Wednesday, April 7, 2010

The Payroll Disparity

There was a complaint from the Milwaukee Brewers owner was complaining a bit about the disparity between his payroll and the Yankees. Apparently the Yankees infield makes more than his whole team. Mike and Mike on ESPN were talking about this and discussing the merits of the complaint.

I think there’s some validity to the issue of the Yankees far outspending the other teams. However they are working in the rules, and they pay back more in a luxury tax that goes to the other teams.


I think that if the Yankees were spending $80mm on a payroll and the Steinbrenner family was making $500mm in profit we’d hear other complaints. As much as it might be an issue with disparity, at least the Yankees are spending on the team, on the sport, and trying to win. You could argue the Marlins and Pirates aren’t spending enough at all.

But what should they spend? If they are losing money, or not making enough profit, should they still be spending? We always hear baseball is a business, so should owners lose money if they don’t have to? I think not. They ought to be able to spend what they want. I could see some parameters around min/max profit percentages they’re allowed and requiring them to spend more, but I don’t think they should run in the red.

There’s also the issue of debt. Many owners are in debt from building  a stadium or even purchasing the team. That’s an iffy one. I think that a highly leveraged purchase of a franchise ought not to be approved. It distorts the way someone would run their business, the team. Instead I’d like to see requirements that owners, and their partners, actually put 50% or more of the purchase down without borrowing. That way they wouldn’t be looking to pay down so much on their debt.

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