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Wayland Student Press

The student news site of Wayland High School

Wayland Student Press

The student news site of Wayland High School

Wayland Student Press

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Does baseball need a salary cap?

lawyer-salary-723862Five hundred million dollars. That’s the amount of money the New York Yankees have committed to spend by signing three premier players from this year’s free agent pool, and it has other MLB teams and owners up in arms.

The Yankees basically wiped the free agent market clean, signing the two best pitchers and the best “overall” hitter on the market in CC Sabathia, AJ Burnett, and Mark Teixiera. The Yankees even pursued outfielder Manny Ramirez and flirted with the idea of having him play DH for another $75-$100 million over a three or four year contract.

With the Yankees’ active offseason, their annual team payroll will rise sharply to just about $210 million, almost $70 million more than the next team, the Detroit Tigers. Other team owners and GMs are frustrated with the Yankees’ spending ability. Milwaukee Brewers owner, Mark Attanasio, voiced his opinion on the loss of CC Sabathia, “At the rate the Yankees are going, I’m not sure anyone can compete with them. Frankly, the sport might need a salary cap.”

Oakland A’s managing partner Lew Wolff agrees with Attanasio. “I think there’s a lot of owners that would like to have that [salary cap] right now.” Most owners think it’s bad for business and good for baseball, but at the same time, are getting frustrated. “

The fact is that a salary cap has always been a non-starter in negotiations with the MLB Players Association, which agreed to a competitive balance tax and threshold in the collective bargaining that followed the last players’ strike in 1994.

According to Attanasio, “[The tax] doesn’t seem to stop them. But I don’t blame the Yankees, I blame the system. The Yankees are playing within the rules of the system. This isn’t sour grapes. You can’t blame the team, so you have to change the system. They have a lot of very intelligent business people there. I’m sure they’re working within their economics.”

This year, the threshold for player payroll is $162 million. Last year, when it was slightly lower, the Yankees and Tigers exceeded the threshold, and because the Yankees repeatedly spend over the threshold, they pay Major League Baseball at the highest rate of 40% on the difference between the threshold and their actual payroll. That means if they spend $200 million this year, they will be taxed 40% of $38 million or about $15 million, the fair market price of another substantive player, and this money is distributed to teams that are in the bottom tier of the league payroll holders.

“I have no problem with what they’ve done,” said Crane Kenney, the chairman of the Cubs. “They’ve done it within the confines of our agreement. Look at the reality there: they’ve got a $1.3 billion stadium coming online. They were probably relying on Wall Street to fill a lot of those seats. They didn’t make the playoffs for the first time in 13 years. Their reaction is probably similar to what I would do, which is you’ve got to put a compelling product out there when you open the doors of that new ballpark and that’s what they did.”

The salary cap will be debated until the current collective bargaining agreement is over in 2011, when a new contract will be discussed. Waiting for the contract to be up will only be more costly for teams, as players continue to ask for more and more money even in a depleted economy.

As upper-echelon teams like the Yankees, Mets, Red Sox, and Tigers continue to spend more and more, teams will call for salary caps. The question won’t be answered for a while, but it will be a very important topic in 2011. Until then, the Yankees will continue to spend and spend, and the upper teams will give out bigger contracts.

“It’s important to realize that we’re playing by a certain set of rules right now,” said Bob Nutting, chairman of the Pirates. “We’ve got to find ways to succeed in the current economic environment. We’re not going to use the hope of a salary cap as a crutch or as an excuse.”

Quotes thanks to Barry M. Bloom, national reporter for MLB.com

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Does baseball need a salary cap?