Playing for Profit: The MLB needs to hold owners accountable for lack of spending

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The MLB absolutely has a parity problem. Leaguewide competitiveness seems to be unusually low, with massive discrepancies in team salaries ridding some fans of hope before the season starts. For an example of the massive gap in investment, fans should look no further than the difference between the spending habits of the Pittsburgh Pirates and Los Angeles Dodgers this offseason. 

The Dodgers, reigning World Series champions and perpetual luxury tax payers, signed four players to contracts worth more than $2.6 million in average salary, according to Spotrac. The defending champions also added one of the offseason’s biggest free agent prizes, starting pitcher Trevor Bauer. Bauer’s deal with the Dodgers is for three seasons, and he will be paid an MLB all-time single season record of $40 million this season alone. This comes less than one season after the Dodgers signed outfielder Mookie Betts to a 12-year contract worth roughly $365 million.

An absurd demonstration of wealth? Surely. Especially during a global pandemic, and after laying off nearly 50 employees after citing budget concerns. Nonetheless, while the Dodgers field a 26-man roster due nearly $230 million in combined salary this season, fans of the Pirates are expected to get excited about a team with a combined salary of $34 million, with a prize free agent signing on a maximum salary of $1.5 million this season. 

Yes, you read that right. The Dodgers’ prized signing Bauer will make more money than the entire 26-man Pittsburgh Pirates roster this season. To make matters worse, Pirates owner Bob Nutting and company did essentially nothing to improve their bottom-dwelling roster from last season. In the shortened 2020 season, the Pirates won just 32% of their games, compared to the Dodgers’ mark of 72%. 

For those who aren’t familiar with American professional sports, bad teams usually spend the offseason remedying depleted rosters while highly successful teams, like the Dodgers, spend the offseason making up for inevitable player departures. Instead, the rich have gotten richer, and the gap in competitiveness continues to grow. 

Ultimately, the MLB and commissioner Rob Manfred must hold franchise owners accountable for their lack of spending. The idea of implementing a salary cap in order to deter teams like the Dodgers, New York Yankees and others from excessive spending isn’t misguided. However, without a minimum salary floor, situations like that with Nutting and the Pirates will persist. 

As recently as 2017, Nutting was estimated to have a net worth exceeding $1 billion. Admittedly, net worth is not fully liquid and much of Nutting’s wealth is likely tied to assets and properties. But the reality is, for someone as financially affluent as Nutting to invest so little into an organization over an extended period of time with little to no repercussion, fans should be concerned about the viability of baseball as a mainstay in sports viewership in future years. While a high payroll doesn’t necessarily directly translate to on-field success, it definitely helps. 

Nine teams are set to have a 26-man payroll of $150 million or higher in the 2021 season. On the other hand, five teams are currently paying less than $50 million combined for their 26-man roster. This is not a sustainable business model. If the gap between the teams at the top of spending and teams at the bottom of the list continues to widen, the MLB can surely expect the exodus of fans to continue. 

With more owners adopting Nutting’s minimal spending strategy, a concept accelerated by the coronavirus pandemic, those at the league office need to act quickly to regain balance within the league. It should be noted, however, that league revenue is shared among owners. Essentially, the revenue allocated for owners taken in by the Dodgers and Yankees is placed into the same pot as the revenue of less-popular teams, and split evenly among the league’s 30 owners. Thus, if the majority of owners are content with receiving their portion of the profit share despite their own team fielding a poor roster, then the league is in a sticky situation. 

Ultimately the owners would have to vote to institute a salary floor, and if the majority of owners become comfortable with the concept of minimizing personal costs and leeching off the “blue-blood” franchises’ revenue, then league administrators would find it difficult to increase minimum roster investment. 

If the MLB institutes a salary floor like the NFL, the lack of competitiveness and fair compensation for the league’s less competitive rosters would at least be partially corrected. As a result, with more teams in contention to sign top players, teams like the Dodgers and Yankees would be unable to dominate the free market as they do now.

David Ramirez is a junior writing about the intersection of sports and business. He is also a sports editor at the Daily Trojan. His column “Playing for Profit” runs every other Tuesday.