How Do We Fix The Salary Mess?

 I read a tweet the other day that posted the total salaries teams will have in 2024.  Of course, the numbers were wrong because it doesn't factor in arbitration agreements/settlements that will happen.  The list has Cleveland at $73 million but, unless someone is traded, their 2024 opening day 40 man will be closer to $90 million.

But the tweet brings up the typical old argument: Baseball owners are interested in keeping profits, are cheap and won't spend money on their teams.  The  tweet suggested a floor of $100 million for team salaries every year.  

But that is an idea that won't work.  Here's why:

• There will be 780 guys on ML opening day rosters, not counting guys on the IL.  
• Those 780 guys have agreed to play for the salary they were promised.  Thus, obviously, there is enough money to pay for those players.  Few, in any, of them are 'holding out' for larger salaries. 
• On the point of holdouts, likely, these 780 will represent >95% of the best available players, not counting rookies who may be inherently better but wouldn't move the needle in terms of team salaries if they were substituted for guys already on 26 man rosters.
• Here is the speculative but logical part of the argument:  the other 5%, the ones who don't sign, are at or near the bottom of the quality pool for veterans.  Very few, if any, of those 5% are there because they refuse to play unless they get paid more money.  Most are there because there are better, cheaper internal or external options for that job and those guys have to accept minor league deals because there is just no place for them.  Remember, with what MLers are paid and the benefits and the pensions they get just for being in the majors, it is worth it to stay in the minors looking to get promoted.

If you believe these arguments then there are only three scenarios if you have a salary floor for ML baseball teams:

• Lesser players will make more money because teams will have to reach that $100 million threshold
• Teams will bid on higher-priced free agents, driving up the salaries of the best players once they get to free agency but, likely, not changing where those free agents end up.
• Teams will take on or retain bad contracts of players just to reach that $100 million floor.

So, given the above, the salary floor could do basically three things: 

• make inferior players get artificially high salaries, 
• make the top tier players get even higher salaries than they do now. 
• maybe, and I repeat MAYBE, cause teams to favor second tier veterans over rookies.

 Neither the weaker veterans getting paid more or the best players getting paid more will change the competitive balance in baseball.  I mean, do you really think if Oakland filled their roster with Ramon Laureano/Jaime Barria etc. types it will make them win more.  If the A's took on Marco Gonzalez's salary would it make them more competitive?  No, it would simply make the A's spend more money for the same, non-playoff outcome.

There is only ONE positive thing I think we would get from a salary floor: teams would be more likely to meet that floor by doing a Jackson Chourio/Wander Franco thing and signing their young, pre-arbitration players to long term contracts just to meet that salary floor.  Given what is going on with Franco, I don't see that as a logical pathway in most cases, especially not with pitchers (see Stephen Strasburg, for example).  But I acknowledge it would be a way to get to the $100 million floor.

You are now free to ask: "OK, Mr. Negative, how do we make owners spend money in a way that addresses the competitive imbalances that exist in baseball without imposing an artificial salary floor?"

Well, I'm glad you asked.  

SO, WHAT IS THE SOLUTION TO MAKING TEAMS SPEND MORE MONEY ON THEIR ROSTER? 

The simple answer is that there is no reasonable way to fix this problem immediately, given that most solutions would have to be negotiated between MLB and the MLBPA.  A potential solution to this problem that might be implementable right now is to incentivize/mandate the small market franchises into spending more money getting better amateur players into their system.  Here are a few things I think MLB could do right now to help make that happen.

Amateur Draft: 

THE CARROT

• Teams that did not make the playoffs would get an extra $5 million added to their draft budget.  Looking at the budgets for the 2023 draft, here is what those budgets would have looked like for the teams 10 picks in that draft.  The numbers I have included are the original budget/my proposed budget/my proposed budget plus 5% (the highest amount a team could spend before losing a draft pick the next year).  All numbers are in millions.

Pirates: $16.1/$21.1/$22.1

Tigers: $15.7/$20.7/$21.7

Nationals: $14.5/$19.5/$20.4

Twins: $14.3/$19.3/$20.25

Athletics: $14.2/$19.2/$20.1

Reds: $13.8/$18.8/$19.7

Mariners: $13.2/$18.2/19.1

Marlins: $12.8/$17.8/$18.6

Royals: $12.3/$17.3/$18.1

Rockies: $11.9/$16.9/$17.7

For comparison, it is likely that the Guardians would have $20/$25/$26.2 if my system was in place next year.  That is about $18 million more than they had this year, meaning they could take, and sign, more 'flyers', i.e., guys who normally would go to/back to college instead of signing.

• Teams that make the playoffs who receive revenue sharing get $1 million added to their next draft budget so that they are not left out and are rewarded for their success even though they are a small market team.

THE STICK

All the teams who receive extra draft budget monies have to spend their entire budget.  If they don't they lose their second draft pick the next year.  The penalty on any amount that they spend over their budget (up to 4.99%) is added to whatever their draft budget money is the next year.  In essence, the penalty they pay is just banked by MLB and given to them to spend on the draft the next year.  

International Signing Period

• All the teams in the top budget group for the international signing period will receive an additional $2 million in their budget above what they would be given in the current calculation system.  
• All the teams in the second group receive an extra $1 million over what the budget is calculated to be using the current calculation system. 
• To make the international process less of a free-for-all, no team is allowed to sign more that 10 players for more than $10,000.  There is no cap on the number of players a team can sign overall, however.
• Teams are fined at a 50% rate for any money left over that they do not spend on international signings.
• Like amateur draft signings, however, the bonuses of all players signed for over $10,000 are made public so that fans can see how much of their international budget teams are actually using.
• The date for the international draft is agreed upon before opening day 2024 with that draft starting in January, 2026. 
• Players who are 17 years old or younger when they sign get an extra year before they are eligible for the Rule 5 draft.

SUMMARY

These changes to the acquisition process for both drafted and international amateur players, along with the ability to protect amateur international signees from the Rule 5 for an extra year, should force teams to spend money on acquiring amateur talent.  While it is theoretically possible for teams not to invest more heavily in player development infrastructure, this is a business and you want to maximize your assets so teams would likely increase their player development budgets to support the extra talent they have coming in.  

Would this change the competitive balance immediately?  No, it would likely take 3-5 years to see the changes.  But when you take a look at teams like Baltimore, Cincinnati and Cleveland it is easy to see how you could compete under this system.  In fact, if the Guardians had not squandered Nolan Jones, Will Benson, Yandy Diaz, Junior Caminero and Yainer Diaz, among others, they would be the absolute poster child for the success of a system like this.

Large market teams would still get to invest in free agents and take on large contracts of veterans players from small market teams in exchange for prospects but the small market teams, if they do their jobs correctly, would be able to compete with younger players just like the Guardians did in 2022 and we hope they do in 2024.