Salary Cap Increase?

[Deleted]

What are the chances Salary Cap is raised from its current $120M? Television money is skyrocketing; player salaries are soaring; free agency contract are matching the rise in available money. Yet teams here continue to be locked at an anemic $120M.

Seems time (past time?) for a more realistic uniform raise in cap limit.

We have no figure in mind, but we thought a mention might promote discussion on the issue.

[Winston-Salem Spirits (Brad)]

Isn't this point (mostly) moot given that we bid on free agents with our cap limits in mind, not with real world team payrolls as the basis? Although, now that I ask that question I can see it coming into play in determining the relative values of real life contracts via-vis a franchise tag decision. Given the skyrocketing salaries in real life MLB, it follows that pre-arbitration extensions will also see a hefty increase thus making the act of locking up a Goldschmidt, MCarpenter, CCarrasco, McCutcheon, etc. with a franchise tag much less of a relative bargain.

Is there a place where collective real life payrolls are catalogued? Should we be looking to inch the cap up to match the median or mean MLB payroll? If so, when during the year would be the time to do so? Off hand, $120M doesn't feel as dated as Guapo thinks it is, but I could be wrong.

[Deleted]

I agree completely with Brad

[Winston-Salem Spirits (Brad)]

Just did some amateur calculations using numbers from this site...

deadspin.com/2015-payrolls-and-salaries-for-every-mlb-team-1695040045

There were a number of different sites with payroll info, deadspin claims to be reporting AP reported payroll numbers. Most other sites had numbers that were a little lower. The numbers from Deadspin correspond to...

Mean payroll: $124.7M (dividing total payroll by 30)
Median payroll: $114.4M (the midpoint between the # 15 & 16 payrolls. In this case the CHW & KCR)

Of course, these numbers only include ML contracts. We have the additional expense of spec bidding, fwiw.

[Deleted]

i don't know that we need a cap increase yet, but its not a moot point either. That's because we have franchise tags. And so as real life contracts go up, then those tagged contracts go up too. Eventually, with no cap increases, franchise tags would become worthless because they'd be higher than bids. So the cap will have to change at some point, it's just a question of when. We can't just say the bidding makes it all moot......because not all contracts are bidded.  Unless of course this is just a shadow method of getting rid of franchise tags. All that said, I don't know that we need a cap increase now, but at some point we will.

FWIW, the easiest way imo to index cap increases is to use the value of QOs since those increase in real life relative to payrolls (well very close to payrolls, QOs are the average of the top 125 salaries, but QOs are probably better for us than payrolls since most of our franchised guys will tend towards better players, plus its a very easy number to find, the only problem would be if the next CBA changes them). So if you look at the rate of increase of QOs per year, you'll get a decent idea of the % increase in salaries. when the league started the QO was at $14.1M, now its $15.8M. So MLB salaries of good players have gone up 12% since we started the league. That sort of rate of increase will certainly crunch the use of franchise tags eventually without increases. I'd imagine tho the original 120 number was set with the idea that there was already some slack in it and that it would stay for a few years so that increase doesn't mean a change is needed now. But eventually, some sort of automatic annual increase linked to real life increases will be needed if we want to keep the franchise tag relevant.

[Deleted]

Cots has the most comprehensive and updated contract info I have been able to find:

www.baseballprospectus.com/compensation/cots/

I agree that we should at least consider raising the salary cap.

[Rawhide GM (Jimmy-LM)]

I feel as though I answered this same question last year, but it may have been in a PM and not on the public forum.

My intent is to likely increase the salary cap every 3 years, long enough where it can't be depended upon, but also to help alleviate the rising costs. Part of this is to make everyone manage their team... As in make tough decisions. Who do you cut, who do you tag, who do you sign. If the cap constantly increases, it takes out a lot of decision making when it comes to offseason moves. It also will help keep contracts reasonable in here, it shouldn't allow for huge overpayments on FA players.

Costs are rising, but that's why I set it at $120M to begin, so it would holds its value for a bit of time. I am curious to see what $$ rules come into the next CBA agreement, and how that will affect contracts and team spending in the future. For this upcoming season, the salary cap will remain the same. Next year, the TRP will discuss it (as we follow CBA negotiations) and see what makes the most sense for the competitiveness of the league.

[Javelinas GM (Scott)]

I'm along the same thinking as Jimmy. Something like $5m every 3 years is reasonable without enabling owners to make bad financial decisions thinking they will get bailed out

[Deleted]

Jan 4, 2016 12:52:49 GMT -5 Javelinas GM (Scott) said:

I'm along the same thinking as Jimmy. Something like $5m every 3 years is reasonable without enabling owners to make bad financial decisions thinking they will get bailed out

I don't mind the every 3 years structure, but spending in real life is going up WAYYYY more than $5m every 3 years, $5M a year won't end up matching real life.  if we do every 3 years, the increases will be very significant if we want maintain the same structure we had to begin the league.  the first time we do an increase it might be smaller just because the original number was cushy so there was built in ability to absorb increases, but 3 years after that the increase will be big.  or else we'll be neutering the franchise tag.

[Winston-Salem Spirits (Brad)]

Interesting thing I read today when poking around for info on MLB payrolls. Even though player salaries are/have been on the ascendancy, the proportion of profit to salary has been increasing in ownerships favor since 2002. This next CBA is going to be real interesting. The vibe I'm getting is that the PA will be going after a larger share of the revenues (of course and as they should), but not just through jiggering restricted free agency and market deflators like compensatory draft picks, but by trying to lift soft caps on draft slots, the luxury tax, international bonuses (or scrapping the bonus system altogether for a draft), maybe even taking a longer look at Milb compensation. It will be interesting to see how things shape up and how it steers these kind of conversations in FBB.

[Winston-Salem Spirits (Brad)]

I'm pulling for the MLB players to get their heads out of their asses and show some solidarity with the Milb guys.

[Deleted]

i doubt it, its just a pyramid and the vets all feel like they suffered through all their own underpaid years so they deserve to get rich off the backs of the underpaid youngsters just as the vets before them got rich off them. there certainly might be some changes tho. i could see some modest bumps draft/bonus structures. some talk of an international draft could throw the whole system up for changes. i could also see the QO process changing now that guys are basically being forced to accept QOs because the compensation affects their FA so much. the mlbpa will also be concerned that now that the yanks have reined in luxury tax spending and the friedman led dodgers are trying to get on that same path, that the luxury tax system is basically operating like a cap on spending. but at the same time some big/middle market teams like the astros/cubs have gone a rebuild path and others like the braves/phillies are doing it now and maybe won't up to their capacity. the mlbpa will probably at least broach the subject on a salary floor for each team. ownership won't go for it generally, but some owners would support it and that discussion could cause some rethinking of how the whole system works.

[Javelinas GM (Scott)]

Jan 4, 2016 13:00:27 GMT -5 @muspelle said:

Jan 4, 2016 12:52:49 GMT -5 Javelinas GM (Scott) said:

I'm along the same thinking as Jimmy. Something like $5m every 3 years is reasonable without enabling owners to make bad financial decisions thinking they will get bailed out

I don't mind the every 3 years structure, but spending in real life is going up WAYYYY more than $5m every 3 years, $5M a year won't end up matching real life.  if we do every 3 years, the increases will be very significant if we want maintain the same structure we had to begin the league.  the first time we do an increase it might be smaller just because the original number was cushy so there was built in ability to absorb increases, but 3 years after that the increase will be big.  or else we'll be neutering the franchise tag.

There is no doubt that real life team spending will increase by well over $5m every 3 years. However, we are not dealing with 25 man real life increase totals. On average, each of us will apply 1 FT a year. 

[Rawhide GM (Jimmy-LM)]

I am suprised there is not some kind of union that represents the minor league players... to me just the formation of something like that could significantly help their leverage and possibly bring them to the table to talks with MLBPA and MLB the like.


I also think the Yankees reeling in spending is a sign of things to come, especially as teams seem to value prospects and young players significantly more. That's one of those markers as to why I have been hesitant to increase the cap. Using a cost / WAR, we really are right where we should be using league averages. If the Luxury Cap holds after the CBA, I think the spending will still curb. But that CBA will dictate the future of MLB $ significantly, which impacts salaries, which will eventually impact this league.

That said, I still prefer to keep stupid money down, so I am happy with where we are at currently.

[Rawhide GM (Jimmy-LM)]

"There is no doubt that real life team spending will increase by well over $5m every 3 years. However, we are not dealing with 25 man real life increase totals. On average, each of us will apply 1 FT a year."

I think it was less than that. I was shocked at the number of RFA tags we had less year, and we have a ton of them this year too. I would say as a whole, these kind of leagues are devaluing the franchise tag overall.

[Deleted]

I agree that no increase is needed.

Only 11 of the 30 teams are projected to have real life salaries over $120 mil in 2016 (http://deadspin.com/2015-payrolls-and-salaries-for-every-mlb-team-1695040045). And that includes some fairly high salaries for arbitration eligible guys (which we treat as PP), and also for many pre arbitration eligible guys (also PP here).

With teams getting only 2 tags a year (and their choice whether to go FFA or RFA) there are fewer and fewer real life contracts to inflate our salaries. RFA should hold down our salaries well below the level of those being given in real life (since, of course, we all face a salary cap).

[Deleted]

Jan 4, 2016 14:45:09 GMT -5 Rawhide GM (Jimmy-LM) said:

"There is no doubt that real life team spending will increase by well over $5m every 3 years. However, we are not dealing with 25 man real life increase totals. On average, each of us will apply 1 FT a year."

I think it was less than that. I was shocked at the number of RFA tags we had less year, and we have a ton of them this year too. I would say as a whole, these kind of leagues are devaluing the franchise tag overall.

We ARE actually dealing with the 25man total increase because what matters with the franchise tag is keeping the ratio of the cost of franchising to the total cap relatively constant over time.   So we have to increase the cap for everyone or else FFA tags get relatively more expensive over time.  If you just add a little bit of cap for the franchise guys that doesn't work because what happens is that franchise guys will end up taking up a greater percentage of your cap to retain over time if you don't increase the total cap to allow for higher bids too.  In the end the percentage a guy costs of your total cap is the most important part.  If we just make small increases to the cap over time, then in percentage terms, franchise guys will just become more and more expensive relative to bidded contracts, which won't go up as much.  We should want it so the balance between the cost of franchise and bidded players stays relatively constant over time. so our bidded contracts should get more expensive over time as well and the cap increases will cover that too. Jimmy's right, FFAs already don't get used a lot as is, if they get even more expensive over time relative to bidded guys, then they become even less relevant.  If we wanted to get rid of FFAs, well, that'd be a different matter. 

[Javelinas GM (Scott)]

I get what Tim is saying, I just don't think that the outcome should be any kind of significant increase in payroll. I think a modest every few year increase would have the effect of keeping the FT value relative to its value in year one. Any significant or frequent increases will have the net desired effect that Tim wants, all other salaries rising relative to the franchise tag salary; however, at the low numbers of guys already being franchised, the bigger impact will be more stupid contracts at the expense of keeping a small handful of FT values relative. I don't think this needs to be any more complicated, mathematically, than a manual adjustment periodically. If the average FT salary goes from $10 to $13m, then maybe a $5m increase is needed as hoc. Either way or no matter how it's solved, it should change at some point if Franchise tags continue to be a part of the league.

[Deleted]

by the way, there's another way to deal with this that would mean we NEVER have to raise the cap. it involves a little math, but other than that it works well. since the only real reason we have to adjust to real life increases is because we have franchise tags, instead of increasing the cap, we could keep the ratio of the franchise tag to total cap constant over time by discounting the cost of franchise players to remove price inflation on them. and then we could leave the cap the same forever.

it would look something like this. i have player A i want to franchise in 2020 and he costs 27m in real life (in 2020). we could choose some index in 2020, say the cost of a QO or total payroll. let's say the index is QO and in real life it costs 18m to QO a guy. then what we'd do is say that since a QO cost 14.1M when we started the league for the 2014 season, in order to get that same relative value now we'd multiple his 2020 real life salary by the ratio of the 2014 QO cost to current QO cost (14.1/18) to get his salary. Using that method, he'd then cost 21.15m to franchise instead of 27m (27M x 14.1/18). If we used that method, we'd never need a cap increase because that would keep the relationship between bid cost and franchise cost even over time.

Basically we'd be adjusting for inflation and putting every FFAs cost in 2014 dollars (or whatever time period we choose).  And by doing that we'd never need to increase the cap.