DID MLB institue a "salary cap"? in SoxProspects Discussion Forum

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DID MLB institue a "salary cap"?

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grandsalami	DID MLB institue a "salary cap"?		Lead	[-]
Veteran Member Posts: 298 01/22/12 1:38 PM	Tags : None http://www.cnbc.com/id/45..._Make_a_Colossal_Mistake This could explain why the sox/yankees want to stay under the lux tax. Last Edited By: grandsalami 01/22/12 1:42 PM. Edited 1 time.
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pedroiayouk1520		#1	[url]	[-]
Veteran Member Posts: 213 01/22/12 2:00 PM	grandsalami wrote: http://www.cnbc.com/id/45..._Make_a_Colossal_Mistake This could explain why the sox/yankees want to stay under the lux tax. I already put this article in the Luxury Tax Threshold thread. Not many people are acknowledging this, despite the fact that the threshold is probably the biggest factor of this offseason.
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grandsalami		#2	[url]	[-]
Veteran Member Posts: 299 01/22/12 2:06 PM	pedroiayouk1520 wrote: grandsalami wrote: http://www.cnbc.com/id/45..._Make_a_Colossal_Mistake This could explain why the sox/yankees want to stay under the lux tax. I already put this article in the Luxury Tax Threshold thread. Not many people are acknowledging this, despite the fact that the threshold is probably the biggest factor of this offseason. this could also explain why the yankees keep repeating that they want to get under the tax in the next few years.
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Archie Graham		#3	[url]	[-]
Veteran Member Posts: 3485 01/22/12 6:04 PM	I don't think the Sox will ever again go over the tax (once they get under), so long as these type of incentives are in the CBA. Last Edited By: Archie Graham 01/22/12 6:16 PM. Edited 1 time.
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Guidas		#4	[url]	[-]
Veteran Member Posts: 2527 01/22/12 6:54 PM	The Arb offer to Ortiz really hamstringing them if this report is accurate.
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jmei		#5	[url]	[-]
Posts: 1482 01/22/12 7:04 PM Forum Moderator	This does seem to explain the uncanny desire by both the Red Sox and Yankees to cut payroll. 2012 may end up as a "bridge year" of another sort-- a one-year hit to get them more salary flexibility in the future. To be fair to Theo, he couldn't have foreseen the player's union conceding a real soft salary cap, so last offseason's spending can only be evaluated on its merits and not on any multiplier effect. Guidas is right, it really still speaks to the poor planning, FO-ownership communication, and/or a bad gamble in terms of offering Ortiz arb if they knew that there would effectively be a hard cap on spending this year and still tied down a lot of it. Lavarnway could represent a cost-effective alternative that also reduces the team's reliance on LH hitters (you could also use the spot to rest Youkilis extensively or even full-time).
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grandsalami		#6	[url]	[-]
Veteran Member Posts: 300 01/22/12 9:13 PM	jmei wrote: This does seem to explain the uncanny desire by both the Red Sox and Yankees to cut payroll. 2012 may end up as a "bridge year" of another sort-- a one-year hit to get them more salary flexibility in the future. To be fair to Theo, he couldn't have foreseen the player's union conceding a real soft salary cap, so last offseason's spending can only be evaluated on its merits and not on any multiplier effect. Guidas is right, it really still speaks to the poor planning, FO-ownership communication, and/or a bad gamble in terms of offering Ortiz arb if they knew that there would effectively be a hard cap on spending this year and still tied down a lot of it. Lavarnway could represent a cost-effective alternative that also reduces the team's reliance on LH hitters (you could also use the spot to rest Youkilis extensively or even full-time). agree w/ your first paragraph
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stats39		#7	[url]	[-]
Veteran Member Posts: 157 01/22/12 10:27 PM	this tax threashold does go up by 12m$ next year. there is no reason in the world for a baseball team to spend over 190M a season.
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pedroiayouk1520		#8	[url]	[-]
Veteran Member Posts: 215 01/22/12 11:28 PM	stats39 wrote: this tax threashold does go up by 12m$ next year. there is no reason in the world for a baseball team to spend over 190M a season. The threshold stays at $178M in 2013. If it is true that staying under the luxury tax means the team can eventually get a 25%-100% rebate of its "revenue sharing," then I'm sure that is the main driving factor of this "penny pinching" offseason. In case anyone was wondering, the Sox paid $86M in 2011 revenue sharing. So its not just about John Henry not wanting to pay a 40% tax of a couple mil. Its about getting that $86M per year back in return down the road. Someone mentioned in the luxury tax thread that the Sox are not allowed to get the rebate, can anyone here find/prove that anywhere? Last Edited By: pedroiayouk1520 01/22/12 11:41 PM. Edited 1 time.
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Yirmiyahu		#9	[url]	[-]
Posts: 3894 01/22/12 11:48 PM Forum Moderator	pedroiayouk1520 wrote: Someone mentioned in the luxury tax thread that the Sox are not allowed to get the rebate, can anyone here find/prove that anywhere? This is what I said in the other thread: Pedroiayouk, that can't be the whole story. Revenue sharing payments are paid by every team as a percentage of revenues (currently 31%), and the payments are distributed among the clubs with lower-than-average revenues. The amount of the payments varies according to a really complex formula. If the 15 largest market clubs were to (eventually) get back 100% of their payments, the entire revenue sharing program would become useless. If the big market teams became exempt, who would be paying into the fund in the first place? My understanding of the new provisions is that a) they would for the first time prevent the biggest-market teams from being eligible to receive revenue sharing payments, because they should be able to be profitable without assistance, but b) those low-revenue big-market teams wouldn't lose their revenue sharing payments so long as they didn't exceed the luxury tax cap. Between the payors and the payees, it would basically create a middle class of low-revenue big-market teams. This would apply to a small group of teams like the Astros/Athletics/Blue Jays. But that would never include the Red Sox or Yankees, who would never be low-revenue. I don't know what the situation is, but the system described in the CNBC article doesn't make sense, and I'm certain we're working with incomplete information. http://twitter.com/YirmiyahuStats
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pedroiayouk1520		#10	[url]	[-]
Veteran Member Posts: 216 01/22/12 11:52 PM	Yirmiyahu wrote: pedroiayouk1520 wrote: Someone mentioned in the luxury tax thread that the Sox are not allowed to get the rebate, can anyone here find/prove that anywhere? This is what I said in the other thread: Pedroiayouk, that can't be the whole story. Revenue sharing payments are paid by every team as a percentage of revenues (currently 31%), and the payments are distributed among the clubs with lower-than-average revenues. The amount of the payments varies according to a really complex formula. If the 15 largest market clubs were to (eventually) get back 100% of their payments, the entire revenue sharing program would become useless. If the big market teams became exempt, who would be paying into the fund in the first place? My understanding of the new provisions is that a) they would for the first time prevent the biggest-market teams from being eligible to receive revenue sharing payments, because they should be able to be profitable without assistance, but b) those low-revenue big-market teams wouldn't lose their revenue sharing payments so long as they didn't exceed the luxury tax cap. Between the payors and the payees, it would basically create a middle class of low-revenue big-market teams. This would apply to a small group of teams like the Astros/Athletics/Blue Jays. But that would never include the Red Sox or Yankees, who would never be low-revenue. I don't know what the situation is, but the system described in the CNBC article doesn't make sense, and I'm certain we're working with incomplete information. Ya, you're probably right. I just hate the fact that as fans, we literally have no idea what is going on this offseason. Its becoming a complete guessing game at this point. It even seems like most of the sports writers don't know how the new rules work at this point. I have faith in ownership/Ben that they are focused on winning, so I'm sure whatever moves they are making involves plenty of information that we don't know or understand.
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grandsalami		#11	[url]	[-]
Veteran Member Posts: 301 01/22/12 11:54 PM	Yirmiyahu wrote: pedroiayouk1520 wrote: Someone mentioned in the luxury tax thread that the Sox are not allowed to get the rebate, can anyone here find/prove that anywhere? This is what I said in the other thread: Pedroiayouk, that can't be the whole story. Revenue sharing payments are paid by every team as a percentage of revenues (currently 31%), and the payments are distributed among the clubs with lower-than-average revenues. The amount of the payments varies according to a really complex formula. If the 15 largest market clubs were to (eventually) get back 100% of their payments, the entire revenue sharing program would become useless. If the big market teams became exempt, who would be paying into the fund in the first place? My understanding of the new provisions is that a) they would for the first time prevent the biggest-market teams from being eligible to receive revenue sharing payments, because they should be able to be profitable without assistance, but b) those low-revenue big-market teams wouldn't lose their revenue sharing payments so long as they didn't exceed the luxury tax cap. Between the payors and the payees, it would basically create a middle class of low-revenue big-market teams. This would apply to a small group of teams like the Astros/Athletics/Blue Jays. But that would never include the Red Sox or Yankees, who would never be low-revenue. I don't know what the situation is, but the system described in the CNBC article doesn't make sense, and I'm certain we're working with incomplete information. i trust the CNBC article more then the others.. he has been on it (sports business side for a while)
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Steve of Charlotte		#12	[url]	[-]
Veteran Member Posts: 585 01/23/12 9:16 AM	Wow.........that is amazing. Thanks Grandsalami for that link. It certainly does give us more insight in what Ben Cherington is up againest. It makes MORE sense in what he is trying to do. Sounds like Punto is our SS whether we like it or not (go Iglesias!!!!). I love what Big Papi has done for us over the years, but his contract demands (and I'd be doing the same thing, if I were him) are hurting us ($16.25 million...yikes)!!!
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BorisMan		#13	[url]	[-]
Veteran Member Posts: 905 01/23/12 10:27 AM Veteran Member	Steve of Charlotte wrote: I love what Big Papi has done for us over the years, but his contract demands (and I'd be doing the same thing, if I were him) are hurting us ($16.25 million...yikes)!!! Is it true that if Papi goes to arbitration and wins, his contract is not guaranteed if he is cut in spring training? Could the salary cap really cause the Sox to think of doing this and just have Lavarnway DH if he has a good spring?
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Ohioguy66		#14	[url]	[-]
Rookie Posts: 93 01/23/12 3:30 PM	Well isn't that a carrot and a stick. If you over spend the Luxury Tax limit you pay an extra tax, and you forfeit a potentially large rebate. Couple that with a hard slotting system, and many of the advantages the Sox may have had in the market are certainly penalized far more severely, if not completely off the table. I have to wonder if Scutaro was on the radar for the Sox this year at all? He had a $1.5mil buyout. So the Sox exercise their option for $6mil, really only spending a net of $4.5 mil, and then trade away the whole $6mil obligation, and get back a player in return. Essentially they got Punto for the same $1.5mil they already had tied up in Scutaro. I wouldn't count on any more signings, or the Sox will have no room for mid-year acquisitions in the budget without moving more salary. Really, we now have a salary cap, which means that cost controlled young players need to be produced year after year if you hope to balance that off against some expensive free agents. The most expensive free agents are always starting pitchers, and sluggers. I wonder if drafting patterns will change to emphasize the most expensive positions, while ignoring middle infielders, relief pitchers, and speedy outfielders that tend to be cheaper and more fungible. The Rays were way ahead of this curve, they have produced a new starting pitcher every year out of the farm. The Sox really got screwed in this CBA, it sounds as if the rest of the owners were really gunning for the Yankees and the Sox. These moves really reign in the advantages of the big money teams. No wonder Theo left!
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Norm in Oregon		#15	[url]	[-]
Veteran Member Posts: 1776 01/23/12 5:05 PM Veteran Member	Yirmiyahu wrote: ... I don't know what the situation is, but the system described in the CNBC article doesn't make sense, and I'm certain we're working with incomplete information. It's not just CNBC Yirm... Here's the ESPN story that has fuelled a few online blogs, and a quote from that piece: ...there is a new market disqualification test as an incentive for clubs to increase revenue, preventing teams from large markets from receiving revenue-sharing proceeds. By the end of the labor deal in 2016, teams in the 15 largest markets will no longer be allowed to receive revenue-sharing funds, regardless of their TV contracts or attendance, a source told ESPN.com's Jayson Stark. According to the source, t he 15 teams that will be ineligible for revenue sharing by 2016 are the Yankees, Mets, Dodgers, Angels, Cubs, White Sox, Phillies, Red Sox, Rangers, Braves, Nationals, Blue Jays, Astros, Giants and Athletics. The A's will be eligible for revenue sharing until their stadium situation is resolved, the source said. There are quite a few provisions where the details will be very important, such as this on. Another that sparked my interest is the provision that "resets" the competitive balance tax, this from a link posted in this thread when the CBA was first agreed to: The Competitive Balance Tax structure under the 2006 Basic Agreement will be modified so that a team that moves below the threshold will be treated as going over for the first time when it next exceeds the threshold. To me this means there may be some marginal value in hovering right around that threshold and having it reset frequently. As I suggested early on, bring on the bean-counters. The fine grain of this thing probably has a few loose threads, the place where lawyers like to live. Power concedes nothing without a demand. It never did and it never will. ~ Frederick Douglass
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Yirmiyahu		#16	[url]	[-]
Posts: 3897 01/24/12 1:18 AM Forum Moderator	Norm in Oregon wrote: It's not just CNBC Yirm... Here's the ESPN story that has fuelled a few online blogs, and a quote from that piece: ...there is a new market disqualification test as an incentive for clubs to increase revenue, preventing teams from large markets from receiving revenue-sharing proceeds. By the end of the labor deal in 2016, teams in the 15 largest markets will no longer be allowed to receive revenue-sharing funds, regardless of their TV contracts or attendance, a source told ESPN.com's Jayson Stark. According to the source, t he 15 teams that will be ineligible for revenue sharing by 2016 are the Yankees, Mets, Dodgers, Angels, Cubs, White Sox, Phillies, Red Sox, Rangers, Braves, Nationals, Blue Jays, Astros, Giants and Athletics. The A's will be eligible for revenue sharing until their stadium situation is resolved, the source said. And the system described in that excerpt makes perfect sense to me. You don't want to allow big market teams to collect revenue sharing funds just because they're so badly run that they can't make money on their own. What doesn't make sense to me is a system where the richer half of the league is exempt from paying into the fund in the first place. If revenue sharing is to continue to exist, the money has to come from somewhere. If the 15 biggest market teams are eventually exempt from payments, the headline should read "New CBA phases out revenue sharing by 2016." http://twitter.com/YirmiyahuStats
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Deanskie		#17	[url]	[-]
Veteran Member Posts: 124 01/24/12 10:40 AM	Yirmiyahu wrote: If the 15 biggest market teams are eventually exempt from payments, the headline should read "New CBA phases out revenue sharing by 2016." Or rather "New CBA replaces revenue sharing with salary cap by 2016." Screw the troops. Or at the very least, buy them a drink.
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Norm in Oregon		#18	[url]	[-]
Veteran Member Posts: 1778 01/24/12 12:55 PM Veteran Member	Everything I've seen so far is geared towards squeezing teams at the high end of the spectrum, forcing them down and under the spending limit. That limit looks, more and more, like a serious cap. And we need another word for this since it's certainly not a "soft cap", any more than a cop with truncheon is using soft power when he/she beats you over the head with it. It feels plenty hard when it makes contact, just as the MLB penalties will feel very hard if you incur them. It's difficult to imagine any contract that takes a team way over the cap - probably for four or five years running - being seen as viable. Let's say C.C. Sabathia gets a 20+ million salary for four years, a salary that takes you over that limit for those years given the other fixed salaries you're shelling out. The cost of that salary to your franchise is many-fold: the money you shell out to the pitcher, the likelihood that you won't be under the cap during that pitcher's tenure which makes recruiting talent out of the question, and the resulting yearly increases in the taxes you pay. All of this argues for draconian cost controls, shedding of salary where you can, a change in the type of players you bring on board and the length of their contracts. Like I said we need a new language. There has to be something between soft cap and hard cap. I don't particularly like the word firm (makes me think of stool) but I'll throw that out there for starters. Power concedes nothing without a demand. It never did and it never will. ~ Frederick Douglass
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OCD SS		#19	[url]	[-]
Veteran Member Posts: 902 01/24/12 1:26 PM Veteran Member	Norm in Oregon wrote: Everything I've seen so far is geared towards squeezing teams at the high end of the spectrum, forcing them down and under the spending limit. That limit looks, more and more, like a serious cap. And we need another word for this since it's certainly not a "soft cap", any more than a cop with truncheon is using soft power when he/she beats you over the head with it. It feels plenty hard when it makes contact, just as the MLB penalties will feel very hard if you incur them. This is not a cap, basically what Bud has done is switched from stick to carrot and is paying teams at the high end to get under the spending limit. However make no mistake, it is the team's choice to get under the CBT threshold with the idea of increasing revenues. It should also be mentioned that given the real draconian limits placed on spending on in the draft and latin amateur markets this money is much less likely to find its way back in to the roster. *"I'd like to fck Sandra Bullock"** - Pedro, explaining his secret ambition to Sports Illustrated for Kids.
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beasleyrockah		#20	[url]	[-]
Veteran Member Posts: 387 01/24/12 4:04 PM	OCD SS wrote: Norm in Oregon wrote: Everything I've seen so far is geared towards squeezing teams at the high end of the spectrum, forcing them down and under the spending limit. That limit looks, more and more, like a serious cap. And we need another word for this since it's certainly not a "soft cap", any more than a cop with truncheon is using soft power when he/she beats you over the head with it. It feels plenty hard when it makes contact, just as the MLB penalties will feel very hard if you incur them. This is not a cap, basically what Bud has done is switched from stick to carrot and is paying teams at the high end to get under the spending limit. However make no mistake, it is the team's choice to get under the CBT threshold with the idea of increasing revenues. It should also be mentioned that given the real draconian limits placed on spending on in the draft and latin amateur markets this money is much less likely to find its way back in to the roster. This. Clearly being over the tax will be extremely inefficient going foward, but where does the money go exactly? You can only put so much more money in scouting, player development, etc...if the savings and rebate are that massive, I just don't see how that money is going to be put back into the product. The payroll is basically capped for the foreseeable future, and the draft and international market is capped as well. I'm sure ticket prices will continue to rise (yeah, I know supply & demand). It looks like the Red Sox profit margin will just increase, and their economic advantage over baseball becomes less of a factor. This system sucks. The best part of baseball is the roster building, and the major appeal of it was not having to worry about caps. How long before we have NBA styled ESPN build a trade programs to let you know if your team can trade for player X while staying under the tax? Last Edited By: beasleyrockah 01/24/12 4:09 PM. Edited 1 time.
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DID MLB institue a "salary cap"?

DID MLB institue a "salary cap"?