Major League Baseball’s Payroll System Is a Joke

Today the Pittsburgh Pirates traded outfielder Andrew McCutchen to the San Francisco Giants for two prospects. McCutchen was drafted by the Pirates and played with them for 9 years. He was the face of the franchise, but the Pirates had to trade him because he was on the last year of his contract and the Pirates were not going to offer him a contract extension.

This is a public relations disaster for the Pirates, and they’ve had their fair share of them. They traded their best pitcher, Gerrit Cole, this past Saturday to the Astros for prospects. This effectively closes the small window the Pirates had when they made the playoffs 3 years in a row from 2013-2015. And that’s all a small market such as the Pirates can hope for in baseball’s current system. The system favors large markets and teams that spend a lot of money. Small markets have to have everything go just right and maybe they can be competitive for a few years. Large markets make mistakes on players but they can just spend to cover up their mistakes. If a small market makes a mistake on a player, they’re stuck with them and it cripples the team.

Why is it like this? Because there is no salary cap. Football and hockey have salary caps. That’s what allows a tiny market like Green Bay to compete on equal footing with teams from New York and Chicago. Baseball doesn’t have a salary cap. In baseball, there is a luxury tax system. A team can spend as much as they want but if they go above the threshold ($195 million in 2017), they have to pay a percentage of the amount they go over. This amount gets paid to the teams with the smallest payrolls.

Whereas in football where most teams spend approximately the same amount on payroll, in baseball you have huge differences in payroll. Last year the Los Angeles Dodgers’ payroll was $242 million while the Milwaukee Brewers payroll was $63 million, almost 1/4 that of the Dodgers.

What does this do for competitive balance? Let’s look at the recent World Series winners:
2017: Houston Astros
2016: Chicago Cubs
2015: Kansas City Royals
2014: San Fransisco Giants
2013: Boston Red Sox
2012: San Fransisco Giants
2011: St. Louis Cardinals
2010: San Francisco Giants
2009: New York Yankees

The only team that can be considered small market is Kansas City. They had a great 2 year run where they went to the World Series in 2014 and 2015. Last year, they finished below .500. Large markets can be competitive every year. Small markets can only be competitive for a small amount of time. It’s a ridiculous system and it means a large number of teams are eliminated from contention even before the season starts.

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