March 2, 2011

How Much is Too Much?

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Two weeks ago, the Feb. 16 deadline imposed by Albert Pujols to suspend contract negotiations with the St. Louis Cardinals until the end of the season passed without agreement, which means Pujols may be in the market for a record-breaking contract next offseason. Pujols is reportedly asking for a salary in the neighborhood of $30 million a year, which means a contract worth potentially $300 million over 10 years. No surprise, the Cardinals were hesitant to agree to those terms.The highest paid player in baseball is currently Alex Rodriguez, who is earning $27.5 million a year from a 10-year contract signed with the New York Yankees. If there is any player in the game better than Rodriguez it would unquestionably be Pujols. No player in MLB history has hit at least 30 home runs, driven in at least 100 runs and batted at least .300 in 10 consecutive seasons — the first 10 of his career — with the exception of the Cardinals’ slugging first baseman. Currently Pujols is being paid about $16 million — that’s considerably less than fellow first basemen Ryan Howard ($25 million), Mark Teixeira ($22.5 million) and Miguel Cabrera ($19 million). So if we’re talking about market value here, certainly Pujols deserves to be getting paid as much as these guys. The better question is, are the upward salary trends of this current system sustainable? According to Chicago White Sox General Manager Ken Williams, $30 million for one player is “asinine.” Under the current free market approach to player salaries, $30 million for a player the caliber of Albert Pujols is not asinine, but when you compare such a salary with the total payroll of teams like the Pittsburgh Pirates ($35 million) or the San Diego Padres ($38 million) you can understand Williams’ concern for the smaller market teams in the league. In fact, for approximately half of the teams in the league, a salary of $30 million would take up at least one third of that team’s total current payroll. In December, MLB’s current collective bargaining agreement expires and the owners will probably want to discuss the implementation of a salary cap on players’ wages. The NFL, NBA and NHL all have salary caps. While the concentration of talent is not that much of an issue yet — it’s not like the Yankees and Red Sox are winning the World Series every year — there’s no question that these two clubs can afford to be competitive year after year, while many other teams only become competitive when they are fortunate enough to draft great talent. However, once these drafted players become superstars and are eligible for free agency, they almost always get scooped up by the few teams with the most money to spend. Just look at the examples from this offseason — Adrian Gonzalez from San Diego and Carl Crawford from Tampa Bay both going to the Red Sox. The concentration of talent in a few big markets is not good for the league. It is disheartening for fans in smaller markets, economically unhealthy for those smaller market teams and unfair competitively — ultimately undermining the league. Although players do not always go with the bigger bucks and a couple of superstar players may not make a winner out of a team the way it would on a much smaller NBA team, the money certainly goes a long way toward building a championship team. It seems fundamentally unfair that certain teams have the ability to enhance their competitiveness in this way year after year while others do not. From a league perspective, the question should be whether the structure of the current system promotes enough competitiveness for all of the teams in the league.Looking at the NFL, a sport that is just as popular and by many accounts even more popular than baseball, we see an example of a league with a salary cap and even a salary floor — a downright socialistic system. It has always astonished me how Americans can accept such a system, but that is another story. The NFL’s salary cap was at $128 million per team in 2009 with a salary floor of 87.6 percent of that number. This means all 32 teams were fielding payrolls of within about $16 million of each other. And what does this produce? Parity.  Everybody seems to love it, especially fans in smaller market cities because teams in those cities have a legitimate shot of winning a championship every single year. The winner of this year’s Super Bowl is from the town of Green Bay, Wis. — a town with a population barely over 100,000 people. Not only do fans and teams throughout the league love it, it seems to create a very fair competitive system. When every team has about the same money to play with, competitiveness comes from who can assemble the best combination on the field, not who can afford to. When the means required to compete are unbalanced, then one can legitimately call into question the competitive integrity of the league. Unlike in the NBA where all of the talent seems to be voluntarily concentrating itself in a few major markets despite the salary cap, the issue of competitive balance in MLB seems to be fixable through a salary cap. The struggle to implement one, though, will not be easy.

Original Author: Brian Bencomo