WASHINGTON, DC – OCTOBER 27: Gerrit Cole #45 of the Houston Astros reacts against the Washington … [+]
Stephen Strasburg got how much to stay with the Washington Nationals? You’re kidding me. The same goes for what the New York Yankees gave Gerrit Cole to leave free agency for the Bronx.
Those pitchers should have gotten more.
Lots, LOTS more.
The whole thing has me thinking about my chats with the late Marvin Miller, baseball’s great emancipator. After members of the Veterans Committee failed seven times over the years to do the right thing, they finally voted this guy into the Baseball Hall of Fame Sunday, and you know what?
Let’s forgive those Veteran Committee members for embarrassing themselves regarding Miller in the past. For reasons worth a combined $569 million (you know, regarding those contracts for Strasburg and Cole), Miller’s induction into Cooperstown had to wait until now.
The baseball gods demanded it.
First, the Nationals shocked baseball’s financial world Monday, but only for those who never studied the wisdom of Miller during or after he headed the Major League Baseball Players Association from 1966 to 1982. He predicted the coming of something like this. The Nationals signed Strasburg to the richest deal ever for a pitcher at $245 million, and that record lasted until Yankees officials rushed to grab their checkbook.
On Tuesday, the Yankees gave Cole $324 million.
Sounds like a bundle for both pitchers, you say? Well, not when you consider Forbes.com reported Major League Baseball made a record $10.3 billion in 2018, with enough momentum to see that figure grow into this season.
More specifically, the Nationals are the 11th most valuable of the game’s 30 teams at $1.8 billion, and the Yankees are No. 1 at $4.6 billion.
So I’m back to my Miller conversations, and I mostly recall the one in February 1992, when he spoke over the phone from his Manhattan apartment about a mystery just shy of how many angels can dance on the head of a pin.
“This hasn’t been mentioned by the media for some reason, but the gross revenue of all the teams in the Major Leagues was less than $50 million about 25 years ago (in the late 1960s),” Miller told me back then for a column I wrote for the Atlanta Journal-Constitution. “Last year (in 1991), the gross revenue of all the teams in the Major Leagues was $1.5 billion.”
In case you’re shaky at math, that’s about $9 billion less than what the game produces today.
CIRCA 1970’S: Executive Director Marvin Miller of the Major League Baseball Players Association … [+]
Miller continued telling me, “It’s important for fans to realize that, if the players get less, then will that money go to the teachers? No. Will that money go to sanitation workers? No. Will that money go to fans who are laid off from factory jobs? No. The owners will simply get more.”
Yes, indeed. And, yes, there’s the Competitive Balance Tax (CBT), which also goes by “luxury tax.”
Whatever you call it, teams are using it as an unofficial salary cap for a professional sports league that doesn’t have one.
“I mean, we wanted to sign (fill in the blank) and others, but you know how that goes. We couldn’t because of the luxury tax.”
Here’s the short version: The CBT sets a limit that franchises can reach in spending on payroll each season before they begin suffering taxes. The more years you go over that limit, the higher the tax rate.
Matt Snyder of CBSsports.com wrote earlier this year that even if a team gets the maximum tax penalty of 50 percent after going over the threshold for three or more consecutive years, the fine still isn’t much, especially given the revenues of teams these days.
Take, for example, that the CBT limit for each team this year is $206 million, and Snyder said “the tax on a $216 million payroll would be $5 million,” which the Steinbrenners can find underneath their sofa cushions.
Even before baseball’s good old days of now for generating revenue, owners found quick cash to pay players they really wanted, and that included the legendary stingy bosses of the game.
Marge Schott comes to mind.
Once, during Schott’s ownership of the Cincinnati Reds from 1984 through 1999, she fumed when an employee bought too many doughnuts for an office meeting. She tried and failed to return them to the bakery. So she sold them to her employees the rest of the week.
The Reds are a small-market franchise, you know. At least that’s what Schott kept reminding everybody. But soon after DoughnutGate, she made Reds shortstop Barry Larkin the game’s fifth-highest-paid player at $25 million.
Of course, Schott paid Larkin with help from that doughnut money.