Time For a Salary Floor

Major League Baseball's CBA expires in December, and the negotiations figure to drag on for much of the fall and winter.  The relationship between the players and owners isn't nearly as toxic as it was in the 80s and 90s, but it's still pretty bad.  So, while I don't think there will be a work stoppage that actually affects the season, I do think there's plenty of stuff the sides will need to hash out over the coming months. 

One of those things that needs to be discussed is a salary floor.  The owners have included it in their first proposal, and frankly, it's about damn time!  Because a salary floor is long overdue!

Despite being the only major professional sport without a salary cap, MLB has managed to avoid a work stoppage since the 1994-95 strike (while each of the three salary cap leagues has!).  One of the reasons for that is precisely because they don't have a salary cap.  Instead there's the luxury tax.

The luxury tax is designed to prevent more affluent, large market teams like the Dodgers, Yankees, Red Sox and Cubs from simply outspending everybody else.  It's not that simple, of course, but that's the basic idea.  Every team is allowed to spend as much as they want on payroll, but if they go over the luxury tax threshold (this season it's $210 million), a percentage of their payroll is taxed and redistributed to everybody else.  The more they exceed the luxury tax, the higher their bill.

This system has actually worked pretty well at the top.  The Dodgers currently don't care at all about the luxury tax.  They're willing to pay whatever they end up owing.  But that's the exception.  We've also seen plenty of examples where the other teams who hover near the luxury tax every year (the Yankees, Mets and Red Sox) have deliberately attempted to keep their payroll below the luxury tax threshold, even if that meant not going after top free agents.  And as a result, those free agents ended up signing elsewhere.

However, the flaw in the current system has also been exposed and exploited over and over again.  Because, while teams being allowed to spend as much as they want on salary means there's no maximum payroll, it also means there's no minimum.  They can have 26 guys making the Major League minimum if they way.  And there's nothing to stop them from doing that!

These teams receive luxury tax money, but aren't required to use it on salaries, so they don't.  Instead, they pocket it.  We've seen plenty of teams (the Orioles, Marlins, Royals and Pirates among them) take the money they receive from other teams because of the luxury tax and keep it, while making no effort to be competitive themselves.  And it's only gotten worse!

There are still two weeks left in the season and there are already two 100-loss teams.  There could be as many as four!  There were also four 100-loss teams in 2019.  And three in 2018.  The number of 100-win teams in those same seasons?  Three in 2018, four in 2019, looking at just the Giants and Dodgers this year.  So, in other words, there have been essentially the same number of 100-win and 100-loss teams in each of the last three full seasons (2020 obviously doesn't count, but the Dodgers easily would've surpassed 100 wins after going 43-17 in the 60-game season).

Of course, the tanking strategy only became en vogue because the Royals, Cubs and Astros all used it successfully.  They all voluntarily sucked for a few years before winning the World Series with a homegrown core that they built using all of the high draft picks they received during that time.  Imitation is the highest form of flattery, especially in baseball, so other teams are using the "if they can do it, why can't we?" approach.

How is that fair to the fans of these teams, though?  The team is flat out telling them that they don't care about winning.  Likewise, how is it fair to the teams that are lining these teams' pockets with their luxury tax dollars (that they willingly spend while actually trying to win the World Series)?

Tanking has become a major problem in the game, and it's great to see the owners wanting to address it.  And the salary floor is an obvious way to do that.  It would force teams to actually invest in their payroll and at least make an attempt to field a competitive Major League team.  They can no longer just take their money from the luxury tax and do nothing with it.  They have to spend it on Major League talent, which wouldn't just eliminate tanking.  It would level the playing field, too.

Think about it.  Every team is required to spend at least $100 million on salaries (the amount of the salary floor in the owners' first proposal).  That makes more of them players for free agents in the winter.  They might even try to keep their own pending free agents instead of just resigning themselves to the fact that they'll have no chance of re-signing them.

It's not like $100 million is a crazy amount, either.  Eighteen teams have higher payrolls than that this season, and the Brewers ($97 million) and Rangers ($95 million) are both close.  However, there are also four teams (the Marlins, Pirates, Orioles and Indians/Guardians) spending under $60 million.  Not surprisingly, those four were all eliminated from playoff contention weeks ago.

Of course, it would be tough to enforce a $100 million minimum every day throughout the season, but there's really a simple way to make sure teams maintain that average.  If they don't meet the salary floor, they don't get their percentage of the luxury tax payments.  Knowing that would be the punishment would be plenty of incentive for teams to make sure they meet or exceed the salary floor.

As a tradeoff, the owners have also proposed lowering the luxury tax threshold.  The number they threw out there is $180 million.  That would put seven teams (the Dodgers, Mets, Yankees, Astros, Red Sox, Phillies and Angels) over the threshold, as opposed to just one (the Dodgers).  Which means those teams would either have to shed some salary or pay the luxury tax, which would then be disbursed throughout the league.

What it would essentially do is put pretty much everybody in the same $180-100 million range.  Teams like the Dodgers and Yankees would still be willing to pay the luxury tax, but, for the most part, everyone would stay close to that middle range.  Which would make baseball more competitive across the board and, more importantly, go a long way towards preventing tanking.  Truly a win-win for everybody.