Economics of Baseball
Just about everyone is aware of the problems that havefaced Major League Baseball for years. Every time a newlabor agreement is needed, there seems to be a battlebetween the players and owners. And the players have wonevery time. Baseball salaries are the highest of any sport,the gap between large-market and small-market teams isgetting wider every year, and fan interest continues todrop. This year, as the most recent labor contract wascoming to an end, it looked as if the players associationwas going to go on strike. But at the last minute, anagreement was reached, and baseball will go on, at least fornow. But has this agreement really helped solve theproblems of baseball? I will look into the facts of thisnew contract and see if there is any chance of competitivebalance being improved, and if fans will continue to losetheir interest in Major League Baseball. It has been argued that this new agreement will helpbaseball regain competitive balance. But I believe thatthis is only a very small step in the right direction, andthat any hope of balance in baseball will occur later ratherthan sooner. One of the main points of interest, and one
Ever since they have instituted the salary cap, competitivebalance in the league is unparalleled. Infootball, once a player is cut from the team, he is owed nomoney except for his initial signing bonus. A player can sign for $10 milliona year for 5 years, play miserably for the next 3, and evenif the team cuts him, they must pay him for the next 2seasons of his contract. These wouldbe the institution of a salary cap, and the problem ofguaranteed players contracts. This tax will however slow down thesky-rocketing salaries being offered to players. Thismoney in essence can be used for anything the commissionerwants, but is meant to be given towards the smaller-marketteams with low payrolls to help make them more competitive. This simply states that if a teamspayroll exceeds the said amount, that they have to pay apenalty. So that $10 million over those 2years is being wasted on a player not even on the team, andcannot be used by the owner to improve the overall team. Ifbaseball instituted a salary cap around this same amount,teams could not spend over that, and it would redistributesome of the talent. This would definitely help regain someform of competitive balance. The luxury tax is again a small step in the right direction,but the amount you have to spend before you are penalized issimply too high, and will even rise in the next few years. Although they just seem to betoo small. Not only doesthis keep athletes playing up to their potential, but allowsyou to cut a player and have that money free the followingyear to spend on some more talent. This states that a total of $10 millionwill be taken from the central fund and that it can beredistributed by the commissioner at his discretion.
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Acceptance Essays
