When it comes to making smaller market teams more competitive, many fans bring up the idea of a salary cap. Out of the big 4 sports leagues (NBA, NHL, NFL, MLB), the MLB is the only league not to have an implemented salary cap. Today we are going to play out a hypothetical situation and how this salary cap idea may be able to work. This article is a collaborative effort between Jay and Cadeyn, so be sure to support them both!

Part One: The Salary Floor and Salary Cap

When we look at payrolls across all teams we find an average of $123,847,652.00 but teams ranked 23rd to 30th each have a payroll of less than 71 million dollars. Teams ranked 1 through 7 have a payroll north of $170 million. The ideal situation would be to implement a salary floor to increase the payroll of lower teams, decrease higher teams, and even the playing field… Right? Otherwise, we’ve created a league where the medium payroll teams are irrelevant and noncompetitive. Our proposed salary floor will come in at 120 million just below the current league average and the salary ceiling is 180 million. With about 60 million in space in between limits, it should keep teams on the heels watching their payrolls closely.

Part Two: Keeping Teams in Line

We have to keep in mind that when implementing any sort of change, teams will try and abuse the system, especially when it’s as game-changing as a salary cap and floor system. To avoid that, we’ve created a system of punishments for how teams will try and get around these restrictions. Before we get into the punishments, we’ve created a taxing system similar to the current luxury tax. There will be three levels, on the first level you’d pay 10 million, on the second level 20 million, and on the third level 30 million. This tax will be paid out to the other teams in the league, just like the luxury tax. With that being said, here would be the punishment system once it’s finalized:

-$1m-$10m penalization: Forfeit of the team’s first-round pick for the following season, maximum team fine of $5m, and a salary cap tax of $10m to be paid out amongst other teams.

$11m-$20m penalization: Forfeit of the team’s first-round pick for the next two seasons, maximum team fine of $5m, and a salary cap tax of $20m to be paid out amongst other teams.

$21m or higher penalization: Forfeit of the team’s first-round pick for the next three seasons, maximum team fine of $5m, and a salary cap tax of $30m to be paid out amongst other teams.

We should also be open to tossing in extra authority from the league itself, in the sense of not letting free-agent deals go through. The league has the ultimate say in permitting contracts, and rejecting them, so they can decline them. This provides questions for arbitration deals, contract extensions, renewable free agents, and more. But, teams shouldn’t be over this limit anyways, thus making this a potential no-tolerance policy. This isn’t set in stone, but it’s just a suggestion and something to discuss.

With these three levels of penalization towards teams who are violating the guidelines of the salary cap and floor, we can ensure that teams will not be able to manipulate the new rules. These guidelines will keep things fair, and provide a solid outline for discipline amongst these teams.

Part Three: Buyouts, Salary Retention, and Contract Restructure

One thing that makes the NFL so fun and so unique is the ability to have contract restructures that allow players to still make their money but also help teams in the now that may be tight in money. One example I will give is one with Pittsburgh Steelers Safety Minkah Fitzpatrick in which the Steelers made 10 million in cap space for the 2023 season. How? Fitzpatrick’s original salary of about 18 million was down to only 7.9 million with the money being moved to bonuses and money pushed down the line. Now this is something that could work in the MLB and immediately to help teams reach our proposed salary floor and limit. Many of you are wondering by the header of this column, what is a buyout? In terms of how the NHL uses a buyout, and the one we are suggesting, a buyout is the removal of a contract off the payroll on a reduced salary but at a longer term. For example, I will use NHL defenseman Oliver Ekman who was bought out last season when he had 4 years and 33 million left on his deal with the Vancouver Canucks. The Canucks must still pay him his money but it would be over 8 years breaking down as follows, 7.1M in year 1, 4.9M in year 2, 2.4M in year 3, and then 2.1M for years 4 through 8. It allows teams money now they can use to sign other talents with that newfound money but using other league rules you can do two until the expiration of the contract. Salary retention is teams eating part of money in exchange usually for higher talents and to get players at cheaper costs. Using the NHL rules, you can have 3 retained active contracts at a time, or else the fines and draft pick losses would come back into play.

Part Four: How do we get Teams to Readjust?

The toughest part of implementing a salary cap and floor system would be for the teams who would currently be over the cap. For teams who are under, it would be much easier. Just increase the payroll and you’re in the green. But for teams who are over, it means reconstruction of contracts, salary dumping some contracts, and more. I would propose to give teams who are over the 180m salary cap three years to readjust their ways of spending to align with the new rules. You may be thinking, how would you prevent teams from using this three-year window to throw all the money they possibly can at their teams to win a championship? Well, you could implement a rule that would prevent these teams from signing free agents until they’re under their salary cap. That way, you give teams 3 years to readjust their salary, and prevent them from increasing, all while making teams under the minimum spend more during the dumping period.

Part Five: How and Why Should the MLBPA and MLB Owners get involved?

While reading this article, you may also be wondering why the MLBPA and MLB owners would approve of this new salary cap and salary floor system.

For the MLBPA, it’s pretty simple. A more competitive free-agent system gives players more opportunities to be signed. The only pushback may be that players might not get the same megadeals as frequently as before, but they can still be handed out. A $180m salary cap still leaves plenty of room for $20-$30m deals. But, a more competitive free agent market would be overall better for players hitting this market.

From the owner’s perspective, you may face a little more pushback, but overwhelmingly I still feel like this system could be accepted. If the system were implemented today, 14 teams would be below the salary limit, and 5 teams would be above the salary cap. Most of the teams who are over the limit aren’t over the limit by much, so readjusting wouldn’t be a huge issue. Although they might be upset, they can still spend a lot of money on their franchises. For the teams who are under the limit, you’ll face the main pushback from owners such as John Fisher, and Bob Nutting, but I think most owners would be open to it. Besides this, both teams who are above the cap and teams who are below the cap would have a full three years to make changes. So it wouldn’t all be happening at once. It may take some convincing from stingy owners, but I think with time, most owners will realize that this is good for baseball. More competitive teams keep fans engaged, and in turn, make them more money.

Part Six: Closing Thoughts

Baseball is a game that has become more and more divided over the years, with the top of the food chain just getting better and richer, and the bottom of the food chain spending less and getting worse. This divide has caused an outbreak amongst fans, and a league many consider to be unfair or unjust. It’s time to implement a salary cap and floor system to make baseball more competitive and bring back the winning culture to the entire league. A more competitive world of baseball is better for the game as a whole, and profits for the owners. Getting fans excited helps the game, and in turn lines the pockets of owners more than ever. But most of all, it’s time to end the trend of owners just barely skating by paying an entire roster what some players make in a single season. Maybe our system isn’t flawless, but it’s certainly time for change in baseball.