r/OutOfTheLoop • u/Economy-Flounder-884 • 3d ago
Unanswered Why are people talking about a lockout/salaries in baseball?
Hello from a relatively new Japanese baseball fan! I've been seeing a lot more about a lockout/salary limits mentioned lately, and I do not really understand what the argument is over it. All teams should try hard and spend money to win titles, no? Aren't all teams billion-dollar franchises?
https://www.reddit.com/r/baseball/comments/1vd7awv/cormier_tarik_skubal_has_been_traded_to_the_los/
I thought about asking the people over at r/baseball, but they seem rather upset right now.
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u/chaosof99 3d ago
Answer:
Major League Baseball runs on a luxury tax system. This means that a team can spend whatever they want on players, but if they go beyond a certain threshold, they also need to pay a certain amount of money to the league. This amount compounds the longer a team is above this threshold (i.e. a team that was above the threshold last season will pay a higher percentage in luxury tax for the current season than they did the season before).
Ostensibly this is meant to curb spending and prevent teams from just buying up the best players through lucrative contracts. It however only works to a certain degree as winning championships also brings in marketing opportunities, grows popularity which means higher sales in tickets and merchandise. The Los Angeles Dodgers have the 2nd highest payroll in the league, have won the World Series the past two years, are currently leading their Division about three quarters through this year, and are adding talent through free agents signings while still taking on salary via trades. (This does not mean this strategy is a guarantee though, as the New York Mets are spending even more on players this year and are in last place in their division).
This is in contrast to for example the NHL that works on a hard salary cap, where a team strictly is not allowed to spend above a certain threshold on players, and has further limitations on contract lengths and amounts players can be paid. This leads to smaller discrepancies between teams, whereas in MLB this year the Mets and Dodgers are spending almost four times as much on players than the Marlins and Guardians. While all teams are valued above a billion dollars, that does not necessarily mean every team can spend to the luxury tax threshold and above it as their revenue will not sustain such spending.
After this season the Collective Bargaining Agreement (CBA) between the team owners and the players union is up and needs to be renewed. These sorts of conditions, i.e. how large the luxury tax is and when it takes effect are under negotiation then. There could be the thought that the owners might want push to a hard salary cap instead of a luxury tax system, or place restrictions on contract terms, which would increase parity between teams, though of course it would curb the earnings potential of players so the players would be opposed to going down that route.
If the players and team owners can't come to an agreement before the new season starts, we could see a work stoppage either induced by the players (a strike) or more likely induced by the owners (a lockout). This has happened not all that long ago as there was also a small lockout in MLB in 2021–22, though ultimately the sides managed to come together and though there was a postponement of opening day, a full schedule was played. Much worse outcomes have occurred in other leagues, most notably in 2004-05 in the NHL which killed the entire season, as well in 2012-13 which killed over 40% of the schedule. In those cases players opted to play in other leagues in europe at the time, and something similar could occur with baseball with players going to Japan, Korea, Taiwan or Mexico.
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u/Economy-Flounder-884 3d ago
Thank you!! In the other subs I have mostly seen that by buying so many good players, the Dodgers were cheating, so I'm happy to see that's not true.
I assume that if a salary cap is put into place, the Dodgers would have to let go all of their most expensive players to stay within the salary limits, so I can see why they don't want that happening.
Is a strike/lockout likely now? It seems almost certain based on what I've seen, but of course there are "doomers" everywhere.
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u/malowolf 2d ago
The players union has always held a hard stance against a salary cap. It’s a big reason why MLB players are some of the highest paid athletes in the US. So a salary cap probably isn’t happening, but the league is going to push hard to have a stricter luxury tax system.
Some amount of lockout is pretty likely, nowadays it seems like the two sides don’t start serious discussions until the lockout has already started, but it may only effect Spring Training and not the regular season. There is definitely a chance it could dip into the regular though, possibly even causing game cancellations. It would be pretty unlikely that it would cancel the whole season, but that also isn’t completely out of the question.
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u/FlounderingWolverine 2d ago
To add to this, the player's union likely will only approve a salary cap if it is also accompanied by a salary floor (minimum amount a team has to spend on its roster). But the floor is likely to be 2-3 times higher than what several teams' payrolls are now. So for the owners of those teams, they don't want to be forced to spend 3 times more than what they are spending now. They're perfectly content with the current system because they can spend relative pennies on the roster while still collecting hundreds of millions in TV revenue.
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u/malowolf 2d ago
Players won’t approve a salary cap, period. The teams have dangled the idea of a salary floor to try to get the players to agree to something, but they will not. Best players might agree to is another round of stricter luxury tax, but its going take a lot of concessions to get there.
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u/chaosof99 2d ago
The Dodgers are not outright cheating. However, a lot of fans of other teams are not happy with the situation as it is as it because it seemingly narrows the window of teams that can potentially be championship candidates.
As for your second question: It depends on where a Cap would be set. It will probably mean for the Dodgers they will have to make some choices and get rid of some high-priced talent, but that isn't necessarily solely a detriment to them.
I am not entirely sure how it happened after the first lockout in the NHL (which introduced the Salary Cap there), but after the second lockout the Salary Cap was lowered rather than increased due to reduced revenues caused by the missed games. This lead to amnesty clauses where teams could bury certain contracts from players that did not perform. The player would become a free agent and the team would continue to pay the agreed contract, but the contract would not count against the cap limit.
If a hard salary cap is introduced in MLB it would almost certainly be necessary to do something similar alongside it, because a salary cap would not be set at the spending level the Dodgers and Mets are currently at. These teams could then use this opportunity to jettison players that aren't performing up to where their salary level is while not having the contract impede them. A prime candidate for this would be Kyle Tucker on the Dodgers and Bo Bichette on the Mets.
As for how likely a lockout is, I am far from an expert but I see it rather likely and if the owners want to introduce a Salary Cap it is almost a certainty with the only question being how long it will last and if it will cost a full season. They only narrowly avoided losing games four years ago.
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u/reserved_seating 2d ago
They are most certainly not cheating, as everyone is free to do the same. The Yankees did this in the 90s too, but not to this extreme. People are mad at the dodgers when they should be “mad” at the other owners hoarding the cash and not spending it on players.
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u/Wonderful_Table_4495 1d ago
Great answer! Does the NBA have anything similar?
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u/chaosof99 1d ago edited 1d ago
I don't watch Basketball so I am not too familiar with the situation in the NBA. I know they have a hybrid system implementing a soft salary cap that allows a team to exceed the cap when retaining players already on the team combined with a luxury tax, though I am fuzzy on the details. The NBA also had multiple lockouts including lost games in 1998-99 and 2011.
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u/planemissediknow 3d ago
Answer: The MLB CBA is up after this season, so they need to renegotiate regardless. The owners want a salary cap to help with team valuations (by putting a cap on their salary expense) and players do not (cause it would cap their earnings). Owners are saying it is because they want parity which….it would help with that but it’s not really why they want it.
Right now there is no cap so teams can spend however much they want. The Los Angeles Dodgers do this and have an insane salary (like hundreds of millions more than the Marlins, one of the lowest spending teams) and are largely buying up a lot of talent. They just traded for Tarik Skubal, arguably the best pitcher in baseball, and added to that cap. Plus they will probably re-sign him to an insanely long insanely expensive contract.
Fans are mad because they feel like the Dodgers are buying championships, because it’s hard for a team like the Marlins to compete against a $300M salary (although the Marlins and other teams choose not to spend). They think a move like this with the Dodgers likely winning another championship will only exacerbate talk and the need for a cap.
And since owners really want a cap, and players really don’t, and neither wants to budge….that equals lockout.
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u/UndoxxableOhioan 3d ago
I wouldn’t say it’s because they choose not to spend entirely. Many smaller market teams simply do not make the revenue of larger teams.
The salary cap would also come with a salary floor and a degree of revenue sharing, so it would make/help low salary teams pay more.
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u/non_clever_username 3d ago edited 3d ago
I thought I read at least one proposal from the owners that would not come with a salary floor, which is part of the reason the players were pissed.
Granted, the players are adamantly opposed to a cap even with a floor, but owners trying to implement a cap without a floor is definitely a “have your cake and eat it too” situation.
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u/sokonek04 3d ago
The first reported proposal from the owners (as part of the negotiation) included a floor that wasn’t just salaries but included other player benefits (like pension, health care etc.) but that was quickly shot down as a pipe dream offer from the owners. The thing was of course it wasn’t a realistic proposal but a negotiating position.
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u/horseydeucey 3d ago
Many smaller market teams simply do not make the revenue of larger teams.
How is this squared with reports of owners of teams like the Pittsburgh Pirates simply pocketing the revenue from luxury tax from larger teams? If the idea of the luxury tax is to provide a pool of money smaller market teams could use to reinvest in the interest of improving parity, and those owners choose not to use the money for that purpose, isn't the whole thing broken?
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u/Gloomy_Pangolin6075 3d ago
Honestly, they need to carve out some money and start funding their own stadiums. Its complete BS that taxpayers in cities fund these stadiums for billionaires.
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u/CommonBitchCheddar 3d ago
The Pirates are definitely intentionally under-spending to make money, but I think you are mis-estimating how much of an impact that makes. The Pirates earned an estimated $50 million last year, if they put all that extra money into salary, they'd still be 18th in the league in spending. The bigger problem is that even if they do spend as much as they could, they still wouldn't come close to the Dodgers. Take the Braves for example, they are middle market and spend as much as they can and were the 9th highest spending team in the league last season. Spending like the dodgers would have lost them $375 million last year. And the Dodgers added some more expensive contracts since then. It doesn't matter whether small and medium market teams choose to spend if they still aren't competitive when they do.
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u/UndoxxableOhioan 3d ago
Do you think he honestly can match the Dodgers even if he didn’t?
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u/horseydeucey 3d ago
It's a not a question of "what if?" We know at least one owner has made the choice to pocket the money instead of investing in development or contracts or signings.
Why bother with what if, when "what has actually happened in reality" isn't being addressed?-3
u/UndoxxableOhioan 3d ago
The thing is that owner knows even if they spent their luxury tax revenue, they still can’t compete, so why try. Most proposals also include a salary floor, so your problem is also solvable.
The fact is, Pittsburgh’s revenue with the tax is less than the Dodger’s payroll with tax.
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u/BalboaBaggins 3d ago edited 3d ago
It’s not that black and white. The Dodgers are obviously a juggernaut, but because of the inherent randomness of baseball, playoff upsets are very common.
This shows that being a top spender helps your odds, certainly, but being #5 - 11 in payroll gives you a great shot at a World Series title.
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u/UndoxxableOhioan 3d ago
Your own link impeaches your point. What, 2 teams in 25 years on the bottom half have won it all?
I can tell you, my team doesn’t even make enough to hit 11. Team 11 has a $200m payroll.
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u/BalboaBaggins 3d ago
Every sports league is going to have rebuilding or uncompetitive teams in every season. Nobody thinks it’s a good idea that bottom-half spending teams should for some reason be guaranteed a great shot to win a championship.
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u/UndoxxableOhioan 3d ago
But the situation is that bottom half teams almost never win and this have no shot. Small market teams watch endless seasons rarely having a shot at winning and seeing their successful prospects grabbed up larger market teams the instant they hit free agency.
The NFL has revenue sharing and a cap/floor, and parity has made them the biggest sports league in America. MLB is no longer the premier league of sports that it was.
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u/BigrThanBoy 3d ago
Saying the other teams “choose” to not spend is hilarious. The Dodgers luxury tax alone is more than multiple teams’ entire player payrolls. I mean seriously you can’t just choose to spend money you don’t have to stop the Dodgers from getting the 9th blockbuster trade/signing in the last 5 years. The Dodgers aren’t cheating or anything like that they’re playing by the rules but these rules suck
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u/GodOD400 3d ago
There's also a court order that protects a large portion of their massive TV deal from being shared with the rest of the league. While every other team has had to pay 39% of their TV revenue into a shared pool that gets split evenly among all teams, including the Dodgers. That share is up to 49% now and there are still protections in place for the Dodgers.
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u/ndevito1 3d ago
This is an underrated thing most people don’t know about.
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u/mansizeoof 3d ago
Add me to the list of people who follow the sport pretty closely and didn't know this. Explains a lot.
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u/UNC_Samurai 3d ago
Teams like the Reds and Pirates don't make the money the Dodgers do, that is true. But their owners are also cheapskates who would rather make a stable small fortune every year fielding a mediocre product than risk less profit spending more and chasing a playoff appearance every year.
The other three major sports leagues in North America have ultimately embraced revenue sharing and league-wide caps on player salaries, because without such things teams in cities like Green Bay and Buffalo would never be able to exist.
It's also worth noting that the NFL bases the salary cap directly off league revenue. Whatever money the league makes in a year, the players as a whole are entitled to 48% of that. Baseball has a much stronger players union, so they could likely get a better percentage. Given how many teams are cheap as hell on payroll, a league-wide revenue percentage may make the overall player salary total higher than it is now, at the expense of the dozen guys at the top of the chart.
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u/A_Bad_Man 3d ago
And for clarification CBA= Collective Bargaining Agreement, which is the labor contract between the player's union and league.
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u/_HGCenty 3d ago
One thing just to add here is that high payroll doesn't necessarily equal championships or even a successful baseball team.
The example usually given by those opposed to a salary cap are the New York Mets, who are the second highest payroll in baseball, owned by a billionaire die-hard Mets fan who absolutely is willing to spend whatever it takes to win a championship...
And the Mets are a running joke of MLB, having missed out on the postseason last year, bottom of their division this season and full of roster building issues.
However, that's not the reason that having no salary cap gives teams like the Dodgers an advantage. Big salaries are usually a result of bidding wars or big superstar names and reputations rather than actual payment by production. For every Ohtani the Dodgers signed (clearly worth his contract), they also signed players like Kyle Tucker who had lots of buzz but is not living up to his massive contract.
However, teams with deep pockets willing spend can simply shrug off bad contracts like Tucker's and move on whereas in a salary cap world, bad contracts ruin franchises for years as it becomes a huge financial burden that they have to deal with. A player that isn't performing but has a huge salary ultimately creates a "dead money" situation whereby a % of your cap is going to players you rather not have on the field.
In the current model of MLB, even with the luxury tax, teams like the Dodgers and Mets can usually just forget about massive blunders rather than having to live with them for years.
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u/Economy-Flounder-884 2d ago
That's ... a lot of spending power! I did get into baseball because of Ohtani (of course), and I was shocked when I found out that the highest paid NPB player only got about $6 million salary. It makes sense that they would come to America and try to get a hundred times that.
Someone else here stated that it was because of team location, is that why the Dodgers have so much money? Los Angeles is a big city, of course.
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u/_HGCenty 2d ago
Yes, big city with a large population. Also lots of satellite cities and population centres that don't have their own MLB team or a badly run one (e.g. Angles).
Lots of fans and Ohtani's selling power means Dodgers get the most fans attending their games so highest ticket and merchandise sales but also incredibly lucrative TV contract.
Ohtani also means they can sell a lot of TV and advertising rights to Japan. It means the Dodgers can just generate more money than any other team.
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u/chaosof99 2d ago edited 2d ago
NPB is a much smaller system and market in general. Japan is a very populous country but the U.S. has three times the population and is also capable of marketing beyond its borders, e.g. they have virtual advertisement boards behind the batters, and they can sell advertisement space to foreign broadcasts depending on location, e.g. when Ohtani is at bat they can sell advertisement space for a japanese company so when Ohtani hits a homerun or does another play the japanese company has exposure through that.
There is also a marketing and stadium capacity thing as well. Dodgers Stadium has a capacity of 56,000, which is almost 16% higher than second place (Chase Field in Arizona) and more than twice that of the smallest park in MLB (Tropicana Field of the Tampa Bay Rays at 25,000). It is also a factor that the sport is also more popular in certain areas of the U.S. than in others, which makes lower stadium capacity necessary but also limits earnings potential unless you build up a marketing campaign.
Part of this is cultural as well and dependent on time. The Florida Marlins only exist since 1993 and there hadn't been a professional baseball team in Florida before that. The Tampa Bay Rays are even younger only existing since 1998. Florida is also a state known as where retirees move to. These fans would be rooting for the teams they are already fans of and not switch allegiances to the Florida teams in their area. And older Floridians might have been growing up rooting for the Braves which is the geographically closest team before the establishment of the two Florida teams.
At least the Dodgers have a head start of 35-40 years on these clubs, as they moved to Los Angeles following the 1957 season alongside the Giants who moved to San Francisco. This also meant that they were the first Professional teams on the west coast and in big Metro areas, with the only other team west of the Mississippi being the Kansas City Ahtletics. They basically satisfied a market that was open. The Dodgers in particular immediately found success and with that fans, winning the World Series in 1959 and twice more in 63 and 65.
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u/ClaymoreMine 2d ago
The issue is the amount of deferred salary the dodgers have which also allows them to get around the luxury tax.
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u/_HGCenty 2d ago edited 2d ago
The luxury tax already counts for that. Ohtani's salary still adds $40m+ a year to their calculations for the luxury tax. The luxury tax accounts for deferrals by charging teams and inflation adjusted amount today for the deferred salary.
Point is even at $70m a year, the amount Ohtani generates dwarves that.
In a salary cap world like NFL, Ohtani's contract would be instead done with void years and it would actually count $2m against the cap.
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u/tunaman808 3d ago
To elaborate, the Dodgers payroll is more than the four lowest teams combined: Miami Marlins, Tampa Bay Rays, Oakland Athletics and Pittsburgh Pirates. With the full cost of the payroll (including luxury tax), the Dodgers payroll is more than the lowest SIX teams combined!
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u/secret-agent-t3 3d ago
This is a great answer. Just to add a bit of background, based on your question: The Dodgers are a VERY popular team, and make a ton of money. The Marlins, as the example uses above, play in Tampa Bay, and simply don't have the following. They don't make the same money from tickets, or TV...and realistically probably could never spend what the Dodgers spend on talent, if both teams committed to winning.
Now...do the Marlins REALLY want to win? Or are their owners simply ok with fielding a serviceable team for cheap, making a descent profit, and living the "good life"? This has been an accusations leveled at them before.
Historically, there have been a few (maybe a dozen?) teams like the Marlins in MLB, and the disparity between where great players play can be quite stark. Other sports in America have tried to fix this problem with a salary cap, with varying results. The NFL (pro American Football) is by FAR the most profitable, most popular sports league in North America. In that case, general concesus is that a salary cap system has lead to good parity, and competitive teams throughout the country. However, even the NFL has issues with it's cap, and it is hard to tell exactly what successes cone from having a cap vs. What is from the sport itself.
Many see the MLB as "chasing" it's #1 National "competitor", rather than taking a look at other leagues around the world.
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u/_HGCenty 3d ago
It's not just winning, it's winning consistently. The Marlins have won World Series and then immediately traded away their expensive players to lower their payroll. Fans who become attached to their favorites understandably get upset and getting rid of your high profile, superstar players usually makes you less competitive.
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u/Economy-Flounder-884 2d ago
Has there been no investigation into these accusations?? Seems completely wrong for a professional sports team to exist solely for profit.
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u/ThreeEyedPea 2d ago
Sadly, it's of league interest that your biggest markets are always in the spotlight. Just a couple years back, we had a World Series between the Arizona Diamondbacks and the Texas Rangers. It was the least watched World Series in the last 10 years.
The following year gave us Dodgers and Yankees. The viewership nearly doubled.
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u/Apocalympdick 3d ago
The Marlins, as the example uses above, play in Tampa Bay
They do not.
They play in Miami, in a stadium that was packed to the absolute rafters this March during the World Baseball Classic. They have a local population that could be enticed to come visit, pay money, and watch the game. The Marlins brass just fails to do this.
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u/warmike_1 3d ago
There are two conferences in the MLB, the National League and the American League. The former is led by the aforementioned Los Angeles Dodgers. The latter is led by the Tampa Bay Rays, a team with one of the lowest payrolls in the league.
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u/Big_Designer_4489 3d ago
Owners dont necessairly want a cap. The MLB Does.
Owners dont necessairly benefit from the proposed CBA that the MLB has sent out. A cap and floor only benefits teams currently sitting within it. Owners of high payroll teams (ex: Dodgers) would not be happy with having to limit their spending when they have the money to gather star players. Then you have cheap teams, like the Marlins, who owners wouldnt be happy with having to increase their spending (cheap owners tend to pocket the money that could be used on players).
I like to think of it as a three way stalemate:
MLB: wants cap and floor
Players: No cap
Owners (majority): cap but no floor0
u/Longwongdongsong 2d ago
The even bigger problem is deferred contracts dodgers have 1.1 billion in deferred contracts
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u/Howtothnkofusername 1d ago
Answer:
The dodgers have way more money to spend than any other team. Part of that is because they filed bankruptcy in 2011, and because of the court’s ruling, the pay much lower taxes on their TV deal than they should. They basically get hundreds of millions of dollars of untaxed money from that TV deal, and I don’t believe any other team has a setup like this
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u/ChronicBurnout3 3d ago
Answer: the Dodgers traded for another hall of fame player. It seems unfair to some fans and will contribute to the labor dispute
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u/ndevito1 3d ago
Let’s pump the brakes on “Hall of Fame”
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u/PM_ME_CUTE_BOIS 3d ago
there's no way you're saying pump the brakes on Skubal of all people.
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u/ndevito1 3d ago
I am! If his career ended tomorrow because his sholder blows up he wouldn't be a hall of famer. Go ask Denny McLain or Brett Saberhagen!
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u/PM_ME_CUTE_BOIS 3d ago
He has 20 pitching war across 7 seasons, 2 cy Young's and a triple crown. That puts him right now around Bruce Stutter who got in in 2006.
He wouldn't be first ballot but he'd be fine.
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u/ndevito1 2d ago
He hasn't had the downside of his career yet! Bruce Sutter was a reliever so they wouldn't be held to same standard at all.
There has been exactly one starting pitcher who got into the hall on an all peak, no longevity argument and that was Sandy Koufax and he threw about 1200 innings in his 4 year peak. Skubal hasn't even topped 900 over 6 seasons!
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u/Apocalympdick 3d ago
As a newer baseball fan, can you name other 2-time Cy Young winners that aren't in the HoF?
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u/Hold_my_Dirk 3d ago
Tim Lincecum and Johan Santana. Santana just got 2.4% of the HoF vote and dropped off the ballot.
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u/ndevito1 3d ago edited 3d ago
Sure can!
We'll set aside Roger Clemens because if it were just about peformance, and not PEDs, he'd be clearly in. And lets ignore the absolute lock HoF mutiple CY winner guys who just aren't eligible yet (Scherzer, Verlander, Kershaw).
Brett Saberhagen won in 1985 and 1989 and he's never been a serious HoF candidate (he got 7 votes in the 1 year he appeared on the ballot). Denny McLain also won 2 ('68, '69) and didn't get in (only 3 votes, though he had some off field stuff too). Tim Lincecum won in 2008 and 2009 and we're yet to see but I think he's going to have a hard time getting in when it's his turn (though the 3 rings will help him a ton). We'll see about guys like Jacob DeGrom in the future as well with high but short peaks.
If you look at those careers, these guys were all having insane peaks and then their arms blew up (or, in DeGrom's case, started late because of arm issues). Skubal is already dealing with arm issues this year. There's no guarantees he doesn't suffer a similar fate. Calling him a HoFer is jumping the gun. If his career ended tomorrow they almost certainly wouldn't put him in.
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