The Luxury Tax Cap

This has cropped up in other threads this offseason, most often in the "where do we go from here" and "roster" threads, but it seems like it needs its own place in light of new developments.

"Revenue Sharing Reform" On Red Sox' Mind

What I take away from that is that baseball still hasn't figured out the right way to use incentives to create a revenue sharing system that actually works to address competitive balance.

And then the other piece of the puzzle here is the ridiculous new playoff system.

Resetting the luxury tax clock and getting revenue sharing rebates are both good reasons for teams big market, big payroll teams to at least occasionally get below that tax threshold. But then, by eliminating any and all value in being a 95-win Wild Card team, there is now a pretty powerful incentive the other direction for large market teams – and in particular the Red Sox and (especially) Yankees – to renew their payroll arms race.

Another solution,owners actually putting money intotheir teams to compete,these guys are all millionaires.excuse me billionaires,let them spend as they want,sure it mean that the name of the game is too knock the yankees down,but thats been the game for decades and year in and year out they are in the playoffs.

Billionaires do not get to be that way by pouring tens of millions of their own dollars every year into losing ventures for their own amusement.

Barring that, nobody else can spend with the Yankees. So, fine. The Yankees have an advantage, and they shouldn't necessarily be punished for it. But sports are different from other businesses. Coke does not need Pepsi in order to survive. AT&T does not need Verizon. Google doesn't need Yahoo. Apple doesn't need Microsoft.

The Yankees do need other teams to play against. And the Yankees are going to get richer, not poorer, if those other teams are able to remain competitive enough to make "a Yankees game" a compelling product ("The Yankees" are not really a product by themselves). Their revenues would go down significantly if they pulled out of the AL and decided to join the NY-Penn league…even though they might win 95% of their games.

Competitive balance does matter for the health of the sport.

That doesn't mean absolute parity. It doesn't mean that the Yankees should derive no benefit from their market, or from smart business moves (e.g. their stake in the YES Network). If they are always Goliath, they're always Goliath. Good. I like hitting them in the head with rocks.

But revenue sharing should encourage and reward success for teams at all levels within the system. That's what will improve the health of the sport. The new tweaks to the system are a nice try...but I still see some misplaced incentives.

Billionaires do not get to be that way by pouring tens of millions of their own dollars every year into losing ventures for their own amusement.

Barring that, nobody else can spend with the Yankees. So, fine. The Yankees have an advantage, and they shouldn't necessarily be punished for it. But sports are different from other businesses. Coke does not need Pepsi in order to survive. AT&T does not need Verizon. Google doesn't need Yahoo. Apple doesn't need Microsoft.

The Yankees do need other teams to play against. And the Yankees are going to get richer, not poorer, if those other teams are able to remain competitive enough to make "a Yankees game" a compelling product ("The Yankees" are not really a product by themselves). Their revenues would go down significantly if they pulled out of the AL and decided to join the NY-Penn league…even though they might win 95% of their games.

Competitive balance does matter for the health of the sport.

That doesn't mean absolute parity. It doesn't mean that the Yankees should derive no benefit from their market, or from smart business moves (e.g. their stake in the YES Network). If they are always Goliath, they're always Goliath. Good. I like hitting them in the head with rocks.

But revenue sharing should encourage and reward success for teams at all levels within the system. That's what will improve the health of the sport. The new tweaks to the system are a nice try...but I still see some misplaced incentives.

I still think Bill James had the best proposal I've seen to date. I'm probably not going to communicate it well, but I'll try anyway.

Given that the Yankees do need to put on a show and that means having worthy competitors, and creating worthy competitors is expensive, the idea is to split the revenue from each game 50/50. This would include tickets, concessions, and, my addition, a one game's share of the TV revenue.

The home team in a big market still has an advantage because they have 81 games to take half of what should be the largest per game revenue. And they're also are likely to have a bigger take when they visit a small market team than when a small market visits a small market. But if you have to play the Yankees or other big market teams 19 times a year, it means you have a bigger take than those who don't. And if you field a team worthy of a sell out, even better.