Trout’s Massive New Contract Hints at Why Baseball Needs a Salary Cap

It is reported that Mike Trout and the Anaheim Angels are closing in on a massive 12-year $430 million contract extension.  When completed, this deal will be the largest contract in professional sports history.  To put this into perspective, Mike Trout is now worth more than the entire Buffalo Sabres hockey team, which is valued at $375 million.

Although this is an unfathomable amount of money for one player, Trout undoubtedly deserves to be the highest paid baseball player.  There is almost no debate that Trout is the best player in baseball right now.  Trout is a 7-time All-Star, 2-time MVP, and has been the runner-up for the MVP award four times. Trout’s stats also show that he has had arguably the greatest start to a career in baseball history with a 0.307 batting average, 0.416 on-base percentage, and 0.573 slugging percentage.  The best metric to see how valuable Trout is to his team is wins above replacement (WAR) and Trout has the greatest WAR of any player in the history of baseball with a WAR of 64.3.

Baseball is no stranger to these enormous, jaw-dropping contracts.  In February of this year, Manny Machado signed a 10-year $300 million contract with the San Diego Padres.  Then, on March 1, Bryce Harper signed a 13-year $330 million contract with the Philadelphia Phillies.  Although player contracts continue to reach new heights, success for the league has not followed.

Major League Baseball has been struggling for most of the decade with low TV ratings and dropping attendance.   This culminated in last year’s World Series which saw a four-year-low in TV ratings.  The 2018 World Series involved two of the largest cities in America with the Boston Red Sox facing off against the Los Angeles Dodgers, but still, TV ratings were down 23% from the 2017 World Series ratings.  MLB Commissioner Rob Manfred said that the league was looking into the low ratings, but had not isolated a cause.  Some argue that the decline in ratings is due to the fact that the games are too long.  Others argue that data analytics has caused viewers to stop watching.  However, the problem may stem from the enormous contracts like Trout’s $430 million contract extension.  That is, the problem is that Major League Baseball does not have a salary cap.

Of America’s five major sporting leagues, Major League Baseball is the only sport that does not have a salary cap.  In the NFL, the salary cap is calculated pursuant to Article 12 of the Collective Bargaining Agreement every year.  The purpose of the salary cap is to level the playing field for all teams so that one team cannot simply outspend another to obtain talent. The NFL salary cap helps small market teams, like the Buffalo Bills, compete with larger markets.

Major League Baseball does not have a salary cap and therefore does not have a system in place to help level the playing field for small market teams.  Consequently, many small market teams are forced to let go of talented players because they cannot afford to pay them top dollar.  This was highlighted in the movie Moneyball, which followed Billy Beane and the Oakland Athletics 2002 season.  Prior to 2002, the Athletics lost star players Jason Giambi to the New York Yankees and Johnny Damon to the Boston Red Sox in free agency.  This forced Beane to think outside the box and use data analytics to put together a winning team.

 

Moneyball underscores how the lack of a salary cap stacks the deck against cash-poor teams like the Oakland Athletics.  However, Moneyball does not show how the lack of a salary cap hurts the entire game of baseball. With no salary cap, baseball is alienating its fans by quashing the hopes of fans of small market teams because their team can’t pay for top talent.  For example, Buffalo Bills fans currently have hope for the 2019 season because they were able to sign 11 free agents in the offseason.  The Buffalo Bills would not have been able to sign all of these players and give their fans hope if it were not for the salary cap keeping big market teams from offering these players more money.  Conversely, in Major League Baseball, teams like the Tampa Bay Rays, Miami Marlins, and Pittsburg Pirates are heading into the 2019 season with no hope because they know they cannot attract and retain talent with their small payroll.  This causes fans of small market teams to become disengaged with baseball altogether, contributing to baseballs poor TV ratings and low attendance.

2018 MLB Payroll by Team

Therefore, Major League Baseball could alleviate this problem by putting a salary cap in place.  With a salary cap, small market teams could compete for free agents and be able to keep their homegrown talent.  As a lifelong Buffalo Bills fan, I can attest that even through the 17-year playoff drought, I had some hope at the beginning of each year that my team could win.  This is evident by the fact that in the last 20 years, 12 Super Bowl Champions have come from outside the 15 largest metropolitan areas.  Whereas in the last 20 years only 3 World Series Champions have come from outside the 15 largest metropolitan area.  Therefore, if I were a Miami Marlins fan today, I cannot say that I would have any hope for my team in 2019.  Major League Baseball can learn from the NFL and give its fans hope by implementing a salary cap to level the playing field in its sport.  This will give more fans of small market teams hope and keep them engage in the sport of baseball.  Consequently, Major League Baseball will have more Americans watching its sport all year round.

In all, Trout’s enormous contract is an indication that Major League Baseball needs a salary cap.  The fact of the matter is, if Trout were drafted by a cash-poor team like the Oakland Athletics or the Pittsburgh Pirates, he wouldn’t have made it to a second contract with that team and would’ve signed with a cash-rich team through free agency.  Therefore, Major League Baseball can solve its problems by implementing a salary cap, which will give all of its fans hope, no matter what market they are in, and keep them engaged in the game of baseball all season long.

 

Photo Courtesy:

USA Today

FanGraphs

YouTube

 

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