It’s not just about major league payroll

On Tuesday, news broke that the Major League Baseball Player’s Association chided the Marlins for not spending enough on major league payroll, invoking an heretofore ignored aspect of the Collective Bargaining Agreement struck between the players union and baseball owners in 2006.

In a quid pro quo for instituting the luxury tax that has essentially provided low-revenue baseball teams with money from the New York Yankees, the agreement includes the following provision:

A principal objective of the Revenue Sharing Plan is to promote the growth of the Game and the industry on an individual Club and on an aggregate basis. Accordingly, each Club shall use its revenue sharing receipts (from the Base Plan, the Central Fund Component and the Commissioner’s Discretionary Fund) in an effort to improve its performance on the field. (Article XXIV(B)(5)(a) – PDF)

Essentially, the MLBPA took the Marlins to task for the low payroll the club has had for years, despite a clear ability to continue contending. Below are the Opening Day payrolls for the 25-man roster (salaries plus pro-rated signing bonuses) as measured by Cot’s Contracts (this figure is misleading, as it doesn’t include major league salaries for the non-25 man rosters, those that might have been on the disabled list, those that joined the club after Opening Day, amongst other considerations, but it remains a good barometer):

2009 $36,834,000
2008 $21,811,500
2007 $30,507,000
2006 $14,998,500

Except for 2007, when Florida finished a titillating 29th, those payrolls have been the lowest in baseball. Annual roster purging and the occasional fire sale have become commonplace in town, although that might change once the team is renamed the Miami Marlins in 2012, after the new stadium is built.

That wasn’t enough for the MLPA and new head Michael Weiner, however. They wanted results now.

It’s hard to fault Weiner and the players for growing concerned over the way the Marlins do business while pocketing at least $20 million in revenue sharing. However, remember this: the player’s union is concerned only with things that impact the livelihood of major league players. They couldn’t really care less if the Marlins are investing $60 million into their minor league development department, their scouting department, their international department… all that matters is major league payroll, because that’s where the players make their money.

I say this not to defend Florida: there have been numerous occasions over the past several years that I have been perturbed at their business decisions. I’m glad someone finally gave Florida a kick in the pants.

However, moving forward, it should be important to understand that it’s not just major league payroll that drains a team’s resources. In some cases, it would be prudent to avoid spending on major league payroll.

Take the Kansas City Royals, for example. Without regard to whether or not the Jason Kendall signing was motivated, in part, by this clause, would you rather give Jason Kendall a two-year contract at $6 million (true story) or put the money towards an international free agent like Aroldis Chapman or a high-impact amateur draft player that fell into later rounds due to signing bonus demands?

I hope that in the next Collective Bargaining Agreement, this clause will be adjusted to reflect that spending to improve the quality of a baseball team isn’t tied directly to increasing the major league payroll. Good luck convincing the MLBPA of that, though.

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Comments

  1. Tom B said...

    The only clause they need is that “if you don’t spend the revenue sharing $‘s on payroll, you don’t get them”.

    This doesn’t cause them to take on contracts for the sake of paying someone, but if they can improve their team by spending some money, it will be available to them.

  2. Greg Simons said...

    Jimbo, the union isn’t causing ticket prices to go up.  Supply and demand is.  Corporations are (or at least were) buying bunches of tickets, rich folks are snapping up seats, scalpers are grabbing huge blocks to resell.

    I don’t blame the players, or their union, for trying to get the best conditions and most money they can.  I’ve never gone to a game to see an owner, so I’m all in favor of the players getting as much of the pie as they can.

  3. Jimbo said...

    I don’t like the union. Very very bad for fans IMO. I think I’ve paid my way into two games the last 3 seasons. Just can’t stomach such an expense when owners are making millions, and men playing a game are making millions…while just parking my car costs $20.

    They’ve been on a consistent trend for so long, where the next contract HAS to be bigger than the last. Will be interesting to see how the agents and salaries adjust to the economic decline. Seeing this clause brought up looks like early-stage desperation to me.

    Oh, and who started the big contract increases? Canseco and Clemens (at least the ones I remember). Interesting how owners found it made sense to pay for “enhanced” superstars almost 20 years ago, yet they haven’t taken any responsibility for the steroid era.

    For $250,000,000 and an unnaturally long career playing baseball? Sure, I’d take a pill.

  4. Brian Cartwright said...

    “each Club shall use its revenue sharing receipts…in an effort to improve its performance on the field.”

    The statement says nothing about spending money.

    Sure, Florida doesn’t write out much in payroll checks, but they do have the performance on the field.  Are they supposed to now start spending stupidly and pay over market for marginal players?

  5. Kristi said...

    That clause was added because there was previously no guidance on how revenue sharing money had to be used.  The language was left vague because teams are supposed to be able to use it to improve their talent at the minor league level.  As a matter of fact, teams like the Marlins, Rays, Pirates and Royals routinely state that the majority of their money goes to developing the farm system, which should thereby improve their major league club in the long run.

    The Commissioner has the power to sanction any club not obiding by this clause.  However, he never has and presumably never will because the vague language allows teams to get away with spending that money just about anywhere.  Plus, there’s no requirement that clubs report back on where they spend the funds.  I don’t think any of this will change anytime soon.

  6. Joe said...

    It’s not only about major league payroll.  However, if the Marlins are raking in revenue sharing and, in turn, pocketing profits as a result, then they aren’t doing anything to improve the product on the field.  I thought that was the original gripe with the Marlins (and the Brewers at one point, IIRC), one that I think the Yankees would share with the Union.

    Major league salary, international players, draft choices, minor league infrastructure – these are all legitimate ways to improve the team.  Profits, Jeffrey Loria’s bonus, David Samson’s bonus – these are not good uses of revenue sharing.  I think the union has the right to question the Marlins.

  7. Jimbo said...

    Greg, the union just seems greedy. I don’t like greed. I agree it is perfectly fine for players to want their share of the money they’re earning the teams. Just don’t do it with such lust for more more more. Seriously, if Pujols said “I’ve got enough money, let me sign for $1 and help the team build around me”…the union would throw a fit.

    I’m fine watching baseball on tv, and enjoy the occassional company outing to a game. I’m sure once my son is older that’ll change…but even then I may take him to minor league games. Fraction of the cost, closer to the action, same great game!

  8. Ryan said...

    Jimbo,

    The billionaire owners are the greedy ones.  Why don’t they say, “I’ve got enough money, let me charge $1 tickets and help build the fan base.”

    The owners are stealing billions of dollars in taxpayer money in the form of subsidized stadiums.  I can’t begrudge workers who try to take some of that money back.

  9. MVD said...

    “Sure, Florida doesn’t write out much in payroll checks, but they do have the performance on the field.  Are they supposed to now start spending stupidly and pay over market for marginal players?”

    I’ve seen a lot of comments like this about this story on various sites and I believe that some people are missing the point. Nowhere was it stated that the Marlins should start spending money poorly, just that they increase their payroll. As Mr. Brunell points out, no one wants them to act like the Royals. And I agree they do have performance on the field, and, no they probably don’t need to jump into the free agent market, but increasing payroll doesn’t mean jumping into the free agent market, nor did the MLBPA specifically say anything about free agents. But keeping good home-grown players around (not trading every arbitration-eligible player on the roster and maybe giving a couple of them real contracts) to remain competitive will increase payroll and possibly make the Marlins a real contender.

  10. Spike said...

    “They couldn’t really care less if the Marlins are investing $60 million into their minor league development department, their scouting department, their international department… all that matters is major league payroll, because that’s where the players make their money.”

    Actually, there is an in depth review each team must do to defend their spending of revenue sharing money to “improve performance” and I’m sure if that number were accurate, the Marlins would have a case. Is that a number you pulled from somewhere reputable or is it just a number you threw out there?

    A recent Biz of Baseball article stated that teams spend roughly $20 million on player development so a number like $60 million would be gigantic in terms of showing an effort to improve performance and that would definitely give the Marlins a leg to stand on if both of those numbers are accurate.

    I’d love to read a study on minor league development spending if you have a link.

  11. Detroit Michael said...

    Of course the union is greedy.  Their function is to bargain for what’s best for the players.

    The large majority of people are greedy, i.e. they react to economic incentives.  Welcome to capitalism.

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