After three complete minor league seasos,, a major league team must decide if they want to keep a particular player or not. If their decision is to keep a specified player, they must sign the player to a major
league contract. In so doing, the assign the player to the teams 40 man roster.
If a player is not placed on the 40 man roster, he is then eligible for the Rule 5 draft. Another organization
can draft the player for $50,000. There is a risk involved in the Rule 5 draft: If the drafted player is not kept on the
active 25 man roster for the entire next season, he must be offered back to the original team for $25,000.
A player not on the 40 man roster and not taken in the Rule 5 draft remains under contract with the team
he is currently assigned to. He can elect to take minor league free agency instead of going in the Rule 5
draft, but players want to be selected in the draft because it represents what could be a fast track to the majors,
leaving a team that believes the player should not be included on the 40 man roster.
This concludes my blog on "The Business of Baseball. It is my sincere hope that you have enjoyed what I have written over these past several weeks, and has given some helpful insights on "This Business of Baseball."
This blog is prepared by a paralegal student as a class project, without compensation. The content of this
blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this blog may not be construed
as legal, medical, business, or personal advice.david.mosher3993@my.sinclair.edu
Sunday, November 21, 2010
Sunday, November 14, 2010
"The BusinessofBaseball--FreeAgencyContinued"
In my last segment, I covered the history of free agency and where it originated. Continuing in that arena, this is what happens when a player has been drafted.
When a player has been drafted, he is bound to the team who has drafted him for three seasons in the minor leagues.
A minor league contract is automatically renewed on a year to year basis. After three years, a player must either be added
to the 40 man roster, which then indicates that he has a major league contract, or the player is then eligible for what is called the Rule 5 draft. Once a player has played for three consecutive seasons and is on the 40 man roster, there are then
team "options" on that player. They can send the player to the minors and still keep him under contract for three additional
seasons with automatic contract renewals. Each player has three option years and can be sent up and down from the minors as often as the team sees fit during that period of time.
However, a player with three or more seasons cannot be removed from the 40 man roster without his consent. The player himself can opt for immediate release or release at the end of the season. A player can also opt for free agency upon his removal from the 40 man roster, starting with the second removal of his career. On the next and final segment of this
BLOG, I will cover the provisions of the Rule 5 draft and how it fits into the free agency program.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others
on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over
time. The content of this blog may not be construed as legal, medical, business, or personal advise.
When a player has been drafted, he is bound to the team who has drafted him for three seasons in the minor leagues.
A minor league contract is automatically renewed on a year to year basis. After three years, a player must either be added
to the 40 man roster, which then indicates that he has a major league contract, or the player is then eligible for what is called the Rule 5 draft. Once a player has played for three consecutive seasons and is on the 40 man roster, there are then
team "options" on that player. They can send the player to the minors and still keep him under contract for three additional
seasons with automatic contract renewals. Each player has three option years and can be sent up and down from the minors as often as the team sees fit during that period of time.
However, a player with three or more seasons cannot be removed from the 40 man roster without his consent. The player himself can opt for immediate release or release at the end of the season. A player can also opt for free agency upon his removal from the 40 man roster, starting with the second removal of his career. On the next and final segment of this
BLOG, I will cover the provisions of the Rule 5 draft and how it fits into the free agency program.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others
on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over
time. The content of this blog may not be construed as legal, medical, business, or personal advise.
Sunday, November 7, 2010
"The Business of Baseball--The Free Agency"
One of the most confusing things for baseball fans to understand is free agency. It is a complex, complicated set of rules that has been negotiated in labor agreements between players and owners for more than 30 years, and the formula involved gets tweaked with each new agreement.
History of the Free Agency
From the 19th Century through 1976, baseball players were committed to one team for life because of a
clause called the reserve clause. Teams were allowed to renew contracts for one year as long as they wanted
to keep the player. The beginnings of free agency began in 1969. Longtime Cardinal outfielder Curt Flood was
being traded to the Philadelphia Phillies and refused to report. Flood appealed his case to the Supreme Court,
but lost. His case, however, set in motion and put in place an arbitration system for owners and players' union
disputes.
In 1975, Andy Messersmith and Dave McNally, Major League pitchers, played without a contract. They argued that their contract could not be renewed if it had never been signed. An abitrator agreed, and the two pitchers
were declared free agents. With the reserve clause now successfully abolished, the owners and the players'
union then agreed to the rules governing free agency that the players and teams would follow. In my next
segment, I will cover the Rule 5 draft, minor league requirements and how the 40 man roster fits in.
This blog is prepared by a paralegal student as a class project, without compensation. The content of
this blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The
reader is solely responsible for verifying the content of this blog and any linked information. Contents, sources, information, andlinks will most likely change over time. The content of this blog may not be
construed as legal, medical, business, or personal advice.
Sunday, October 24, 2010
"The Business of Baseball--The American League Championship Series"
Before we can actually move to the American League Championship Series, we have to go through the
American League Division Series. This is two best of five series to determine who the participating teams
will be in the Championship Series. Here's how it works: The three division winners, the winning team from the American League East, the winning team from the American League Central, the winning team from the American League West, and a "wild card" team(the team with the best record among the teams not winning their division)played in two series that began on October 6th and concluded on October 12th.
Under MLB's playoff rules, no two teams from the same division were matched up in the Division Series, regardless of their records supporting such a matchup. The matchups consisted of the Tampa Bay Rays as the American League Eastern Division Champions with a win-loss record of 96-66, and the Texas Rangers as the American League Western Division Champions, with a win-loss record of 90-72. The Rangers won the series 3-2, thereby advancing them to the American League Championship Series. The other matchup
consisted of the Minnesota Twins as the American League Central Division Champs with a win-loss record of 94-68, and the New York Yankees as the wild card qualifier with a win-loss record of 95-67. The Yankees won the Division Series 3-0. The 2010 season was the second consecutive season for the Twins
and the Yankees, the fourth season overall for both teams to meet in the ALDS; the Yankees were victorious in all their previous series, 3-1 in 2003 and 2004, and 3-0 in 2009.
The Tampa Bay Rays and the Texas Rangers had never previously met in post-season play. Tampa Bay
made only its second appearance in franchise history after 2008. It was the Rangers' fourth post-season appearance, but their first since 1999. The Rangers' win was their first post-season win in franchise history; the series also came the first MLB win in the post-season where the visiting team won every game.
On the other side of the coin, so to speak, the New York Yankees extended their dominance in the post-season over the Twins with four consecutive series wins.
With the win by the New York Yankees and the Texas Rangers, the teams were in place for the
American League Championship Series. On October 22nd, playing at Arlington Stadium Texas, with a
3 games to 2 lead over the New York Yankees, the Rangers wrote another page in their franchise history.
They defeated the New York Yankees in game six of the series by a final score of 6-1. Josh Hamilton was named as the Most Valuable Player in the Championship Series. As a show of team support, and what I
believe to be the mark of a First Class team, knowing of Josh Hamilton's struggles with substance abuse, his teammates chose to celebrate both the Division Series win and the Championship Series win with
softdrinks. It was not until after Josh Hamilton left the field after the victory in the Division Series and
the Championship Series that his teammates began their celebrations with champagne.
American League Division Series. This is two best of five series to determine who the participating teams
will be in the Championship Series. Here's how it works: The three division winners, the winning team from the American League East, the winning team from the American League Central, the winning team from the American League West, and a "wild card" team(the team with the best record among the teams not winning their division)played in two series that began on October 6th and concluded on October 12th.
Under MLB's playoff rules, no two teams from the same division were matched up in the Division Series, regardless of their records supporting such a matchup. The matchups consisted of the Tampa Bay Rays as the American League Eastern Division Champions with a win-loss record of 96-66, and the Texas Rangers as the American League Western Division Champions, with a win-loss record of 90-72. The Rangers won the series 3-2, thereby advancing them to the American League Championship Series. The other matchup
consisted of the Minnesota Twins as the American League Central Division Champs with a win-loss record of 94-68, and the New York Yankees as the wild card qualifier with a win-loss record of 95-67. The Yankees won the Division Series 3-0. The 2010 season was the second consecutive season for the Twins
and the Yankees, the fourth season overall for both teams to meet in the ALDS; the Yankees were victorious in all their previous series, 3-1 in 2003 and 2004, and 3-0 in 2009.
The Tampa Bay Rays and the Texas Rangers had never previously met in post-season play. Tampa Bay
made only its second appearance in franchise history after 2008. It was the Rangers' fourth post-season appearance, but their first since 1999. The Rangers' win was their first post-season win in franchise history; the series also came the first MLB win in the post-season where the visiting team won every game.
On the other side of the coin, so to speak, the New York Yankees extended their dominance in the post-season over the Twins with four consecutive series wins.
With the win by the New York Yankees and the Texas Rangers, the teams were in place for the
American League Championship Series. On October 22nd, playing at Arlington Stadium Texas, with a
3 games to 2 lead over the New York Yankees, the Rangers wrote another page in their franchise history.
They defeated the New York Yankees in game six of the series by a final score of 6-1. Josh Hamilton was named as the Most Valuable Player in the Championship Series. As a show of team support, and what I
believe to be the mark of a First Class team, knowing of Josh Hamilton's struggles with substance abuse, his teammates chose to celebrate both the Division Series win and the Championship Series win with
softdrinks. It was not until after Josh Hamilton left the field after the victory in the Division Series and
the Championship Series that his teammates began their celebrations with champagne.
Sunday, October 17, 2010
The "Politics" of Oil...
Up until now I have been doing a series of blogs on "The Business of Baseball." With the baseball season winding down except for the playoffs for the American League & National League championship series still going on, I decided to shift gears a little and take on the "politics" of oil. I don't know how many of you remember the
TV series titled "The Beverly Hillbillies that ran for a number of seasons on TV. You're probably wondering what this has to do with oil. Well, if you recall the series at all, it starts with Jed Clampett hunting on his property for food, shooting and hitting the ground and up from the ground came oil, or as the song sung by Lester Flatt &
Earl Scruggs' Foggy Mountain Boys says, "up through the ground came bubbling crude...oil that is, black gold,
Texas tea." It was that "black gold" that propelled Jed Clampett and his family from poverty to instant millionaire
status. Of course with that change in status came the move from the poverty ridden backwoods to the city of
notoriety of Beverly Hills. Although the program was created for the entertainment of the masses, oil itself still holds the political power to control nations and their economic well being.
Some of you who might read this blog might also remember the oil embargo of 1973. The embargo itself wasn't brought about because people were getting greedy over oil output and prices. Rather, the embargo was
brought about by the political climate of the time. The political climate of the time involved the OPEC nations and the Arabian countries of OPEC stopping the flow of oil in retalliation against the United States for their
re-supplying the Israeli military during the Yom Kippur war. The embargo lasted until March 1974, and its effects on the economic climate were described as devastating, regarded as the first event since the Great Depression
to have a persistent economic effect.
Shift gears to the present time. The latest crisis to hit the oil market was the BP disaster in the Gulf. Until it was contained, it not only created created havoc in the oil markets, but on other Gulf economies as well. The people who live along the Gulf coast were in danger of losing their very livelihoods, whether it was from the boating along the Gulf, from fishing and shrimping along the Gulf, but on the tourist industry as well. There are still
undoubtedly economic reverberations going on as people still try to recover from the disaster.
Is it still a "political" situation? It is still a political situation because it still involves who drives the price of
oil and how that price effects the overall economy, not just here in the US, but around the world as well. I may not be an oil expert, but I am a consumer, and it never ceases to amaze me how the price of oil can fluctuate
so rapidly from one day to the next and the price of a gallon one day can be $2.599 a gallon and the very next day rise, without warning, to $2.799 a gallon, especially when there are no major hurricanes threatening the Gulf area that could damage or destroy refineries, the BP crisis appears to be behind us for the most part, and the
OPEC nations have been fairly quiet without threatening more oil cutbacks or price increases. It was understandable, in 2005, when Hurricane Katrina ravaged the Gulf Coast area, for prices to rise, due to damage done to numerous refineries. But now?mailto:now?david.mosher3993@my.sinclair.edu
This blog is prepared by a paralegal student as a class project, without compensation. The content of this
blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely
responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content pf this blog may not be construed
as legal, medical, business or personal advice.
TV series titled "The Beverly Hillbillies that ran for a number of seasons on TV. You're probably wondering what this has to do with oil. Well, if you recall the series at all, it starts with Jed Clampett hunting on his property for food, shooting and hitting the ground and up from the ground came oil, or as the song sung by Lester Flatt &
Earl Scruggs' Foggy Mountain Boys says, "up through the ground came bubbling crude...oil that is, black gold,
Texas tea." It was that "black gold" that propelled Jed Clampett and his family from poverty to instant millionaire
status. Of course with that change in status came the move from the poverty ridden backwoods to the city of
notoriety of Beverly Hills. Although the program was created for the entertainment of the masses, oil itself still holds the political power to control nations and their economic well being.
Some of you who might read this blog might also remember the oil embargo of 1973. The embargo itself wasn't brought about because people were getting greedy over oil output and prices. Rather, the embargo was
brought about by the political climate of the time. The political climate of the time involved the OPEC nations and the Arabian countries of OPEC stopping the flow of oil in retalliation against the United States for their
re-supplying the Israeli military during the Yom Kippur war. The embargo lasted until March 1974, and its effects on the economic climate were described as devastating, regarded as the first event since the Great Depression
to have a persistent economic effect.
Shift gears to the present time. The latest crisis to hit the oil market was the BP disaster in the Gulf. Until it was contained, it not only created created havoc in the oil markets, but on other Gulf economies as well. The people who live along the Gulf coast were in danger of losing their very livelihoods, whether it was from the boating along the Gulf, from fishing and shrimping along the Gulf, but on the tourist industry as well. There are still
undoubtedly economic reverberations going on as people still try to recover from the disaster.
Is it still a "political" situation? It is still a political situation because it still involves who drives the price of
oil and how that price effects the overall economy, not just here in the US, but around the world as well. I may not be an oil expert, but I am a consumer, and it never ceases to amaze me how the price of oil can fluctuate
so rapidly from one day to the next and the price of a gallon one day can be $2.599 a gallon and the very next day rise, without warning, to $2.799 a gallon, especially when there are no major hurricanes threatening the Gulf area that could damage or destroy refineries, the BP crisis appears to be behind us for the most part, and the
OPEC nations have been fairly quiet without threatening more oil cutbacks or price increases. It was understandable, in 2005, when Hurricane Katrina ravaged the Gulf Coast area, for prices to rise, due to damage done to numerous refineries. But now?mailto:now?david.mosher3993@my.sinclair.edu
This blog is prepared by a paralegal student as a class project, without compensation. The content of this
blog contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely
responsible for verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content pf this blog may not be construed
as legal, medical, business or personal advice.
Sunday, October 10, 2010
"The Business of Baseball--The Players' Union"
The Major League Baseball Players' Association(MLBPA), as it is called today, is not the first attempt to
unionize baseball players. Earlier attempts included, in 1885, The Brotherhood of Professional Baseball Players,
founded by John Montgomery Ward. Later, in 1900, it was The Players' Protective Association. In 1912, it was
The Fraternity of Professional Baseball Players of America. In 1922, Raymond Joseph Cannon founded The
National Baseball Players' Association of The United States.
The MLBPA, as we know it today, was founded in 1953. In 1966, Marvin Miller, from the United Steel Workers of America, was hired by the association to head the organization as its Executive Director. Miller
served in that office until 1983. During his tenure, the following changes were seen in Major League Baseball:
1968--The first collective bargaining agreement was negotiated with team owners. This resulted in an increase
in players' salaries from $6000 dollars a year to $10,000 dollars a year.
1970 Collective bargaining agreement--Arbitration was brought in to resolve disputes. Arbitration is still used in
resolving players' salary disputes at contract renewal time.
1972--The first players' strike witnessed by Major League Baseball. The strike was in opposition to the owners'
refusal to increase player pension funds.
1974--When owner Charlie Finley failed to deposit $50,000 into Catfish Hunter's insurance fund, the MLBPA took the matter to arbitration. The arbitrator agreed that Catfish Hunter should be allowed to file for free agency.
During Marvin Miller's time as Executive Director of the MLBPA, pensions, base salaries, revenues and licensing rights were increased. These actions helped in laying the groundwork for what is considered by most to be one of the strongest unions in the country. On June 22, 2009, Donald Fehr, the current Executive Director, announced that after a transition period he would step down. His successor was the union's legal counsel, Michael Weiner.
As mentioned in a previous blog, Major League Baseball is the only professional sports league in the United
States that does not have a salary cap.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog
contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for
verifying the content of this blog and any linked information. Content, sources, information, and links will most
likely change over time. The content of this blog may not be construed as legal, medical, business, or personal
advice.david.mosher3993@my.sinclair.edu
unionize baseball players. Earlier attempts included, in 1885, The Brotherhood of Professional Baseball Players,
founded by John Montgomery Ward. Later, in 1900, it was The Players' Protective Association. In 1912, it was
The Fraternity of Professional Baseball Players of America. In 1922, Raymond Joseph Cannon founded The
National Baseball Players' Association of The United States.
The MLBPA, as we know it today, was founded in 1953. In 1966, Marvin Miller, from the United Steel Workers of America, was hired by the association to head the organization as its Executive Director. Miller
served in that office until 1983. During his tenure, the following changes were seen in Major League Baseball:
1968--The first collective bargaining agreement was negotiated with team owners. This resulted in an increase
in players' salaries from $6000 dollars a year to $10,000 dollars a year.
1970 Collective bargaining agreement--Arbitration was brought in to resolve disputes. Arbitration is still used in
resolving players' salary disputes at contract renewal time.
1972--The first players' strike witnessed by Major League Baseball. The strike was in opposition to the owners'
refusal to increase player pension funds.
1974--When owner Charlie Finley failed to deposit $50,000 into Catfish Hunter's insurance fund, the MLBPA took the matter to arbitration. The arbitrator agreed that Catfish Hunter should be allowed to file for free agency.
During Marvin Miller's time as Executive Director of the MLBPA, pensions, base salaries, revenues and licensing rights were increased. These actions helped in laying the groundwork for what is considered by most to be one of the strongest unions in the country. On June 22, 2009, Donald Fehr, the current Executive Director, announced that after a transition period he would step down. His successor was the union's legal counsel, Michael Weiner.
As mentioned in a previous blog, Major League Baseball is the only professional sports league in the United
States that does not have a salary cap.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog
contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsible for
verifying the content of this blog and any linked information. Content, sources, information, and links will most
likely change over time. The content of this blog may not be construed as legal, medical, business, or personal
advice.david.mosher3993@my.sinclair.edu
Sunday, October 3, 2010
"The Business of Baseball--Signing Bonuses"
The baseball signing bonus is a bonus offered by Major League Baseball to a new player as an incentive to
join that franchise and begin their major league career with that franchise. The bonus and the size of the bonus
is determined by the number of first round picks and the number of later round picks.
Typically, signing bonuses for first round players run in the millions of dollars. Also, typically, bonuses for those players in the bottom rounds of the draft, take a sharp, pronounced drop and end up somewhere around a few thousand
dollars. Once signed, players are given the standard minor league salary, which again is considerably less than the
standard minimum salary for a major league player.
Baseball Almanac is putting together a list of all known signing bonuses in Major League history. Here are some of those bonuses from varying years. Only the players and the year they were signed are given, not their respective teams at the time of their signing.
1st Round Pick Josh Hamilton 1999 Outfield Signing Bonus $3,900,000
1st Round Pick Mark Texeira 2001 Third Base Signing Bonus $4,500,000
1st Round Pick Mark Prior 2001 Right Handed Pitcher Signing Bonus $4,000,000
25th Round Pick Nate McClouth 2000 Outfield Signing Bonus $500,000
The dollar figures are much lower for the early year players. For instance, in 1946, a third baseman
by the name of Bobby Brown, New York Yankees, only received a signing bonus of $56,000.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog
contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others
on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the
content of this blog and any linked information. Content, sources, information, and links will most likely change over time.
The content of this blog may not be construed as legal, medical, business, or personal advise.david.mosher3993@my.sinclair.edu
join that franchise and begin their major league career with that franchise. The bonus and the size of the bonus
is determined by the number of first round picks and the number of later round picks.
Typically, signing bonuses for first round players run in the millions of dollars. Also, typically, bonuses for those players in the bottom rounds of the draft, take a sharp, pronounced drop and end up somewhere around a few thousand
dollars. Once signed, players are given the standard minor league salary, which again is considerably less than the
standard minimum salary for a major league player.
Baseball Almanac is putting together a list of all known signing bonuses in Major League history. Here are some of those bonuses from varying years. Only the players and the year they were signed are given, not their respective teams at the time of their signing.
1st Round Pick Josh Hamilton 1999 Outfield Signing Bonus $3,900,000
1st Round Pick Mark Texeira 2001 Third Base Signing Bonus $4,500,000
1st Round Pick Mark Prior 2001 Right Handed Pitcher Signing Bonus $4,000,000
25th Round Pick Nate McClouth 2000 Outfield Signing Bonus $500,000
The dollar figures are much lower for the early year players. For instance, in 1946, a third baseman
by the name of Bobby Brown, New York Yankees, only received a signing bonus of $56,000.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog
contains my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others
on this blog are the responsibility of the posters of those messages. The reader is solely responsible for verifying the
content of this blog and any linked information. Content, sources, information, and links will most likely change over time.
The content of this blog may not be construed as legal, medical, business, or personal advise.david.mosher3993@my.sinclair.edu
Sunday, September 26, 2010
"The Business of Baseball...The Salary Cap"
Is a salary cap needed in Major League Baseball? Salary caps are used around the world by the following
major sports leagues. In North America, we have The National Hockey League, The National Basketball
Association, The National Football League, Major League Soccer, The National Lacrosse League, Canadian
Football League and minor leagues in various sports. In England, the top level leagues in both rugby codes--The
Super League in rugby league and The Aviva Premiership in rugby union have salary caps.
Benefits of a Salary Cap:
In theory there are two major benefits derived from salary caps: Promotion of parity or equality between teams
and control of costs. First and foremost, an effective salary cap prevents wealthier teams from particular destructive
behaviors, such as signing a number of high salaried star players, preventing rival teams from accessing or acquiring
talented players and insuring victory through superior economic power. Secondly, with a salary cap in place, each club
has the same or similar power to attract players, thereby contributing to equality---roughly equal playing talent on each team in the league, subsequently bringing economic benefits to the league and to the teams that are a part of that
league.
One of the biggest reasons that Major League Baseball does not have what is classified as a hard salary cap in place is
because of the players' union hard, bitter and successful fight against it. The hard cap is the cap imposed on the overall team payroll. It is a simple prospect to envision---Once teams have reached the magic payroll number, they are forbidden to spend more. Salaries are thus reduced in two ways: Teams going over the cap are removed from free agent bidding(or trade targets that are too pricey) which gives players fewer options and thereby reducing bidding pressures; and by causing teams below the cap to resist blowing their budgets on a single player.
What Major League Baseball has done instead has adopted two modified cap type options or mechanisms: Revenue
sharing and the luxury tax. The luxury tax, after a trial run in the late 1990s, was instituted in the 2002 collective bargaining
agreement. It is essentially a soft cap. A team can bust its budget, but at the risk or cost of being taxed. A better word
would be "fined" for the excess amount. The tax starts at 22.5 percent and goes higher for repeat offenders. As a three time repeat offender(recidivist), the Yankees paid a 40% tax on their 2005 excess spending. It's not too difficult to see
how a 40% tax would create a lag on spending. Spending $20 million a year for a superstar player is one matter, but
adding another $8 million in payments to the league could make a deal untenable. Look at it this way---How would
the average individual react if they had to pay a 40% surcharge on every gallon of gas purchased over the ten gallon
mark? It is almost a certainty, that unless it was a small car, they would be filling their tank anymore. On my next blog,
I will cover the second method of this cap, the revenue sharing.david.mosher3993@my.sinclair.edu
major sports leagues. In North America, we have The National Hockey League, The National Basketball
Association, The National Football League, Major League Soccer, The National Lacrosse League, Canadian
Football League and minor leagues in various sports. In England, the top level leagues in both rugby codes--The
Super League in rugby league and The Aviva Premiership in rugby union have salary caps.
Benefits of a Salary Cap:
In theory there are two major benefits derived from salary caps: Promotion of parity or equality between teams
and control of costs. First and foremost, an effective salary cap prevents wealthier teams from particular destructive
behaviors, such as signing a number of high salaried star players, preventing rival teams from accessing or acquiring
talented players and insuring victory through superior economic power. Secondly, with a salary cap in place, each club
has the same or similar power to attract players, thereby contributing to equality---roughly equal playing talent on each team in the league, subsequently bringing economic benefits to the league and to the teams that are a part of that
league.
One of the biggest reasons that Major League Baseball does not have what is classified as a hard salary cap in place is
because of the players' union hard, bitter and successful fight against it. The hard cap is the cap imposed on the overall team payroll. It is a simple prospect to envision---Once teams have reached the magic payroll number, they are forbidden to spend more. Salaries are thus reduced in two ways: Teams going over the cap are removed from free agent bidding(or trade targets that are too pricey) which gives players fewer options and thereby reducing bidding pressures; and by causing teams below the cap to resist blowing their budgets on a single player.
What Major League Baseball has done instead has adopted two modified cap type options or mechanisms: Revenue
sharing and the luxury tax. The luxury tax, after a trial run in the late 1990s, was instituted in the 2002 collective bargaining
agreement. It is essentially a soft cap. A team can bust its budget, but at the risk or cost of being taxed. A better word
would be "fined" for the excess amount. The tax starts at 22.5 percent and goes higher for repeat offenders. As a three time repeat offender(recidivist), the Yankees paid a 40% tax on their 2005 excess spending. It's not too difficult to see
how a 40% tax would create a lag on spending. Spending $20 million a year for a superstar player is one matter, but
adding another $8 million in payments to the league could make a deal untenable. Look at it this way---How would
the average individual react if they had to pay a 40% surcharge on every gallon of gas purchased over the ten gallon
mark? It is almost a certainty, that unless it was a small car, they would be filling their tank anymore. On my next blog,
I will cover the second method of this cap, the revenue sharing.david.mosher3993@my.sinclair.edu
Monday, September 20, 2010
"The Business of Baseball"
Is baseball really a business? I'm sure whenever the game was invented, and whoever it was invented by, intended it to be a sport and never would have believed in their wildest dreams that players' salaries and contract prices would be what they are today. Although legend has it that the game was invented in 1839 by Abner Doubleday, this is difficult to imagine because in 1839 Doubleday was in military training at West Point Military Academy. There was also no mention of this in
his obituary published in the New York Times in 1893 when Doubleday died.
In 1934, while Joe DiMaggio was playing for the San Francisco Seals, he tore ligaments in his left knee while stepping out of a jitney for a dinner engagement at his sister's house. It almost ruined his career. Although the Seals wanted to sell his
contract for $100,000, he was acquired in November 1934 for $25,000 and five players. DiMaggio was allowed to play for the Seals through the 1935 season.
Let's jump ahead to the current century. Since the Cincinnati Reds are the oldest organized professional baseball team,
I chose them to be represented here. As mentioned in the previous paragraph, Joe DiMaggio's contract was purchased
in 1934 for a meager $25,000 and five players. On January 10, 2010, almost 76 years later, the Cincinnati Reds purchased the contract of one Aroldis Chapman, a Cuban defector, and one of the stars of the 2009 World Port Tournament, for a six year term for the amount of $30.25 million. Although not one of the largest contract purchases in MLB history, it is a far cry
greater than the meager $25,000 given in 1934 for Joe DiMaggio.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains
my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsiblefor verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this
blog may not be construed as legal, medical, business or personal advice."The Business of Baseball"
his obituary published in the New York Times in 1893 when Doubleday died.
In 1934, while Joe DiMaggio was playing for the San Francisco Seals, he tore ligaments in his left knee while stepping out of a jitney for a dinner engagement at his sister's house. It almost ruined his career. Although the Seals wanted to sell his
contract for $100,000, he was acquired in November 1934 for $25,000 and five players. DiMaggio was allowed to play for the Seals through the 1935 season.
Let's jump ahead to the current century. Since the Cincinnati Reds are the oldest organized professional baseball team,
I chose them to be represented here. As mentioned in the previous paragraph, Joe DiMaggio's contract was purchased
in 1934 for a meager $25,000 and five players. On January 10, 2010, almost 76 years later, the Cincinnati Reds purchased the contract of one Aroldis Chapman, a Cuban defector, and one of the stars of the 2009 World Port Tournament, for a six year term for the amount of $30.25 million. Although not one of the largest contract purchases in MLB history, it is a far cry
greater than the meager $25,000 given in 1934 for Joe DiMaggio.
This blog is prepared by a paralegal student as a class project, without compensation. The content of this blog contains
my opinion, and is offered for personal interest without warranty of any kind. Comments posted by others on this blog are the responsibility of the posters of those messages. The reader is solely responsiblefor verifying the content of this blog and any linked information. Content, sources, information, and links will most likely change over time. The content of this
blog may not be construed as legal, medical, business or personal advice."The Business of Baseball"
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