The “Salary Floor” Myth, Part Two: It's Not Going To Do What You Think It's Going To Do
Today I would like to return to the subject of a hypothetical “salary floor” for baseball, a subject that has popped up more and more as the supposed solution to baseball’s competitive balance problem. Now, if you read Part I, you’ll see that baseball does not actually HAVE a competitive balance problem:
Baseball has not had a repeat champion since 2000, and every franchise has made the postseason at least once since 2014. As of this writing, with ~90% of the season completed, the best team in baseball is the Milwaukee Brewers, with the 15th highest payroll in the game, while the big-spending Mets cling to the last Wild Card spot in the National League. Of the teams outside playoff contention, most were in the postseason last year or the year before that. Two of the worst teams in baseball, the Braves and Orioles, won over 100 games just two years ago.
In other words, the league is already balanced by any reasonable metric, and these concerns are really just a smokescreen for owners who want to impose a salary cap. The idea of a “salary floor” is almost always discussed in conjunction with a salary cap, in a way that would closely approximate how leagues like the NFL, NBA, and NHL operate. In those leagues, unlike in Major League Baseball, team payrolls are tightly regulated, with total player salaries even explicitly codified, in the collective bargaining agreements, as a certain percentage of league revenues.
To give a general overview, the way it works in other leagues, and the way it would presumably work in baseball, is that league revenues are calculated1, and then a certain percentage is allocated to the players.2 That percentage is divided up to all the teams in a narrow band — between a “floor” and a “cap” — presenting strict limits on a team’s budget. Owners obviously prefer this situation, as the workers in those leagues literally CANNOT earn more than a certain slice of the league’s pie.
But many fans are also drawn to such an arrangement, for reasons that have nothing to do with protecting owners’ financial interests. Indeed, there is an intuitive, almost egalitarian appeal to giving all the teams roughly the same budget to work with in constructing their rosters. It FEELS fair, so I want to explain why the salary floor/cap combo is actually a very bad idea.
Even though there isn’t really a competitive balance problem in baseball, there are certainly problems — it’s just that a salary floor will not actually fix them. To see why, let’s break down the argument for a salary cap/floor.:
There is a real and persistent correlation between team spending and team success. As a general rule — and despite some notable outliers, like the Brewers and Tigers — the teams that spend a lot of money win and the teams that do not lose: Eight of the top nine teams in payroll are currently in playoff position, and none of the bottom ten are.
Given this correlation, many teams enter every season with very little hope to compete. This is bad for their fanbases, which is bad for the league.
Even worse, those teams at the bottom of the payroll rankings tend to recur year after year, meaning that fans of certain teams, like the Pirates and the Rays and Athletics, feel perpetually locked out of meaningfully competing.
A salary cap, combined with a floor, would fix this problem by eliminating, or at least compressing, the gap between the spending of all teams, forcing the poor teams to spend more and forbidding the rich teams from spending so much.
Again, there IS an intuitive appeal to this kind of logic, and I understand why so many fans respond to it, but it is very wrong. Let’s start with the first point, on the correlation between payroll spending and team success.
This correlation, while real, can be misleading, because it is often used to imply that spending more money means teams will perform better. In reality, there is way too much variance to draw these kinds of conclusions. For example, the Dodgers and Padres are neck and neck in the NL West, even though the Dodgers’ payroll is twice as big. The Marlins are 29th in payroll, yet are slightly ahead of the Braves, who are 20 spots ahead of them.
While this might seem like cherry-picking, there are examples like this every year. Since baseball players are not eligible for free agency until they’ve played six years in the big leagues, there’s only so much free agent spending can do for you. Nevertheless, competitive teams are usually in the top half, or at least top 20, of team payrolls because spending SOMETHING on free agency is a sign that a team is at least trying to make the postseason. The rest — that bottom third, which includes teams like the Nationals and the Athletics and the Rockies — are going through the infamous “rebuilding” process. That is, they are intentionally keeping their payroll low while they stockpile prospects for a “competitive window” that their front office feels is a few years down the road.
It is this rebuilding process that is the cause of the aforementioned two-tiered nature of the league. The reason it often feels like teams like the White Sox are playing a different sport than teams like the Phillies is that the White Sox are rebuilding — they are not TRYING to win this season, and their fans have no illusions that they will be competitive this year.
But there are a few things that must be said about the rebuilding process.
The first is that teams are not trapped in the “rebuild” process forever. Indeed, the thing about saying “teams that win the World Series are always in the top of league payroll” is that this is not a fixed group: A team’s payroll can fluctuate, and teams we often think of as low-payroll teams can make strategic inroads in free agency to compete. The Kansas City Royals are generally thought of as a low-payroll team, but when they won the World Series, they were 7th in team spending. The Washington Nationals were 5th in payroll when they won the 2019 championship; this season, their spending is last in the league. So you don’t have to be some perpetual big-spender to make a deep playoff run.
Nor do you have to rebuild at all! If a team is willing to invest in their roster, it can just do that, thanks to the league’s lack of a salary cap. A few years ago, the Texas Rangers were stuck in a “rebuild” that wasn’t going anywhere; they finished in last place three times in five seasons. Then they went out and signed Corey Seager and Marcus Semien and Nathan Eovaldi, and they won their first World Series in 2023.
Some will rebut that not every team can do that. That so-called “small-market teams” are unable to sign free agents because they simply do not have the resources to outbid their competitors for free agents. But this is nonsense. For one, the idea that any team’s “market” is fixed is foolish, and not how teams themselves behave. For another, teams within the SAME markets often have diametrically opposed spending habits: Compare the White Sox payroll (28th) to the Cubs (6th), or the 2024 Giants payroll (13th) with the Athletics (29th). While there certainly are some real differences between a New York team’s budget and that of a team in Kansas City, the market-size is far less important than the decisions and philosophy of the specific owners.
Of course, this is why so many people gravitate towards the salary floor idea — they believe bad owners like Bob Nutting and John Fisher must be FORCED to spend money by the imposition of a minimum team salary. But the problem there is how a floor/cap combo would work in practice.
Indeed, we know from how the other professional leagues operate that the only way to make this system work is to impose severe restrictions on the free agency process. In the NFL, contracts are not guaranteed, allowing players to be cut and removed from a team’s payroll. In the NBA, the penalties associated with going over various “aprons” include the loss of draft picks and an inability to sign veterans to minimum deals. All of these would, of course, have hugely negative implications for the players.
But even speaking purely to the matter at hand, they would also be terrible for competitive balance! In effect, a floor/cap combo forces EVERY team to go through periodic rebuilding phases when they bump up against the salary cap. If you look at the leagues that have implemented some version of floor/cap combo, you see that roughly the same proportion of the league enters their seasons as non-competitive.
About ⅓ of their teams are, in essence, rebuilding every season. In the NBA, the Phoenix Suns are likely to be irrelevant for years as they deal with the fallout of going over the second apron to get Kevin Durant and Bradley Beal. In the NFL — the league known for its parity — they are only in Week 2 of their season, yet teams like the Saints and Giants and Browns are all in the middle of ongoing “rebuilds” caused by salary cap mismanagement, leaving them with little chance of making the playoffs this year.3
In other words, a cap and a floor would NOT actually fix the issue MLB fans are mad about. It would still be the case that several teams would enter every season with little to no chance of being competitive — in fact, that would essentially be CODIFIED by the rules around the cap. If anything, the so-called “competitive balance” issue would be worse, because a bad team couldn’t just sign free agents until they were better, as the Rangers did a few years ago.
What fans are really mad about is bad owners: people like Jerry Reinsdorf of the White Sox and Robert Nutting of the Pirates, who refuse to ever spend on free agents even when they have talented young players on rookie deals. The allure of a salary floor is that it would FORCE these guys to spend more money. But this wouldn’t actually work. There’s no reason to think they’d ever spend much more than the minimum, and they would still be comparatively non-competitive. Even teams in leagues with a cap/floor are plagued by sad sack teams with bad owners, whether it’s the Browns or the Hornets or the Jets or the Kings. The problem of bad owners isn’t going to go away with a salary cap or a floor.
If we are so concerned with “competitive balance” — as Rob Manfred pretends to be every time he talks about a salary cap — then he should go after bad owners directly. Just take their teams away! Nobody has a right to own a baseball team. After all, every league regulates who can own one of its teams, and Manfred is empowered to discipline owners directly.
Of course, he’ll never do such a thing, because he cares about protecting the financial interests of owners far more than he cares about “competitive balance,” and this should be a sign that his justification for a salary cap or floor is total bullshit. Because we KNOW that a salary cap would limit the amount of money flowing to the players, and help owners get richer. That’s why they have tried for decades to impose a cap, and it’s obviously the real reason why they are pushing for it now. But since greed is still nominally frowned upon, they have to pretend it’s about competitive balance.
Fans DO care about competitive balance, and so many of them have been suckered by this talk. But, to recap:
There is no competitive balance issue in Major League Baseball. Most of the league competes for playoff contention every few years, and there hasn’t been a repeat champion a quarter of a century. There are “sad sack” teams — the Pirates, the Marlins, the Athletics — that perpetually underperform, but those exist in every league. And, in fact, teams CAN emerge from sad sack status, as teams like the Royals, Rays, and Cubs have done in the last 15 years.
Extended playoff droughts are no more common in MLB than in other pro sports leagues, despite having a smaller postseason than the NBA, NFL, and NHL. So while it’s easy to feel bad for fans of sad sack teams, there’s no great crisis that ought to trigger major changes to the league’s rules.
The specific rule being floated — a salary cap combined with a salary floor — would NOT actually solve the problem of “sad sack” teams (as evidenced by the fact that such teams exist in every league). If anything, it would make the problem worse by ensuring that teams stuck in “salary cap hell” cannot be competitive for years at a time. But it WOULD put a ceiling on the amount of money owed to players, a goal that directly benefits owners’ financial interests at the expense of the players who make the game go. This is the obvious, nefarious explanation that is being hidden by gestures towards “competitive balance.”
This is easier said than done, and the unions in leagues with this structure are constantly having to bargain over what counts as “league revenue.”
That percentage is another point of negotiation, but it is generally around half, even though the players do nearly all the work and provide all the real value to the leagues.
The Saints have been in salary cap hell since Drew Brees retired and haven’t made the postseason since the pandemic. The Giants infamously let Saquon Barkley leave because they didn’t think he was worth the cap hit, and the Browns, of course, have ~20% of their cap tied up in the worst contract of all-time, Deshaun Watson.