I missed one major point on Tuesday: the dynamic that Mark Cuban wrote about not only raises a league’s salary cap, but also raises a hypothetical salary floor.
The NHL added a salary floor along with its cap following the 04-05 lockout. So if the New York Rangers and the Detroit Red Wings both increase their revenues by twenty percent, and the Nashville Predators’ revenue decreases five percent (with all other teams staying equal), both the cap and floor would be raised the following season. Despite having a decrease in incoming cash flow, the Predators could be forced to raise their player payroll.
What happens when teams are forced (or force themselves) to spend money on payroll, regardless of their position? You get the 2001 Pirates. In an attempt to prove that a new stadium really does help a team spend (and therefore win, because that’s how these things are supposed to work), the Pirates raised their payroll from $26.6 million to $57.8 million. That latter figure ranked 18th in the Major Leagues, which is by far the franchise’s highest spot in recent memory.
You see where I’m going. The Pirates were set on dishing out big contracts, almost regardless of who the actual players were. Jason Kendall, Kevin Young, Pat Meares, Derek Bell all became very rich thanks to the Kevin McClatchy/Cam Bonifay throw-money-at-a-problem-and-hope-it-gets-better grand plan. The team lost 100 games.
I’m not sure if there has been a case where an NHL team has had to spend recklessly to get above their minimum threshold. But if a payroll floor was instituted in Major League Baseball (not that this will happen any time soon), the Marlins would certainly be affected, and teams like the A’s, Pirates, and Devil Rays would be very close.
Now look at that list. In the short history of this blog, I have complimented each of those teams’ strategies (even the Pirates, under their new management). All four are in the midst of large scale rebuilds, albeit at different stages. Only the Rays are at a point where spending a little extra could have made some sense this past offseason.
The point is essentially the same as Tuesday: the more mandates and restrictions you impose on these individual businesses, the more inefficiencies will arise. Some collectivist practices can be helpful, since these leagues are cartels, after all. But forcing teams to spend (or not spend, for that matter) regardless of their top lines can create very dangerous situations for certain clubs.
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