averages will take over.

I can’t argue that the World Series between the Yankees and Dodgers is exactly what most of the casual baseball viewing world probably wanted. Two all star squads facing off, hell, even I was intrigued, but those casual viewers, well, they probably don’t show up in April hungry for more ball.

Like here in Pittsburgh, even if this team takes a big step this year, fans will watch on opening day, and for a few weeks to see what kind of team they think they have, but if the team falls off, they’ll file out in droves. And under this structure, there will never be a day for 15-20 teams in this league where they come north from spring training and honestly believe they can stand toe to toe with the Dodgers or Yankees. You might believe you have an element like a starting rotation that can compete, but never will you line your team up next to them and think you’re the favorite, barring injury of course.

I can’t speak for every fan base, but this one, even in my most insane fever dreams of Bob selling to an altruistic owner willing to front his own money to improve our lot in life, trust me, I’m not taking it all the way to believing Juan Soto is considering wearing Black and Gold.

Conclusion

This isn’t meant to be some class on how you get to a cap system in baseball. It’s meant to be a tool to help understand the actual issues and why the solution is never as simple as pretending you can just legislate someone into not being cheap and wash your hands of the issues.

Spending big doesn’t guarantee you a championship, it never has, and it never will, you still have to play it on the field and there will always be young players like Paul Skenes who come along and help temporarily spread the talent to the dregs of the league.

That said, baseball has a developing Globetrotters VS Generals situation. The Savannah Bananas VS the Firemen if you will. They can put their heads in the sand and ignore it, just like they have for decades, but eventually, fans will stop paying for the hope their team gets the one crack they get every decade or so, less if you follow some teams of course.

I wrote this more to illustrate why it’s difficult to implement, even while it in my mind is unsustainable to leave it this way in perpetuity. I don’t think MLB is positioned to go into a full cap system when the CBA expires after the 2026 season, but I do expect them to clean up the deferral situation, even if it’s just to count the dollars against the luxury tax threshold. I do expect them to at least add in some conditions for how the revenue money is spent. I expect them to institute an international draft system, and the funny part is it’ll be because the big clubs are losing too many quality players to the system as it’s currently constituted.

They’ll make changes, they always do, but at the end of the day to the national media, it’ll always be as simple as these teams want to win more, and it’s evidenced by their brilliance in continuing to bring in great players. You know, because you thought that Hyundai you could afford was as good as your neighbor’s Land Rover all along.

It’s a problem, and I don’t have to have a solution to talk about it. Neither do you. Our general discontent is probably our best weapon.

The big boys need willing patsies, and the more they spend, the more they defer, the less willing the patsies become.

Same for their fans.