Time For a Salary Floor?

Next season, the Mets will be paying Max Scherzer and Justin Verlander a combined $80 million.  $80 million just for two starting pitchers in their late 30s.  That will almost certainly be higher than what some teams spend on their entire 40-man roster.  Which has again led to the questions about how fair that competitive imbalance is.

Major League Baseball is unique among the four major sports in that it's the only one without a salary cap (the NBA supposedly has one, yet teams continue finding creative ways to circumvent it).  Instead, they have the luxury tax, where teams with high payrolls are taxed a percentage of their payroll if they exceed certain thresholds.  They actually added another threshold in the new CBA that's been nicknamed the "Cohen Tax" after Mets owner Steve Cohen, who's shown he has no problem spending money to get high-priced free agents.  (I also think he took the "Cohen Tax" as a challenge rather than a suggested limit.)

The problem with the luxury tax, though, is that whatever's collected from the big spenders is then redistributed to the teams with low payrolls.  So, they're free to keep their payrolls as low as they want (while obviously still paying everyone the Major League minimum) while also getting "competitive balance" money from the high-payroll teams...that they aren't required to invest in improving their own team!  Thus, they have no incentive to do anything differently!

So, the problem with the luxury tax system isn't that teams are free to spend as much as they want on free agents.  All 30 teams are able to do that if they want, which would actually be great for everyone.  And the luxury tax has actually achieved its purpose.  Teams still surpass it, but they do so willingly.  Those that don't want to, meanwhile, are very careful to make sure they don't go over it.

On the flip side, though, the other purpose of the luxury tax is not being achieved.  The whole idea of the revenue distribution is so the teams receiving those funds use them to invest in their teams.  That hasn't happened, though.  Some of those teams have no interest in being competitive.  Instead, they're taking the money and pocketing it.

That's the real issue, and it's one the owners tried to address in the prolonged CBA negotiations during last winter's lockout.  They wanted to put in a salary floor, which would require teams to spend at least that amount on payroll.  The players rejected it, though.  In fact, it was a non-starter for them.  They thought once the owners had a salary floor, a salary cap wouldn't be too far behind, and the players are vehemently opposed to a salary cap.  So, the owners dropped it.

Instead, they put in various apparatuses to discourage tanking.  Chief among them is the draft lottery, guaranteeing that the team with the worst record isn't guaranteed the No. 1 pick the following season.  They also stipulated that teams receiving revenue sharing can't be in the lottery more than two years in a row.  The hope is that this, along with the extra playoff team in each league, will be enough incentive for everybody to at least try to be competitive.

We'll see if those changes have the desired effect, but I'm skeptical.  I think the only way to guarantee spending is a salary floor.  Unfortunately, they can't even broach the subject again until the current CBA expires after the 2026 season.  And the MLBPA has been pretty steadfast in its opposition.

It's not all on the players, of course.  They probably agree that a salary floor would be beneficial on the low end.  But their worry about the luxury tax eventually turning into a salary cap is understandable, especially after they went through several offseasons in a row where the luxury tax turned into a sort of soft cap and the big-name free agents didn't sign deals for what they're worth until right before Spring Training (or not at all).

Besides, there's nothing stopping small market teams from going out and spending.  Everyone understands that the Pirates and A's obviously can't outspend the Yankees or Dodgers, but the owners in Pittsburgh and Oakland choose not to spend at all, which is a big part of the problem.  At the very least, MLB should require teams that receive revenue sharing to use that money on free agents.

Being in a small market can't (and shouldn't) be used as an excuse, either.  Look at the Rays.  They're a small market team that's found a way to be competitive year after year...while playing in a division that includes the Yankees, Red Sox and Blue Jays.  Meanwhile, San Diego's not the biggest city, yet the Padres have somehow managed to find all this money to throw at free agents somewhere (I guess the Chargers leaving and making them the only team in town has really helped on the sponsorship and local media fronts!).

Tampa Bay and San Diego have shown that you can play in a small market and still be competitive.  The Angels and Rangers have proven the opposite can also be true.  They're both always in the mix for big-money free agents.  Texas signed Jacob deGrom this year after getting both Corey Seager and Marcus Semien last year, while the Angels have attracted numerous big names and signed Mike Trout to a massive extension.  Yet neither one of them has come anywhere close to the playoffs recently!

Which brings us back to the original question.  Which would be better: a salary cap or a salary floor?  It depends on who you ask, but I think the general consensus is that competitive balance would be achieved much quicker with a salary floor.  Rather than limiting the spending by the top teams, requiring the teams at the lower end to shell out more would raise salaries across the board and open up so many more options for free agents...both for teams and players.  Those teams still won't be able to get a Judge or Verlander, but they might be able to re-sign one of their own guys who they otherwise wouldn't be able to afford.  Likewise, if teams don't have those artificial limitations, players may be more inclined to sign somewhere other than the same five teams without everybody else being priced out.

Ultimately, a salary floor would be the best solution.  Will it happen?  Unlikely.  But if the Mets want to spend $80 million on two starting pitchers, that's their prerogative.  And fans shouldn't be asking why that's OK.  What they should be asking is why it's OK for the Pirates to pay their entire 40-man roster less than that (that's less than $2 million apiece).