With a widening revenue split, could MLB benefit from a salary cap?

It's been two decades since replacement players populated baseball's spring training camps and nearly started the regular season. Twenty years after baseball's last strike wiped out the World Series and alienated millions of fans, changes players fought so hard against, coincidentally, might benefit them today.

In the 1994-95 players' strike, the union held a hard stance against the owners' proposed salary-cap system that would have guaranteed players a 50-50 revenue split with owners and replaced arbitration with restricted free agency.

Union president Tony Clark recently told Trib Total Media that because of a confluence of trends in the sport, the players' share of revenue has fallen from a reported peak of 63 percent in the early 2000s to below 50 percent this season.

If the divide in revenue shares continues to grow, it has the potential to become a divisive issue in future negotiations. Baseball's collective bargaining agreement expires after next season.

Trib Total Media research found if baseball split its revenue between owners and players using the NBA's model, and had instituted a salary cap-and-floor system for this season, 19 teams would have opened under the salary floor by a combined total of $413.5 million in payroll. Thirteen of those clubs, including the Pirates, would have been under the minimum by more than $15 million.

In the NBA, the salary cap is set at 44.7 percent of league revenues, divided by 30 teams. The floor, or minimum, is 90 percent of the salary cap, or maximum. It's a soft cap, meaning teams can spend over the cap but would face a luxury tax.

So do MLB players of this generation view a cap-and-floor system differently? Do they see it as a path to more earning potential or an obstruction?

“For most players,” Detroit Tigers union representative Alex Avila said, “when they hear ‘salary cap,' to them it sounds like a limit.”

‘A dangerous game'

A number of forces are conspiring against players' take of revenues.

For starters, players' careers are shorter. From 2009-14, players 30 and older accounted for 279 fewer seasons than the same age demographic from 1998-2003, the last five years before performance-enhancing drug testing.

Salaries for players age 30 and older typically are higher because most have reached free agency or arbitration years.

Moreover, since the early 1990s when the Cleveland Indians pioneered signing young stars to long-term deals, hundreds of players began trading earning potential later in their careers for the security of guaranteed money. Nearly 20 years after the strike began, 108 players on rosters in 2013 had signed deals that allowed clubs to buy out as much as 406 seasons of arbitration and free agency, according Trib Total Media research.

The result is hundreds of fewer free agency seasons available to buy in the open market and fewer arbitration seasons to pay for, allowing owners to enjoy a larger proportion of money from TV, radio, digital media and revenue from new stadiums. SportsEconomist.com founder Raymond Sauer told Trib Total Media in November 2013 that the conditions are a “recipe” for owners profits.

The Sports Business Journal reported players took in a record-high 63 percent of revenues in 2003. The revenue split then hovered between 51 and 55 percent from 2004-07. Other estimates have players' share of revenues falling below 50 percent in recent seasons.

TheHardballTimes.com reported that while the sport's revenues have increased 122 percent since 2002, the average salary for MLB players (now at a record $4.2 million) has increased by 58 percent over the same period.

Smith College economics professor Andrew Zimbalist noted the explosion of revenues has made it difficult for players to maintain their share in the short term.

“When you have league revenues growing very quickly, there is going to be some lagging in salaries,” he said.

Zimbalist is skeptical a cap-and-floor system would benefit players. He said a cap system would restrain spending by the large-market clubs that typically set the market for top-end free agents.

“If you had a cap-and-floor system that guaranteed players 60 or 58 percent (of revenues), sure, it would help,” Zimbalist said of a percentage favoring players. “But where would the Dodgers be? The Red Sox? Most teams wouldn't spend that kind of money.”

Are players concerned by the current revenue split? Not yet, said Pirates union rep Neil Walker.

“We haven't had much discussion about it,” he said, “and frankly at this point, we don't see it as much of a concern.”

Said Avila: “I think players enjoy the freedom they have. ... I know guys of this generation want to be able to maintain that for future guys.”

Freedom has a value. After all, what would the NBA's LeBron James and the NFL's Aaron Rodgers be worth in a free-market system?

Clark visited all 30 major league teams this spring. Was the subject of players' declining share of revenues a topic of discussion?

“You're the first person (to ask),” Clark told a Trib Total Media reporter.

Clark said it would be folly to overreact to a 10-year sample. There is risk, he said, in establishing salary floors and ceilings based on one period of time.

“It's a very dangerous game to play.” Clark said.

‘Where is it going?'

Agent Scott Boras stood on the warning track behind home plate at PNC Park in April. He represented some of the top talent on the field that day, particularly Pedro Alvarez and Gerrit Cole. Boras said he is concerned about the widening revenue split.

“We believe it's well below 50 (percent),” Boras said of the players' revenue share. “Show me a team, after you go through the general fund without selling a ticket, that's not making $120 million.

“So where is it going? … Where are (owners) spending it?”

Boras is not a proponent of a salary cap, but he is in favor of providing incentives to owners to spend more.

“Caps in other sports just don't work for the purpose they said they'd promote: ‘We're going to have parity,' ” Boras said. “Well, tell the New England Patriots that. Tell the NBA that.

“Players have averages and ERAs. We need to have averages and ERAs for owners. Owners cannot give revenue sharing to owners that are not effective.”

Has Boras floated this idea by owners?

“I think the small-market owners are in love with that idea,” said Boras, pausing to laugh. “I think Bob (Nutting) would love that idea.”

The Pirates ranked 25th in baseball in Opening Day payroll at $86.7 million, according to the Associated Press. The Pirates would be $34 million below an NBA-modeled cap floor.

Owners no longer are clamoring for a cap-and-floor system that exist in other sports.

“I think it's very hard to have any specific formula that applies across multiple clubs much less multiple years,” Nutting said of a cap system.

There is less incentive for owners to spend since the value found in free agency has been eroded as the game is trending younger.

“I think prudence and judgment would indicate that those long-term, late-in-career deals in any era have generally not turned out to be very good decisions,” Nutting said. “I think we've been right to do what we've done (in avoiding lucrative free agent deals). I think we'll be even more right in the next era.”

Although no one is worried about players' ability to meet mortgage payments, billionaires and millionaires have fought before over revenue imbalance. And over the past decade, the imbalance has grown.

Travis Sawchik is a staff writer for Trib Total Media. Reach him at tsawchik@tribweb.com or via Twitter @Sawchik_Trib.