Deep pockets do not mean success as MLB defies other leagues in North America

Boston Red Sox manager John Farrell has a US$156m worth team which could finish last in AL East. Chris Young / AP Photo

Compared to its North American counterparts, Major League Baseball has an odd relationship with money.

The National Football League, National Basketball Association and National Hockey League all employ some form of salary cap. This helps leagues prevent operating costs from growing too quickly, while also promoting greater parity on the field.

These leagues also have a salary floor that requires teams to spend a certain amount on payroll, making sure every side involved is at least nominally competitive.

Baseball, though, just has to be different.

Rather than limit spending, MLB uses a luxury tax – also called a competitive balance tax – to discourage teams from amassing payrolls significantly larger than the rest of the league.

Teams are still free to spend what they like, but those who spend more than US$189 million (Dh694.2m) pay MLB a tax on the excess amount.

Those funds are then invested back into the league. Given the lack of a salary cap, in theory MLB should look something like the English Premier League, where big teams, funded by deep-pocketed owners, spend many times more than their rivals.

In practice, however, cases of teams buying championships are increasingly rare in MLB. A recent analysis by the Providence Journal suggests that money spent is no longer an accurate indicator of on-field success. In fact, the correlation between a team’s total payroll and number of wins has plummeted from accounting for 25 per cent of their success 10 years ago to just four per cent this year.

As a reporter put it: “In other words, you’d have a slightly better chance of predicting play-off participants simply by using alphabetical order than by using payroll numbers.”

In short, baseball is enjoying better competitive balance than it has in years.

Last season, half of the play-off teams – Tampa Bay, Oakland, Cleveland, Pittsburgh and Atlanta – were in the top eight of lowest cost per win (payroll divided by regular-season wins).

Only half of this season’s top-10 teams in total payroll look likely to make the play-offs, with the Boston Red Sox and their US$156m payroll on course to finish last in the American League East for the second time in three seasons.

This is great news for baseball. Front offices are focussing on spending smarter, securing younger players to long-term deals before they get too expensive and taking greater advantage of the draft and international market. More money in the game allows smaller-market teams greater ability to keep their best players.

Having more money is still preferable, since it helps cover up mistakes in the draft or free agency. Fortunately, though, it is no longer a prerequisite to earning a seat at baseball’s top table.

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