Harsher luxury tax- the realistic answer

[rickh150]

Brewers fans like Attanasio. He has been more than a good owner for the Brewers. He's been great. Think of all that he's done so far: Raised the payroll by more than half.... Poured money into improving Miller Park by leaps and bounds... Brought the team into the community.... Surrounded youth on the field with veterans..... Got to the playoffs. However, all these positives aside, he might be biting off more than he can chew with this whole salary cap business. It's not going to happen.

 

The salary cap was issue #1 and #2 of the sorrowful 1994 no World Series season. Players were not going for it regardless of how much money was not coming into their pockets for the short- term. Long-term, they knew what their best interests were. Now, just like then, many owners would love to have a structure in place to curb spending and allow for more competetive balance, yet the players in 2009 like money just as much as players in 1994. It's not going to happen in 2011 or anytime soon after. So is there another route to the bakery, another winding street through the valley, another passageway to grandma's house? I think so.

 

Right now, as I understand it, the threshhold for luxury tax is at approximately $180 million(has increased yearly). Over the past 4 years, only a few teams have gone over it including these if not a couple more: Yankees(every year), Red Sox, and Tigers(one year?). The problem with this system is two-fold. The threshhold continues to increase yearly, and the % teams pay for being over the threshhold is only 40%(based on 2007 info). For every dollar the Yanks are over, only $.40 is given back.

 

With the Yankees splurge this winter, I believe now is the time to start talking about change to the luxury tax system. First keep the threshold down or limit its increase. Also, and more than anything, increase the % to 80%. Small market and big market teams could agree with this, I believe. Hey, if the tax doesn't affect most teams, what would they care? Also, players not called Yankees wouldn't mind this either. Players would say spend if you want Yanks, but the more you spend over the cap the more my team gets.

 

This being said, a soft salary basement should also be in place with the proposed changes. Teams that are financially helped with luxury taxes need to spend and not keep this cash. If a team doesn't or can't spend $50 million, let's say, a season, draft picks are taken away for the first offense and harsher penalties for the second.

 

Overall, like our beloved owner said, "The system is broken." The sooner we stop talking about salary cap and begin talking about harsher rules with luxury taxes and a soft salary basement, the better.

[kramnoj]

Players won't approve a higher luxury tax specifically because it would curtail the Yankees spending. CC and/or Burnett would have made less money this year if the luxury tax was higher.

 

Why do you prefer a higher luxury tax to increased revenue sharing? Luxury tax money goes to a slush fund controlled by the commissioner, it doesn't go directly to teams.

[thebruce44]

They may go for a harsher luxury tax if they also get a salary basement.

 

I agree that this is the way to go instead of a salary cap, but another major issue that needs to be addressed is that foreign players need to enter the league through the draft, not just go to Boston, Chicago, NY, or Seattle.

 

The advantage that some teams have is unbelievable in this sport.

[JohnBriggs12]

They should get away from the tax idea altogether. They need to share local TV revenue equally, especially now that fans can watch any game anywhere via the internet, dish, or cable. As Bill Veeck said way back when television was new, that it takes 2 teams for their to be a show.

[Invader3K]

I think the key thing to making any changes is institute something that is going to make the average players more money...right now the union doesn't seem to be serving the interests of the majority of their members. Yeah, guys like Tex and CC get their huge paydays, but how about the younger players? I think a minimum salary floor to curb a lot of the one sidedness in the spending right now.

 

The international draft seems like such a no brainer that I don't understand why it hasn't happened yet. I believe the current agreement even has a provision to implement one.

[kramnoj]

Yeah, guys like Tex and CC get their huge paydays, but how about the younger players?

 

Did you mean older players, or are you making a different point? There aren't that many younger players that are FA. Most younger players are arb eligible, and the arb process seems to do well for pre-FA players. As far as making younger players more money, the minimum is $400k, that is a nice salary for players who sometimes don't contribute much.

[endaround]

The union protects current members not potential ones, which is why it doesn't fight the draft. The owners couldn't get together on worldwide draft. I think people need to realize that there is much more disagreement among owners keeping things from happening than between the union and owners. You need an agreement of 25 owners to get anything done.

[alorrigan]

Instead of just taxing teams that spend, tax teams that don't spend wisely. I would like to see the top quarter spending teams pay the tax. However, teams that make the playoffs don't have to pay. This might prevent the big boys from taking on injury risks or just generally over paying for average players because they have to.

 

The one thing that needs to be done though is an international draft. I would say that is bigger than any luxury tax or salary cap. Second would be doing something so team don't draft a player because they can't afford him.

[mothershipconnection]

The international draft seems like such a no brainer that I don't understand why it hasn't happened yet. I believe the current agreement even has a provision to implement one.

 

An international draft would be made difficult by the purchasing of players from foreign teams, such as Matsuzaka. Those foreign teams won't just give their players away when they've always collected a posting fee. My proposal for an easier system is to take the amount paid for each undrafted foreign player and use that in a formula that would forfeit draft picks accordingly. So, it your total investment in a Japanese player is over $X, you forfeit your 1st rounder in the next draft, over $Y but less than $X, your second, and so on, but marginal players signed to a small amount don't cost picks (e.g. maybe we only go through 5th rounder forfeiture). Basically, it's like FA compensation except nobody gets your pick, no picks are protected, and the ranking is based on contract size rather than Elias.

[endaround]

Thing is that only applies to Japan. Any worldwide draft was going to leave Japan and perhaps S. Korea and Taiwan out of it.

[joepepsi]

They should get away from the tax idea altogether. They need to share local TV revenue equally, especially now that fans can watch any game anywhere via the internet, dish, or cable. As Bill Veeck said way back when television was new, that it takes 2 teams for their to be a show.

Agreed. Media revenue disparity is the real issue. It's important to remember the time of greatest parity in the history of the game was from the inception of free agency right up to the 1994 strike. Revenue sharing and luxury taxes made it more appealing for small market teams to profit by cutting payroll and becoming perennial losers. Meanwhile big market teams were allowed create their own cable networks and rake in millions of dollars. Maybe all media revenues should go into a pot, then be evenly distributed among all teams.

 

It's interesting to me all this salary cap discussion is a result of the Yankees' free agent signings this winter. The reality is their payroll is going to be about the same as last year or a little less.

[RobertR]

The system is already set up so that likely areas of financial expansion, i.e. the internet and MLB Network, is going to be split equally. It won't happen overnight, but the playing field will be evened up some in the changing media environment.

 

The world is too unorganized to implement an international draft. It's just too easy to stash someone away in an academy somewhere and there's no easy way to handle defections. A Cuban defectee, a Japanese or Korean veteran, and an 18 year old from the Dominican are not equivalents and it really makes no sense to handle them that way. I do think there's a better way to handle the Japanese leagues, but Japan appears to be pretty happy with the current system and they have no real incentive to change.

 

The big hurdle with the Luxury Tax was when the Union agreed to it in principle. It's not perfect, but I doubt that the Union will have any real argument against tweaking the formula some as long as the revenue generated goes back into the players pockets in some form.

 

Robert

[rickh150]

I agree that better revenue sharing would be ideal. Yet, is that realistic. Would half of major league baseball teams(or the number of teams over the revenue mean) be willing to share more than they currently do? I think that that is much more difficult than making a stricter tax on basically the Yankees and a couple other teams. With a stricter tax, install a soft salary "cap" basement for the players union, and I believe competetive balance would improve somewhat.

 

Go for small steps first. Avoid another 1994.

[Tbadder]

I think the international draft is a must. You draft players from around the world, hold their rights for five years, and then back into the pool. If players don't want to come (to MLB) based on the team that holds their rights then fine they saty at home and play.

 

I suppose an exception would be players from Cuba. In which case a supplemental draft could be held whereby teams who drafted Cuban players would lose that draft pick in subsequent drafts.

 

2ndly, no high school players drafted, and once a college player registers for the draft, that's it, he's done with college. It's ridiculous what teams are forking out for unproven talent.

 

I agree the real problem is media money. My solution is different. Take the highest local TV revenues (probably the Yanks) then say assign a percentage of that revenue that has to be obtained by all other clubs. say the Yankees average 100 million dollars a year and the percentage is 40%. Then any team that can't get a 40 million dollar per year TV contract can then be contracted and their players dispersed throughout the league.

 

The real problem is that there are too many small market teams. Small market teams generally create more diversity in competitive balance (though teams like the Twinkies are the exception) and screw it up for both players and teams. Survival of the fittest I say, no welfare for ineffectual or underfunded teams.

[Invader3K]

Your solution is contraction? That will never go over with either side. If you contract one team, that is 25 less MLB jobs, and the owners would never go for it, either. Just unrealistic.

[Tbadder]

Yes, contraction. As soon as you get rid of jobs, then wages come down to a more realistic level. In the end the whole industry will be helped at the expense of teams that are losing money, and players who are poor performers. That's my biggest gripe. There's just too many poor performers. The idea that someone liek Jeff Suppan can make the money he makes is beyond ridiculous. So far beyond ridiculous, that I think we've lost sight of just how out of control worker's wages have gotten. Every major industry in the United States is undergoing contraction, layoffs, plant closings, etc. Why not MLB? Why should weak sister teams like Pittsburgh and Florida exist when they can't draw sufficient audiences in person or thru the media. All this talk of revenue sharing and salary caps etc. is just antithetical to the American way. Like the Bucks here in Milwaukee. The only reason they exist is Herb Kohl's deep pockets, but they're not deep enough to ever make them a realistic contender again. Now they need a new arena subsidized probably by taxpayers. Heck no, they need to go away forever. Nothing in this world is more important than making money. It really does make the world go round. If teams need hand otus to make money and therefore be competitive, then something is tragically wrong. Why should New York Yankees fans foot part of the bill for fans in Pittsburgh? It's not fair. It's basically robbery.

[Invader3K]

You really can't compare MLB to regular industries. MLB teams are basically a franchise that is part of the same company. It's like if you own a McDonald's...your competition isn't supposed to be the other McDonald's across town, it's the other restaurants and dining options in the area. MLB or NBA teams aren't really competing with each other, they're competing with other sports and entertainment options.

[Tbadder]

Yeah, I understand that arguement. But you'll never see a MacDonalds in Brookfield giving money to a MacDonalds in Milwaukee.

 

If MLB teams are not competing with each other on and off the field then why is it deemed a sport? That sounds more like entertainment.

 

MLB is an entity in name only. Just ask the Milwaukee Braves, the St.Louis Browns, the Brooklyn Dodgers.

[kramnoj]

Yes, contraction. As soon as you get rid of jobs, then wages come down to a more realistic level.

 

You are starting off on a wrong premise. There is something wrong in baseball salaries, but the problem is that players are making a smaller portion of baseball revenues, not that they are paid too much. Baseball had more revenues in 2008 than ever before, and the portion of dollars going to major league players has been declining for the past several years. If you have a problem with the salary that Suppan is making, your problem should be with the Brewers, not Suppan, as they are the ones who decided to give him the money.

 

As for revenue sharing, do you really not know that the Brewers are a major benefactor of this program, and that you wouldn't have enjoyed the last two seasons without the current revenue sharing?

[Invader3K]

If MLB teams are not competing with each other on and off the field then why is it deemed a sport? That sounds more like entertainment.

 

MLB is an entity in name only. Just ask the Milwaukee Braves, the St.Louis Browns, the Brooklyn Dodgers.

Actually I would guess all McDonald's pay money into an advertising co-op, so in some ways the Milwaukee McDonald's "gives" money to the Brookfield ones...granted, probably based on some sort of percentage formula.

 

Yes, sports are entertainment. The players compete on the field, but ultimately the MLB teams are working together to make the most money for everyone. Yes, sometimes their interests conflict (like when the Brewers and Yankees were both bidding for Sabathia), but ultimately they're not really competing financially with each other.

 

I don't know how you can say MLB is an "entity in name only," when they are basically run like a corporation. Just look at what Bud Selig made last year. Also, I don't know why you mentioned those three teams, as they are the Atlanta Braves, Baltimore Orioles and Los Angeles Dodgers. Relocation is completely different than contraction.

[Tbadder]

1) I do know that the Brewers have benefitted from the luxury tax, but I also believe that the Brewers are one of the teams that need contraction.

 

2) Yes, MacDonalds does in some way benefit from corporate advertisement. But if Brookfield MacDonalds was actually giving monies to Milwaukee MacDonalds from thir own revenues received from customers there would be a hew and cry. It simply would never be done.

 

3) I respectfully disagree with the idea that everyone in MLB is looking out for others financially. If it was up to the Baltimore Orioles the Washington Nationals would never exist because the Nationals are literally taking money out of the the Orioles' pockets. If Milwaukee folded, the Cubbies would generate even more funds. It would be really good for them. Up to a point I might agree with your arguments, but in the clear, cold light of fiscal survival I just have a different belief and that is every team is in it for themselves.

 

4) If the Brewers, Pirates, Marlins, etc. didn't exist another side benefit would be a better brand of baseball. I think that MLB is rife with AAA trying to pass themselves off as major leaguers. The league would be more competitive because poorer players would be out of jobs. MLB would literally be more efficient. I just fail to see how propping up franchises who can't compete is fair or just or in the end productive. We've bailed out Chrysler once, now again, how many times. These small market teams aren't going to all of a sudden double in population, etc. They are terminally behind the big market clubs and it makes for teams like the Brewers who can only make the playoffs once ever 26 years.

 

5) I will say that all of these small market teams would make excellent AAA clubs. They would draw more people than current AAA teams, and it could bring a level of excitement and real competitiveness that the likes of Milwaukee hasn't seen since the Braves (when coincidently Milwaukee was at one time the 9th biggest market and therefore very competitive).

 

6) Not that it matters because I'm only me, but your points are well taken, salient, and a perfectly legit point of view. I just happen not to agree in the main. Peace.

 

daniel

[kramnoj]

I just fail to see how propping up franchises who can't compete is fair or just or in the end productive.

 

Having baseball in more cities leads to more fans being able to spend money on baseball. If the Brewers didn't exist, the Chicago teams would make some more money, but with a good team in Milwaukee, more total money is spent on baseball. Baseball benefits from this.

 

These small market teams aren't going to all of a sudden double in population, etc.

 

It doesn't matter if the population doubles. What matters is the effect that revenue sharing can have on making a team competitive, and the results that can happen. Attendance in Milwaukee in 1995 was less than 1.1 million people. Attendance last year was over 3 million. The Brewers last year had a higher attendance than the Red Sox. Yes, Fenway is smaller, but it's still impressive that the smallest market in baseball can draw that many people, and it only happens because of the current revenue sharing program.

 

Baseball at this point wouldn't benefit from contraction. Having fewer teams in the league means that the next national tv contract will be smaller, because there will be markets that won't be as interested in watching baseball.

 

This seems like a strange time to make these arguments. Baseball has never been healthier as a business. Making the argument that the Brewers should be contracted after the success they had last year doesn't make any sense.

[Tbadder]

Yes, I agree it does seem odd. If Mark is to be believed we either lost a little or profited a little. But in the long run, a lack of success is inevitable. A downturn, back to the days of 1.1 million will happen. Well, maybe not that bad. But when the average fan finds out this year that the Crew will not really be in the playoff chase (nominally so for sure, but realisticallly probably not) attendance might drop to say 2.7 million. Still good, especially for a small market, but a drop that would probably necessitate a cut in payroll. That would probably lead to a team that was even less competitive, and so forth--another downward spiral until we get a magic year or two when we replace older players with minor league studs and we can get excited once more--briefly.

[Invader3K]

Boy, Tbadder is bringing the cynicism big time here. First you suggest that the Brewers should be contracted or at least turned into a AAA team, and now you say that the Brewers are destined to collapse very soon. If I didn't know better I'd say you were a Cubs fan, or worse, a Yankees fan.

 

I believe Attanasio did say the team "turned a small profit" last season, with making the playoffs.