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Salary cap not a solution for baseball, but revenue sharing is

Sunday, July 23, 2000

I don't pretend to occupy the same intellectual level as pundit George Will. The only time he speaks in single syllables is when he says his name. Another George, former Senate Majority Leader Mitchell, is also playing in a higher league. Nevertheless, I'm sure they'll both be thrilled to know that I agree with their findings as members of baseball's Blue Ribbon Committee that meaningful revenue sharing is more effective as a cost-control mechanism than a salary cap.


Stan Savran is the co-host of SportsBeat on Fox Sports Pittsburgh.


What's wrong with the cap is that it doesn't take human foibles into account. What we have now in baseball, all sports really, is players don't trust owners, owners don't trust players' unions, and most importantly, owners don't trust their fellow owners. Rich people, worried that other rich people may be getting over on them, like to bend rules with their money. And so they expend more energy attempting to circumvent the rules of the cap than they do adhering to the spirit of them -- to control costs.

You could look it up. For years the NBA flaunted their salary cap, boasting that they were the best and brightest for employing it. But what happened with their cap in place? NBA owners, seeking an edge on their ownership brethren, subscribed to the Wimpy School of Economics: "I'll gladly pay you Tuesday for a hamburger today!" They began to offer contracts so back-loaded they could do wheelies. A dollar down, $50 million later. Well, later came sooner, and the league had to force a lockout to get restrictions on the salary-cap restrictions. In essence, the owners needed the players to help them abstain from their own gluttony.

It's happening in the most prosperous and successful league, the NFL. But they are those things because they share revenue, not because they have a salary cap. We knew all along that Jerry Jones was redefining the term "creative accounting" down in Dallas. We have just begun to discover exactly how creative the DeBartolo family was in San Francisco. And truth be told, there isn't a team in the league that doesn't look for ways to manipulate the system to its advantage. The true "spirit" of the cap is to clandestinely work around it.

Why in the world would anyone think that it would be any different in baseball? Baseball has long been known for its dysfunctional ownership family. The owners' motto? "What's in it for me?" If it created tomfoolery in the NFL, where there is at least a facade of bonding for the common good, what would the cap be like in a renegade-infested ownership group like baseball's? Guaranteed, George Steinbrenner has already thought of 10 ways to dance through salary-cap raindrops.

In fact, I believe a salary cap would even accentuate the advantage for the big-market teams. If the Yankees, Braves and Dodgers started to back-load contracts with cash they have in reserve, while the little guys continue living hand-to-mouth, the disparity grows even greater. However, if there's a substantial tax on payroll, all of a sudden George is spending his profit margin.

Let's say the Yankees turn a profit of $20 million per annum. But if $8 million of that goes back into baseball's central fund, the profit margin is cut nearly in half. Maybe then George thinks twice about spending extra to buy a player, because the cash expenditure and the additional tax he must pay on that expenditure reduces his profit margin to a negligible number. He might still do it, but he would be playing on his own money. And anyone who has ever played poker or the ponies knows you get a bit more cautious when you dig down and feel the lining of your own pockets. George also knows that by spending more money, thus paying more in taxes, he is thereby empowering his opposition, giving them more to spend.

I'm not suggesting that revenue sharing/luxury tax is a perfect solution. It may not even be a solution. But it has a much better chance of succeeding than a salary cap. Because this isn't really about economics. It's about human nature. Give people a limit, and they'll immediately try to exceed it. Tell people there's a price to pay for the price you pay, and that spending one's money may benefit others instead of just yourself, watch those wallets flap shut.

All the Georges' -- Will, Mitchell, and even Steinbrenner -- understand that.

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