A New Approach to MLB Competitive Balance

I have read all of the analysis about how baseball does not suffer from competitive imbalance. I realize that the Oakland A’s won their division with one of the lowest payrolls in baseball; Bud Selig would offer that as proof that all is well. But it certainly doesn’t feel that way.

To me, the problem goes deeper than who wins or loses. It’s about the fabric of the game. It’s not so much that certain teams have an inherent advantage; that happens in every sport, and management competence is still more important in determining champions than checkbook size. What separates baseball from other sports, however, is the inability of teams to keep key players that they have developed and nurtured into stardom. (I know, you’re thinking how well that worked with LeBron James. But that was not a financial issue. LeBron actually walked away from extra money because he wanted to play in Miami instead of Cleveland. With the salary caps in the NBA and NFL, star players seldom leave their original team in the prime of their careers for financial reasons.)

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Compare that to the Indians. How many players have they developed over the past 20 years only to see them leave in their prime for twice as much money as the Indians could afford? Albert Belle, Manny Ramirez, Jim Thome, CC Sabathia—you know the list. It’s not that it keeps a team from being competitive, although it certainly doesn’t make it easy. The real problem is that we get maybe three years out of a player before we begin thinking about what whether he will get traded or leave on his own.

I can remember in 2008, realizing with every game that Cliff Lee won on the way to a Cy Young that the better he pitched, the more he would price himself out of our range. It’s not good when you can’t even be happy that your favorite players are playing well. As happy as the Oakland fans may be right now, they probably aren’t going out and buying jerseys for Christmas, because they know that Billy Beane will have to turn the whole roster over in the next three years to stay competitive.

Here’s a solution.

Baseball has had a system of revenue sharing for years that has been rather successful at keeping losing teams afloat financially, but it has evolved into a type of socialism in which it is more profitable to suck than to be average, because a lousy team that has traded all of its high-priced players will often also qualify for revenue sharing, whereas if they had kept the players they would take the payroll hit and lose the revenue sharing dollars.

What I propose rather than revenue sharing is cost sharing. The thrust of the idea is that teams are compensated for doing the right things—developing good players, creating fan loyalties, and creating an atmosphere where those players want to stay. In general terms, it would work like this: If a player who has been on a team’s roster for four consecutive years becomes eligible for free agency and is offered a contract by a team with a higher payroll, and the player declares that he would go back to his original team if it matched the offer, a percentage of the contract would be subsidized by a general fund that is paid into by each team according to its payroll.

Let’s take CC Sabathia as an example. Suppose he had remained with the Indians until the end of the 2008 season, which would have given him eight years of service with the team. The Yankees offered CC an annual salary of $23 million dollars, which would have been 11.5 percent of their payroll for 2009. If CC had decided that he would stay in Cleveland if he could make 23 million, the Indians would pay him 11.5 percent of their 2009 payroll, or about $9.2 million. The general fund will make up the rest.

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There are some hitches here, the biggest being that the Yankees may never bother to make any offers to free agents ever again. We have seen that with restricted free agents in other sports. But to me there is a positive aspect to this: If the Yankees offer CC $23 million and convince him that he will love playing in New York, he will not offer the Indians a chance to match the offer. That way the Yankees would have to be able to offer something other than big money in order to recruit the best players. That’s how it works in the NFL. Players go where they can win, where they can get the most playing time, where their friends are, or where they can pick up the most women. Money is a secondary concern, because everyone is even on that score.

Overall, I think this would be a win-win. The players win because they will have more teams able to bid for their services. The fans win because they have a realistic shot at seeing their favorite players for more than three or four years. The owners win because they will put a more interesting product on the field, which should increase revenues. There is also a general benefit in that there will be some disincentive to offer crazy contracts just because you can, like the Yankees do so often. For example, not only do they have to grit their teeth and send Alex Rodriguez a check for $2.5 million every two weeks next year for being about the sixth-best third baseman in the American League, but they will also be paying a tax on that salary that will fund the cost-sharing program. The $30 million they are paying A-Rod will inflate their payroll proportionally to everyone else, making it that much easier for teams like the Indians to match their offers.

I am sure that, once this was implemented, teams would find a way to work it to their advantage that I have not considered, and it may or may not end up being good for the game of baseball overall. But we have four more years of the current labor contract to think about all the ways this could go wrong, so by then I think we can work all of that out (my goal is to have it implemented by the time Francisco Lindor is eligible for free agency). I say we give it a shot.