RS Review Time!

[clidwin]

i have no problem with it!

[Canada8999]

I haven't voted yet because I still don't understand what the purpose of re-distributing cash for RS is now that we have salary caps based on 3-year performance weighting... isn't the intention of RS captured by the min/max values on our new cap structure?  I'm not voting against, I'm just looking for some discussion on what the added value of this is...

[Colby]

Our salary caps come from three-year averages of performance-sorted MLB total payrolls.  Aren't these payrolls strictly based on the 40-man roster?  Therefore, much of the remaining farm payroll is missing from these numbers.  This was my goal in analyzing revenue sharing - to determine how to make up for that missing gap.

[Canada8999]

Our salary caps come from three-year averages of performance-sorted MLB total payrolls.  Aren't these payrolls strictly based on the 40-man roster?  Therefore, much of the remaining farm payroll is missing from these numbers.  This was my goal in analyzing revenue sharing - to determine how to make up for that missing gap.

- Our payrolls should evolve to fit within whatever budgets we set by a natural supply and demand forces
- If that doesn't happen (or not fast enough) wouldn't revenue sharing only help low budget teams (where as this is a league wide issue)?

[Colby]

- Our payrolls should evolve to fit within whatever budgets we set by a natural supply and demand forces
- If that doesn't happen (or not fast enough) wouldn't revenue sharing only help low budget teams (where as this is a league wide issue)?

There is actually good reason to think that our caps will eventually become closer to each other over time.  This diminishes the effect and need for revenue sharing.  The Yankees have to finish in 1st place to maintain the highest cap.  The Padres have to finish in 30th place to maintain the lowest cap.  This is not going to happen every year.  Eventually, the Yankees cap will fall and the Padres/Marlins/Pirates will increase.  Of course, our three-year averaging of these results, maximum cap changes each season, and weight on the previous year's cap keeps these numbers within real-life market results.

Perhaps a better way to simulate the effect of MLB revenue sharing on the farm systems of small market teams is give them additional money to be used in the entry draft OR a bigger EDR... just some more thoughts on this issue.

[lp815]

There is actually good reason to think that our caps will eventually become closer to each other over time.  This diminishes the effect and need for revenue sharing.  The Yankees have to finish in 1st place to maintain the highest cap.  The Padres have to finish in 30th place to maintain the lowest cap.  This is not going to happen every year.  Eventually, the Yankees cap will fall and the Padres/Marlins/Pirates will increase.  Of course, our three-year averaging of these results, maximum cap changes each season, and weight on the previous year's cap keeps these numbers within real-life market results.

Perhaps a better way to simulate the effect of MLB revenue sharing on the farm systems of small market teams is give them additional money to be used in the entry draft OR a bigger EDR... just some more thoughts on this issue.

Say the additional money for small market teams for the ED would be implemented...do we have figures as to what kind of monies that might be, and who would receive them?

[Colby]

Say the additional money for small market teams for the ED would be implemented...do we have figures as to what kind of monies that might be, and who would receive them?

This was the total RS amount figured by research on the current MLB RS system.  I think we could take a fraction of it to apply to ED bonuses.

TIER 10: 1 team x $20m = $20m
TIER 9: 2 teams x $15m = $30m
TIER 8: 3 teams x $10m = $30m
TIER 7: 4 teams x $5m = $20m
TIER 6: 5 teams x $3m = $15m
=======================
Total revenue sharing = $115m

[Dan Wood]

I have an idea, and honestly I don't know if it is a good one, but here goes. Colby I understand what you are trying to do, and it is something that we have talked about before, but with limited roster size it really wouldn't have to much effect. Giving extra money to small market teams to build farms systems is something that is done in MLB, but here in our little 50 man roster world, taking 5 million from the Yanks and building an academy in the Dominican Republic doesn't exist. My idea would be to have an RS threshold. Say you are in the upper tiers. Your payroll can be 200 million, but it doesn't have to be. But let's say you do reach that, then you pay out money. Another example would be the Angels. They have a payroll of 150 mil. But lets say they only have 135 mil in salary starting next year, then they haven't reach their max, and they shouldn't have to kick any money into the RS slush fund. If they are not spending that 15 mil on players, more players will be available to be bid on, and hopefully will come at a lower price. Since we are now adopting a performance based payroll, you don't have to spend all of your money if you are a higher tier team. But if you do then you give to the poor. Say something like 5 percent, or whatever, I just picked that number at random. I don't know, that is the best I can come up with, but that seems to be closest to MLB in my mind.

I know this was rejected, but I am also still in favor of doing away with ED signing bonuses. I still argue that the money for those bonuses comes from a different fund than active player salaries.

This little anecdote about a past Red Sox draft came from Fangraphs...The last sentence is the one that supports what I am talking about...

Best positional player: Mark Teixeira (1998: Round 9, Pick 265) this was, of course, before Teixeira went to Georgia Tech and eventually became the best college hitter in the 2001 draft. The two sides weren’t far apart in talks, yet at the end of the day Boston let him walk, only to try and woo him in free agency during the winter of 2008. (History sort of repeated itself when the Red Sox failed to sign Pedro Alvarez years later. Bryan Smith even notes that the international scouting director attempted to give the amateur department his money to sign Alvarez, but ownership disallowed the move.)

[Colby]

Dan, I go with the notion that all of the money still comes from one giant pot for that franchise.  The entry draft signing bonuses may be too high but they are indeed necessary.  MLB has a luxury tax in place...

MLB's current collective bargaining agreement sets a 'payroll threshold' each season that is somewhat similar to a salary cap. For the 2007 season, this threshold has been set at $148 million ($155 million in 2008). Should the average annual value of a team's total salary contracts surpass this threshold in any year, they pay a 'tax' on the amount over the threshold. The tax is graduated such that a team pays a progressively higher percentage every year it exceeds the threshold, to a maximum of 40%. As an example, when Roger Clemens signed with the Yankees this season, his salary was reported at $18.5 million. But since the Yankees have already exceeded the payroll threshold several times, they were forced to pay the maximum luxury tax on his salary of 40%. Applied to Clemens' salary, the tax comes to $7.4 million. So in actuality, Clemens is costing the Yankees $25.9 million this season.

The Luxury Tax is also called the 'Competitive Balance Tax'. Ironically, the money from the tax isn't distributed to smaller market teams to promote competitive balance. Instead, it goes into an 'Industry Growth Fund' that MLB uses for player benefits and to promote the growth of baseball around the world. Money is distributed to smaller revenue teams, but that money comes from MLB's revenue sharing program, which is entirely separate and independent of the luxury tax.

With your thinking on the big-cap teams (Cubs, Mets, Red Sox, Tigers, Yankees, Angels), a simplified version of that luxury tax could be put in place that taxes payroll greater than $170m at some rate like 20%.  All this does is promote the big market teams to skew to the limit, but of course, just as in real life, they will surely spend.

[Dan Wood]

The point I was trying to make is that in real life, when the Yankees signed all of those free agents last year - Texiera, Burnett, and Charleston Chew Sabathia, they knew that after all of those signing they would have to kick in a butt load to the luxury tax, which in turn goes into RS. I'm not saying that just the larger teams should be taxed, since the RS is cumulative of all teams in the majors, I just think that each tier should have a threshold. If you are in a tier that is due to be taxed and you reach you cap, then you should send some money down to the little teams. For instance, my cap right now is 90 mil. I don't think I am due to be taxed this year. Say I have a really good year and my cap goes to 110 mil. I reach that next year, in that scenario, I think that should be taxed 5 mil. If I don't reach it, then I don't get taxed It is something I would have to think about as a GM as I am signing players. Throw it all in a pot and divvy it up as so. Maybe the Marlins would want to spend it on an FA as opposed to the draft.