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Payroll gap in baseball is still too large

The Red Sox are complaining about how much money the Yankees are spending.

This would be the franchise that, since 2004, has outspent every team in the majors except the Yankees. This would be the franchise that toyed with the idea of making free agent Mark Teixeira $170 million richer. This would be the franchise that paid more than $50 million to the Seibu Lions just for the right to spend another $52 million to sign Daisuke Matsuzaka.

And now this franchise is complaining the neighbors have a nicer car in the driveway? I'm going to go ahead and say the Red Sox are not the most credible witnesses in this case.

On the other hand, that doesn't mean they're wrong.

Baseball is still a game that favors the rich. And it adores the filthy rich. I don't care how many times Bud Selig proclaims there is more competitive balance in baseball than ever before, the bottom line is money still greatly affects standings.

And, yes, I know some people don't believe this. Critics point at Tampa Bay winning the American League pennant with the smallest payroll in the AL, and they say money doesn't matter.

The truth is, the Rays were an aberration. Just like the Marlins were in 2003. And as long as baseball has one or two small-market success stories, MLB officials will keep pushing the idea that money problems have been solved.

But it is misleading to judge the entire system by a few isolated cases. There will always be some team with loads of money that makes foolish decisions and some team with limited resources that operates with high efficiency. The key is looking at all 30 teams and seeing the trends created by payroll disparity.

Because that picture is very clear.

It says richer teams have more hope in the spring and more success in the fall. It says a team with one of the game's largest payrolls is three times more likely to have a winning season than a team with one of the smallest payrolls.

Here is a simple (and maybe simplistic) way of quantifying it:

I divided teams into upper class (1-10 in payroll size), middle class (11-20 in payroll) and lower class (21-30) for each of the past 10 seasons. And then calculated how many teams had winning records, how many qualified for the postseason and how many reached the World Series for each of those 10 seasons.

Upper-class teams had a 75 percent chance of being over .500 during the past decade. Middle-class teams had a 48 percent chance, and lower-class teams had a 28 percent chance. I bombed in geometry, but that looks like a neatly declining graph, doesn't it? And the graph's shape is fairly similar for postseason qualifiers and World Series participants.

Again, I am not a mathematician, and I realize this is not a perfectly formulated equation. For instance, while baseball's 30 teams are easily divided into thirds, the reality is a little more complicated. The true middle class is probably larger than 10 teams, and the upper and lower classes are certainly smaller than 10 teams.

Still, I think the overall concept is fairly representative.

It doesn't mean a team with a miniscule payroll can't reach the World Series. Three of them have in the past decade. And it doesn't mean poorer franchises can't reach the postseason. Usually, one or two do every year.

What it means is there is a direct correlation between the amount of money spent and the relative chance for success.

And that's why baseball still needs to tinker with its model.

On Wednesday, Red Sox owner John Henry called for a salary cap. Owners in Houston and Milwaukee have recently voiced similar concerns. Red Sox CEO Larry Lucchino suggested a "salary zone" that would include a floor along with a cap.

The commissioner seems cool to the idea of a salary cap, and probably with good reason. It would be a hard sell with the players' association, and it could even be counterproductive for small-market teams that might occasionally prefer to dip below the salary floor in order to save money for bigger payrolls in future seasons.

The system in place now — with limited revenue sharing and a luxury tax — has helped to create more competitive balance. But the system needs to take a bigger bite to truly approximate parity.

In the six seasons the luxury tax has been in place, only four teams have been forced to pay. And two of them — the Angels and Tigers — have been hit one time each for a combined $2.2 million. The Red Sox have paid close to $14 million, and the Yankees are closing in on $150 million in taxes.

The payroll threshold this season is $162 million, which seems absurdly high when you could probably combine the payrolls of the Marlins, Pirates and Rays and not get that high. Lower the payroll threshold, and spread the wealth around more, and baseball may actually get closer to its vision of every team having hope on April 1.

It's a small price to pay to get baseball's money issues under control.

Payroll gap in baseball is still too large 02/19/09 [Last modified: Friday, February 20, 2009 7:13am]
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