Joe Posnanski, if you haven’t already heard, wrote a very very good piece in Sports Illustrated this week (or maybe just SI.com) about how it should be no surprise that the Yankees won the World Series because they can outspend everyone else so very very much.  His column, in my opinion, goes towards making the argument that there should be a salary cap in MLB.

I bounce around on both sides of the argument often, but here are some of my thoughts on his article.  I should say I rarely disagree with Posnanski, but I think his argument is too simplistic.  I think there are other factors at work here.

First, the Yankees have always out spent every other team.  Its part of who the Yankees are.  Sometimes they outspend wisely, sometimes they do not.  This year, they spent very wisely it seems. In the American League East, you must win 95 games to win the division, its just a fact.  Ask JP Ricciardi (former Blue Jays GM) what his goal had to be in developing a team, winning 95 games is going to be one of the first things he says.  That is very hard to do cheaply.  And if you look at why division winners come cheaper in other parts of the country, its because they don’t have to win 95+ games.  That 90 game mark makes a big difference.

Secondly, and this probably should have been my first point, is that New York is the biggest market.  Its not the biggest market by just a little, its the biggest market by about the percentage that the Yankees outspent the next team in terms of payroll.  Andrew Zimbalist, the first economist to really write about the economics of stadiums, reckons that if baseball was operated on a free economy there should be 7 teams in New York based on audience before their was ever one in Milwaukee.  That is the advantage the Yankees have.  If you created a salary cap, all that would mean to the Yankees is that the owners would get richer.  Now, they are pouring that money back into the team.  The Yankees won’t stop making money if their is a cap, they will just stop spending it.

Next point is that the Yankees don’t benefit from all the Yankee stuff fans buy.  The league does.  All that profit goes to other teams through revenue sharing.  So having one team in a city that buys lots of stuff, does help the other teams. I know that goes along with the having a team the rest of the country can root against is good for the other teams in bonding their fans together- but in some ways its true financially too.

The Yankees have outspent teams for years.  They don’t always win the World Series.  I know they still make the playoffs regularly, and that probably really isn’t fair.  I have a friend, Brian, that often asks when Joe Torre has ever beaten a team with a higher payroll in a playoff game, which is a fair indictment of the manager perhaps.  For the Yankees to be relevant in New York - in their home market- they must make it to the playoffs consistently.  For the Cardinals and the Cubs, they just have to be playing in September in games that matter.  That part isn’t equal either.

Next:  The Yankees’ payroll is way above the next highest because they have more money, but because players (and their agents)  are good at negotiating for that extra $1 million-$5 million and the Yankees have that to spend.  Why waste time dickering over what is small potatoes to them?  Alex Rodriguez doesn’t need to make $32 million this year to be the highest paid player in the game.  The Yankees didn’t need to pay Alex Rodriguez $32 million to keep him a Yankee.  They could have paid him $28 million, solved both those things, but why waste time.  If you take a few million off of all top players on the team, they are still going to be playing for the Yankees, and that large difference goes down.

Lastly, Ask LeBron James where he wants to play next year and why.  He is in a sport with a cap, and yet still wants to come to New York.  Why?  Because the amount of money he can earn in endorsements goes way up when he plays in New York.  If all things are equal in baseball, the same will be true.  The payrolls might be closer, but the best players will want to be in New York for all the endorsement deals- and that won’t change.

What do I suggest?

Well, there are flaws with all of my ideas that make them impractical.

One way to deal with it is to restructure baseball each year in terms of its divisions.  You could put all the 93+ wins teams in one division and break the divisions down that way. They did it that way back when their were only 8 teams.  Impossible to schedule with 30 though.

They could break the divisions down by opening day payroll, which could be done a bit earlier in the season before, but the problem here is you would have west coast teams in the same division as east coast- making traveling for 19 head to head match-ups a nightmare.

My other idea is to add tickets into a revenue sharing pot.  Not all tickets.  Any team that has tickets that are valued over 150% over the average ticket price for the league shares a percentage of that ticket price.  If the league average price is $26.75 ( which it was on opening day according to the Team Marketing Report), then any tickets that are sold over $66.90 would have to send something like 10% of the cost of that ticket to the revenue sharing pool.  Now small market teams don’t have too many $70 tickets.  A quick look at the Pirates shows only restaurant/club seats over that price point.  The Royals have a few price points over that but they also have a large amount of tickets under $10.  The Yankees on the other hand would have a large portion of tickets over that price point and so would have to share more money with the league.

Why am I targeting tickets?  Because that off-sets the market the best of any other revenue stream, except perhaps sponsorship dollars.  The Yankees will nearly always sell-out always.  The smaller markets will not, even if they are very good.

Sure teams could pass the higher cost along to fans, but if they do, they are raising the ticket price of the fans that can afford it, since only the higher price tickets would be subject to this tax.  Secondly, it could also cause teams to lower some ticket prices that are just around the cut-off rate.   I am not an economics professor, to be sure, but if you want to level the playing field here is one way to go about it without making the richest owners richer.

Joe Posnanski, as usual, is right.  This was the best team money could buy.  But these players, at least the key ones, would be in New York no matter what- with perhaps the exception being CC Sabathia who really wanted to live back in the Bay Area. A salary cap is not the answer though to ridding the league of the Yankees.  Instead, MLB just has to find a better way to share in the Yankees success.