What It's Really About

Last week, as I was reading the announcement about Russell Westbrook's retirement, something really struck me.  It was a quote from his agent.  Westbrook retired on the same day the Lakers were sold for $12.5 billion to former Disney CEO Bob Iger and the Donald Trump-adjacent Joshua Kushner (who I guess moved on to the NBA when the World Cup thing fell apart).  The irony of that sale price was not lost on Westbrook's agent, who said: "Incredible.  The Lakers sell for $12 billion, yet teams won't spend on older vets because of current CBA rules.  Thank you, Union!"

That right there says all you need to know about the upcoming labor dispute in MLB.  The owners insist Baseball "needs" a salary cap (which it does not).  And there are plenty of fans who agree with them.  Those fans, frankly, don't get it.  Because the owners' insistence on a salary cap has nothing to do with competitive balance (as much as they claim it is).  It's about controlling costs and bringing franchise values up.

The Lakers' sale price is the highest-ever for an NBA team.  It makes them the second-most valuable franchise in all of sports, behind only the Dallas Cowboys.  Seven of the 10 highest-value sports franchises are in the NFL.  The other three are the Lakers, Warriors and Knicks.  Among the top 50 are 30 of the 32 teams (with only the Saints and Bengals rated outside).  The NBA accounts for another 12, while six of the remaining eight are either European soccer clubs or F1 giants.

Only two Major League Baseball teams--the Yankees and Dodgers--are included on that top 50 list of most valuable franchises, with the Cubs and Red Sox just outside.  The Yankees are worth "only" $8.2 billion (which is tied with the Bears for 10th overall).  Most MLB teams are in the $2-5 billion range, which is more comparable to the NHL than the NBA or NFL.  That, in a nutshell, is why the owners are pushing so heavily for a salary cap.  Because that's what'll bring their franchise values up into the range where they think they should be.

It's not really that hard to make the correlation.  The other three leagues have a salary cap.  MLB doesn't.  Don't think the owners haven't noticed that.  By having a salary cap, the NFL, NBA and NHL know the amount they're spending on player costs.  By not having a cap, player costs in MLB are significantly higher.  Which cuts into the owners' profits.  Which lowers their franchise values.  Thus, the insistence that MLB "needs" a cap.

Meanwhile, the Russell Westbrook quote tells you all you need to know about the NBA's cap.  The Lakers are worth $12.5 billion, yet the salary cap prevents them from spending on veteran free agents.  You can only have so much sympathy for the players since it's in the CBA, which means they agreed to it.  But the point remains.  The NBA's CBA is clearly making the owners richer at the expense of the players.  Why would MLB players agree to something similar?

When I was at Wrigley, a guy behind me on the concourse, who's clearly on the owners' side in the lockout, said that he thought the players stood to make more money.  I turned around and asked him if he seriously believed that.  Because the reason why the players are so opposed to a salary cap should be just as obvious as they owners' desire for one.  The players won't make more money under a salary cap.  They'll make significantly less.

Let's say the players hypothetically did agree to a salary cap in the CBA negotiations (whenever they actually start).  For the sake of making the math easier, let's say they set that salary cap at $200 million a season.  (This year's average payroll is just under $178 million, so it'd probably be closer to that.)  That would mean the owners are spending a maximum of $6 billion on player salaries.  You know how much teams are spending on player salaries this season?  Just under $6 billion!  And the number I used is likely higher than a salary cap would ultimately be. 

Which means the players, right off the bat, would be getting less.  And that doesn't include any other provisions the owners would put in to benefit themselves and not the players.  Not to mention the fact that MLB has guaranteed contracts, so teams would end up having to pay the guys they cut to get under the cap regardless.  Is there room for players to give on things like deferred compensation?  Sure.  But would a salary cap benefit them in any way?  Absolutely not.

Baseball's economic situation is far more complex than I'm making it out to be.  And I'm not pretending I know all of the details (on either side).  But the basics are really quite simple.  The players like the current system not only because they benefit from it, but also because they know what they'll be giving up should they ever agree to a salary cap.  Likewise, the owners want to change the system because it'll benefit them to do so.  Especially if they were to get their salary cap.  (You didn't get one 30 years ago and you ain't getting one now!)

You can look no further than the NBA, NHL and NFL for examples of what the MLBPA is desperate to avoid.  What part of the CBA actually benefits the players in the three capped leagues?  In the NFL, you've got dozens of veterans getting released every year so that their team can get under the salary cap.  In the NBA, you have veteran free agents going unsigned because there are cheaper options elsewhere.  And it was like pulling teeth for the NHL owners to agree to let their players participate in the Olympics (since there was nothing in it for them).

In each of the other three leagues, the players gave a lot to get a little.  Major League Baseball owners have seen that and want the same.  Major League Baseball players have seen that and want to make sure they don't end up in the same boat as their counterparts in the other sports.  As a result, we're at an impasse.  One side will eventually have to blink.  Until that happens, though, no progress will be made.

But still, that quote by Russell Westbrook's agent says a lot.  Because it sums up each side's position very succinctly.  He spent 18 years playing in the NBA, so he knows as well as anybody how much the CBA is weighted heavily in the owners' favor.  As is the NFL's CBA.  That's why NFL and NBA franchises have become so valuable.  Baseball owners see that and want it.  They want their franchise values to rival that of the NBA (they know they're not catching the NFL).

While it's not an exact parallel, MLB and the NBA are close enough to draw similar conclusions.  In both sports, it's a matter of millionaire players against billionaire owners.  In an ideal world, the CBA makes both sides richer.  But, let's be honest, neither side cares if the other gets richer as long as theirs does.  Which is the real heart of the matter in MLB's upcoming labor fight.