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February 20, 2002

The Daily Prospectus

Salary Cap 2: Electric Capaloo

by Derek Zumsteg

Set aside all the economic and competitive reasons a salary cap is stupid. There's another reason you, as a baseball fan, should be against any kind of cap: it's boring.

If you love your sport, you'll oppose salary caps for it. Why should any fan care about whether their team has a "veteran exception" that might allow them to sign Patrick Ewing and his crappy jump shot to a one-year deal? What kind of sense does it make that if you release Player A, the salary cap hit you take may require you to release Player B? Should being a fan require you to dabble in advanced limited-set economic theory?

Hell, no. Cap discussions are boring. I have trouble keeping my eyes open when salary implications are discussed. In practice, every salary-cap system ever implemented has contained loopholes that allowed future borrowing or some spend-around rules, leaving gaps between organizations in their ability to field teams. Because there's such an incentive for rich teams to spend around a cap, they can afford capologists smart enough to work out ways to use their money to maximum advantage. It's like campaign-finance reform: limit individual contributions, and people form foundations. Limit candidate fund raising, and the parties step up to take money.

The NBA's went through the most egregious example of this when the "Larry Bird" exemption, which allowed teams to exceed the cap to sign their own players, was regularly used by teams to sign their own players and then trade them and their new contracts to teams that wouldn't have been able to offer the player the same money on the open market. A clause designed to encourage player retention ended up encouraging salary escalation and movement.

And the NFL's cap--I don't want to get started on how complicated and useless that thing is.

Caps are supposed to make leagues more competitive; they do no such thing. In practice, they make it harder to rebuild, and the game less interesting to follow.

Think about bad NBA teams. Let's say you've taken over a badly-run NBA team, and you have three decent players signed for $10 million each, a relic of the previous ownership. You need to ditch these guys, but what other team--even if they need one of those players--can take on that salary? Maybe if they have another $10 million in bad salary, they'll make a deal, and hopefully the guy you get has a shorter contract, but the whole structure makes it that much harder to rebuild.

In MLB, teams have a tremendous freedom to rebuild quickly. Stuck with a Mo Vaughn contract? Find a rich team that can get some value out of him and trade him away. Even if you get nothing in return, you can then find a cheaper, better replacement.

NBA teams that are contending also don't have the freedom to add a missing piece or replace an injured player. If you're headed into the playoffs and Grant Hill's ankle has fallen off again, you need a replacement, but how are you going to get one? You can't just take an overpaid guy off a team that's fallen out of contention; you have to take that guy, give up salary in return, and probably give up a draft pick to get the deal done.

If you're a mid-payroll MLB team one big bat short of a division title and playoff run in July, you can pick one up and strike a fair-value deal without having to bribe someone else to get around cap restrictions.

People like to talk about player movement as if it's a bad thing, but it's not. There's nothing that prevented Carl Pohlad, owner of the Twins and one of the richest men in the country, from spending on quality free agents these last few years. A salary cap puts an additional restriction on player movement outside of talent, potential for revenue increase, and value to a team, so teams are less able to construct quality rosters. It makes it harder to trade and harder to sign free agents, and anything that limits the choices teams have makes for limited competition and poorer balance.

Baseball is fun to watch and fun to follow. A salary cap would reduce the quality of teams that franchises can field, and would make the fan experience much more tedious.

Derek Zumsteg is an author of Baseball Prospectus. You can contact him by clicking here.

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