Does Baseball Need a Salary Cap?

0:04Congratulations! You made the varsity, the podcast. My name is John Aranda and I am Puck's sports correspondent and the host of this pod. And today, ESPN's Jeff Passan joins the pod. I was eager to get Jeff on here because the rift between the Players Association and the owners seems as big as ever. Well, three weeks ago, Jeff reported about an altercation in the Phillies clubhouse when Bryce Harper cussed out Rob Manfred. That was when Manfred brought up the idea, the actual idea of a salary cap. He didn't actually speak the word salary cap. So I plan to dive into where things stand when it comes to baseball's labor piece and the likelihood of losing games after next season.

0:43That's right. We still have more than a year to go on all of this. But the back and forth between the players and the owners and MLB, that's really started to ratchet up. But before we get to Jeff, today is Sunday, August 17th, and I want to talk a little bit about my visit to Paramount's Times Square office last week. This really has been the sports media story of the summer. Skydance closed on its$8 billion merger with Paramount 10 days ago, and just four days later, it inked a$7.7 billion deal for UFC rights. It was a really bold move and a huge statement to the rest of the sports business.

1:21The old CBS had lots of long relationships with top sports, NFL, Masters, March Madness, PGA Tour. But the old CBS was never really active when new rights came up. So it came as no surprise that it stood on the sidelines for the NBA, didn't show any interest in NASCAR or the NHL. But this new Paramount, judging by the UFC deal, it looks like it's going to be aggressive under the leadership of David Ellison. So I was interested in seeing if there's been a vibe shift at CBS Sports, which was hosting that event in Times Square to hype its NFL schedule. And the first person I saw when I walked in the room was David Burson, the head of CBS Sports.

2:05Now, I've known David for a long time. We first met a quarter century ago when I was writing for Cable Facts Daily, and David was a whiz kid over at ESPN. And now, David has always had a good demeanor, but I swear, his smile on Tuesday seemed bigger than ever. And his energy, he seemed especially energetic when he talked about the Paramount and UFC deal. As TKO Group's Mark Shapiro told me earlier in the week, David Burson wants to be on offense. And it appears that David Ellison is going to let him. At Puck, we're calling them Ellison Bucks. And Burson, with those Ellison bucks, is going to be another aggressive bidder in the market, which is great news for Major League Baseball, hockey, the NFL, you name it.

2:58Now, let's get to Jeff Passan. Jeff Passan, I am dying to get you back on the bod. Ever since I read your story about Bryce Harper and Rob Manfred, Manfred wasn't cussing at Harper, but I guess Harper was cussing at Manfred. Oh, Manfred was cussing at Harper, too. Yeah, it was. Oh, that sounds like Rob to me. Good. Yeah, I was going to say Rob Manfred doesn't miss a good opportunity to drop an F-bomb. And like, hey, who among us? Nor do I. The constraints of network television have reeled in my instincts. And, you know, God bless Pat McAfee. Yeah, exactly. You're the least of Jimmy Pataro's concerns over at ESPN, believe me.

3:51So the story is Manfred is going club to club and he was in the locker room and Bryce Harper was sitting in the corner. He was listening and then finally hit a boiling point, I guess, when Manfred made an allusion to a salary cap and things escalated. And it's a great story. Everybody has read that story, so we don't need to go back through it. I just want you to step back from the reporting, though. What does that story say? Is this really as big of a wedge issue as that story made it seem? I think it's bigger. I think a salary cap is the existential divide between Major League Baseball owners and the players.

4:41It is the thing that can torpedo the sport. And, you know, owners don't like hearing that because they do. Like, I think they do firmly believe that a salary cap, in addition to all of the benefits that it would bring ownership just in terms of franchise values and other things, I think they do actually believe that for the health of the sport, a salary cap would be a better thing. But I just I don't see it happening without a catastrophic outcome for Major League Baseball just as a whole. And what I mean by that is in order to get a salary cap, Major League Baseball owners would essentially have to shut down the sport for at least one year, potentially multiple years.

5:32We've seen this happen in the NHL before. Didn't go great. And considering where Major League Baseball's business is right now, and on top of that, John, and this is the part that I don't think gets played up enough. with the national television contract expiring following the 2028 season, you're telling me that Major League Baseball, in advance of this transformative deal that it's hoping is going to buoy it in the same way that new stadiums did back in the 1990s and early 2000s and RSNs did in the 2000s, 2010s. You're telling me that this new deal that Major League Baseball is putting so much on, the year before that, the league is going to be willing to have no television or the year of that deal expiring, the current national television contract, as well as the deals that they're, you know, in the process of doing right now, the year that they're going to expire, they're going to have games back for the first time.

6:39And we all saw, John, what happened back in 1994 and how long it took to recover from that and how they needed Mark McGuire and Sammy Sosa just to, you know, a moonshot season for the sport. You're telling me that amid all of that, Major League Baseball is going to risk one of the most important moments in its modern business history, I just have a hard time seeing that. And maybe I'm wrong. Maybe there's more resolve among the owners to get this implemented than I think, but it just seems Pennywise pound idiotic. That bizarrely enough is the most positive spin I've heard on the baseball's labor negotiations.

7:21Let me go though, also from the player's point of view. So, you know, Bryce Harper is a Scott Boris client. Of course, he doesn't want a salary cap. There's a sense that I've heard from other reporters. I don't report on players, so I don't know this firsthand, but you certainly would, that there's a middle class, probably even an upper middle class, and certainly a lower class of baseball players, nine-tenths of them that are like, you know what, we want to get paid more. We don't need to see Soto and Harper and these guys take everything. Is that a wedge within the Players Association? Potentially.

8:05But I also think that if you're a Major League Baseball player, you have surged through all sorts of impediments and roadblocks on your way to get there. To the point that you believe enough in yourself that what's... Irrational confidence. This is a great answer. What's keeping you from being Juan Soto or Bryce Harper? Why would you put another roadblock in place, an artificial one, when that could be used sometime down the road? Now, I understand a lot of players recognize that the length of careers, it's not very high. And the likelihood that you become one of those players is is pretty minimal, too.

8:51And so, yeah, the the reason that the union preaches solidarity as much as it can, whether it's actually realistic solidarity or or just PR spin, the reason that they talk about the importance of that is because I think they recognize that there is a natural way for Major League Baseball to try and bifurcate the players like that. That's a huge pressure point right there. And MLB is going to lean into that. They're going to lean into the idea that the minimum salaried players who represent, if not a majority of those in the big leagues right now, then pretty close to it. Those players could be seeing an extra few hundred thousand dollars a year and more money could go into the pre-arbitration bonus pool.

9:42But all of those things, John, can happen independent of a salary cap. Like that's that's the part of this that I think the union is continuing to preach. All of these different things that you want, they can happen inside of the current financial structure of Major League Baseball, which is why the MLBPA wants status quo. Like they they like the system the way that it is right now. Now, do fans like the system? I think the lack of education on the topic is really interesting. I feel like part of that is my responsibility. Like, you know, fans out there, what do they need to know about what baseball would look like in a salary cap system versus the current system?

10:32And if the current system ends up with the disparity that you have between the Dodgers top and, you know, the smaller market teams at the bottom, if there's a three hundred fifty million dollar gap between payrolls in a single year, is that right? Is that fair? Is that good for the sport? Do do the benefits that exist from the current system outweigh the negatives? And I think that's that's what bargaining is. Right. It's a conversation about both parties being as reaching that like minimal level of dissatisfaction because nobody leaves bargaining feeling really good about it. But just how much are you willing to eat?

11:18And more important than that, and I think what gets lost too often, is where is it taking the sport? Like, where is the game's health right now? And how does its financial system tie into that? Not just inside of the sport, but among the fans who are the paying customers. Is it right? Is it fair? Is it good for the sport? I have a hard time. Maybe this is the Oriole fan in me talking, but I have a hard time seeing anybody argue yes to any of those questions. And I think the one thing I know, and it's funny that we're talking about, it's about to happen like three months from now. It's actually like a year and three months from now that it's all going to come in.

12:00What's the sense that you're getting when you hear from fans? I mean, is that a real problem or is that a problem that you only hear from small market fans and the fans of the Mets and the Yankees or Dodgers? Or they're happy enough with the situation. MLB's messaging has been effective because let's look at the tailwinds that the league has behind it. All three of the other major men's North American sports are capped leagues. um beyond that if you look at the world series winners over the last decade you know since kansas city won in 2015 it's it's all bigger market higher dollar franchises uh beyond that if you look at teams that are in the playoffs this year or in line for playoff spots this year.

12:58A majority of them are over the competitive balance tax threshold. So it's those high payroll teams. But then you've got the counter argument, John, which is really difficult for me, at least, to argue against if I'm just trying to take both sides here and see where they're coming from. How, if you're Major League Baseball, can you deny the existence of the Milwaukee Brewers, Tampa Bay Rays, and Cleveland Guardians. Three franchises that consistently have bottom third, if not bottom, you know, 10th payrolls. Three franchises that exist in smaller markets, especially Milwaukee, which is the smallest market in Cleveland, which is among them.

13:46And yet they are among the most consistent winners in baseball. And I'm talking regular season here, and that's going to be the real differentiation in the argument. The two sides are going to talk past each other. MLB is going to focus on championships. And the MLBPA, I think, is going to focus on the complete opposite side on, you know, who gets into the playoffs and who has the most wins over a particular period of time. And both of them are correct, right? Like there are no lies being told here. It's just a matter of how do fans value success? what what denotes success to fans is it championships alone or is it competitiveness with the opportunity to win championships and i would just argue that major league baseball's postseason system is the biggest crapshoot of any of the major men's north american professional sports like like to me it's clearly so and so to define strictly by championships you can argue is a folly.

15:03And yet, aren't teams defined by championships? Like, isn't that ultimately at the end of the day? That's the, if there's like an existential crisis that fans have when it comes to this issue, they need to understand like very clearly that a salary cap does not equal parity or competitive balance. It's not something where if it's put into place, all of a sudden the Pittsburgh Pirates are going to be a whole lot different than they were. Like down at the bottom, the teams that are there, it's about owners. It's not about what the prescribed system is. It's about owners and their desire to win. And that's a thing that Rob Manfred doesn't like acknowledging or addressing, but it's something that these bad owners, their fellow owners talk about it, about how important it is to get people in here who are competitive, who want to win, who prioritize that.

16:09And if that suddenly is the ethos of the sport, John, then you're starting from a place where a salary cap might not be necessary. We keep talking about a salary cap. A lot of times players talk about a salary, well, not just players, but talk about a salary floor to get those terrible owners to, okay, you have to pay at least whatever, whatever that floor is going to be at,$100 million per team, who knows. Is that something that is likely to happen? That has some support and ownership, but certainly not universal support up there. uh floor and cap are the 60 year married couple nothing will separate them you cannot have one without the other and and so did you say six zero 60 year or six year no no 60 i mean like you are you are never getting those two apart and yeah would it be nice to have just at least a minimum that owners should and could and would have to spend?

17:17Yes. I think that would force either the bad owners to not be so bad or for the bad owners to say, you know what, forget this. You know, we're going to take our money and run because this is not going to work. But the only way that that conversation happens is if there's a cap as well. And, you know, An argument among some players is there already is a soft cap in the CBT threshold, so why don't we have a soft floor too? And that gets laughed at. That is a battle that was lost 20 plus years ago when the CBT came into existence. You've been doing this for a while. I've been doing this for a while.

18:05We're still more than a year away. and every time I write about labor situations that are this far away, save maybe like the NHL this time, which was bizarre. They were bizarrely nice to each other. It always feels like, oh boy, we're going to miss games. Right now, and sometimes they do. Usually they don't. You're a journalist. Deadlines spur pressure. You got to wait for the deadline to come. In your mind, it seems like a total certainty that they're so far apart right now, 15 months ahead of the deadline. Where do you put the likelihood of a work stoppage percentage-wise? 100 % says totally work stoppage, 0 % says none.

18:51It's important to make the distinction here. So I want to do this before I answer the question. Are you talking about a work stoppage? By the way, you're going to answer. This is going to be my, that was going to be my second question. Are we talking about a work stoppage that? Or missing games. Because those are two different things. Work stoppage, 98%. Work stoppage missing games, a lot, lot, lot, lot, lot lower than that. I just think the TV deal, man, I know I keep coming back to that. All right. So you keep coming back to the TV deal. So in your mind, I'm putting words in your mouth. I love to do this.

19:34But in your mind, it's going to be the owners that buckle because they just they see a transformative potential media deal coming up. I don't think that necessarily means the owners are going to buckle. I just think the owners have more to lose in this situation than the players do. And here's the thing we saw last time, like we can't look past this. The eight members of the executive subcommittee for the MLBPA voted against the deal that they accepted. 26 of the 30 teams in turn voted for the deal. And so the idea to me that players are going to stand as a fully united front and follow leadership, that's what the MLBPA is trying to do.

20:22That's what the MLBPA would love to do. But I don't put it past players to acknowledge that, hey, we do have finite careers. We do have limited time to make money. And are we really going to let what in the end, and always in the end, John, it amounts to percentage points. Are we really going to let percentage points potentially derail our personal financial well-being? I can very easily see a scenario where players say, with the prospect of missing games at hand, players say, forget this, like this isn't worth it because for us, we need to take care of ourselves. And that's not how the MLBPA was built, right?

21:07Like there were a lot of games lost in the 1970s and 1980s and 1990s on account of taking a stand and being the most, not just the most effective union in the country, but a truly principled one. Do players today have that same mentality? Are they looking to pay it forward the same way they were paid forward by past generations? I think that's part of what Bryce Harper's thought was behind confronting Rob Manfred the way that he did, that while he's never been super active in labor as a player, never been in a leadership role or anything like that, he's a guy and he's one of the most recognizable names in the sport.

21:52And if anybody is going to speak out and really get the attention of fans of Major League Baseball of owners, of everybody that they're speaking to, it has to be those big names because there's gravitas behind them. There's interest in them. Do the players you talk to, do they support Bryce? Are they like good for him or were they just kind of cringing at the situation? It was good for him for the most part. I mean, there are There are some people who were like, you know, we need to do this in a more tactful manner. But the vast majority with whom I've spoken about this looked at it like, hey, it's about time somebody stood up and punched the bully in the face.

22:36The union looks at Rob Manfred as if his existence is an ally to them because he is someone around whom they can rally support. He is a punching bag for players. And despite his efforts going around and talking to players and trying to improve relations there, you know, players are hearing from the union that MLB is the enemy and this is war. and I think when we look back, John, we're going to look at it like Bryce Harper confronting Rob Manfred in the middle of the Phillies clubhouse was the first shot that was fired. I do find it interesting. I got to cut for break. Two things. One is your prediction in terms of percentages.

23:25I totally subscribe to. I have it like at 99 % even that there's going to be a work stoppage and it's 50-50 whether they lose. I don't even think it's 50-50. I think it's lower than that. I think the next time I think this agreement, whenever it happens, is going to be is going to set up for the ultimate battle, which is the one after that. I think that is because they're going to have proof of concept on the national television deal. Like there are going to be all sorts of things. And that to me is is when the time to to really lose a season, owners are going to look at it. I just find it unique among the people I grew up with and the, you know, friends that are not part of the business.

24:11It's always been a lockstep. Let's support the players. Let's we'd rather see players get money than the billionaire owners get money. this is the first time that I've seen like real fissures amongst, among fans saying like, and, and, and again, those are Oriole fans. Those are, you know, Nationals fans in, in Washington, but teams that don't have big payrolls that just, you know, want a little more, as you said earlier, baseball has a, has a good message and it, and it's been effective in getting that message out at least in, in the types of people I hang out with. Wholeheartedly agree with that.

24:48And, and this is, this is the most conversation I've heard about a salary cap or a potential salary cap. And I think this is my 22nd or 23rd year covering baseball. So I've, I've done this for a while now and the, the calls are, are louder than ever, but, but are they fair? Are they right? Like that's our job. Our job is to talk about all of the things beyond that very basic. I want things to be even because I see them as even in the other sports. Let me take a quick break and then I have some more questions about dysfunction for you.

25:34Well, Jeff, on Thursday, I finished my deadline for the varsity and I was just going on X to see what I was missing. And you and Don Van Nada had a banger of a story about the NFLPA. Your inclusion on it was just because of the one team partners situation that MLB is a part of that we'll get to as well. The NFLPA placed one of their lawyers, Heather McPhee, who was kind of the whistleblower for one team partners. So she wasn't legally designated as such, but they placed her on paid administrative leave. Tell me about that story. What's going on there? I need to speak as basically as I can here because this is a complicated story and I want people to really understand what's going on.

26:29So I'm going to be a little circuitous here. I apologize. A little more than a half decade ago, Tony Clark and DeMora Smith got together and they They were the heads of, respectively, the MLBPA and NFLPA. And they essentially said, if we pool our resources, we can do better business together. And they got in business with Redbird Capital, which is a behemoth in the sports industry in terms of equity investments. And they built this group licensing firm that when Redbird sold its stake less than three years after the company began, it was at a valuation of nearly$2 billion. Following the Redbird sale, there was an effort to create a senior executive incentive plan, which essentially would enrich the members of the board, many of whom worked for the NFLPA and MLBPA.

27:31And while the while the legality of such a thing prevented it from being put into place, when a whistleblower to the National Labor Relations Board accused Tony Clark of all kinds of malfeasance back in November, Heather McPhee, who has spent nearly 17 years at the NFLPA, was extremely alarmed by this. Now, we have to remember Heather McPhee was brought in by Demora Smith, who at that point was gone. She, you know, she has worked all kinds of cases, including Ray Rice and others. Somebody whose intellect is beyond reproach. Like as a lawyer, she is extremely well respected. But when you start making noise internally at a place like the NFLPA, you run the risk of people wanting you gone.

28:30And certainly there have been people at the NFLPA who have been alarmed that Heather McPhee wrote up memos talking about the actions of the NFLPA and one team, questioning whether the union was being put in legal jeopardy. And for months, this has been festering as the Eastern District of New York, John, looks into whether any sort of illegal activity took place there. And we got a tip yesterday that she had been placed on paid administrative leave following a number of people at the NFLPA filing HR complaints against her. Now, as you said, she is not technically a whistleblower, has not been deemed a whistleblower.

29:18And yet some of the information that she has written out in memos has been received by the Eastern District of New York and David Berman and the attorneys there who are looking into whether there's actually a case to prosecute there. And so we can't say that she was placed on paid leave specifically because of what she had done. The timing is just interesting. And and and it's I say it as like a commentator, possibly like, I mean, you can say whatever you want. I don't want to get sued. So I'm not, you know, I'm not I'm not making any connections. I we are just going to ask questions. You know, the the fact that these complaints came because she was not listening to directives from supervisors.

30:20There were claims of bullying there. You know, there were all sorts of things that were said to H.R. departments. And look, people take HR situations very seriously and understandably so. But I feel like this is not going to be the last time we hear about Heather McPhee and her involvement in this. Because considering everything that's happened at the NFLPA over the last, God, is it like a month now? It feels like 10 years. It's incredible. And Lloyd Howell, when he resigned, it's like the one team stuff wasn't even part of that. It was strip clubs and it was conflicts of interest and it was buried agreements with the league.

31:16It was his parking lot shrine to OJ Simpson, for goodness sake. Dude, of all the weird shit that I see on a daily basis, an OJ Simpson parking spot was like, you can't make that up. I mean, you're from Cleveland. 32 has to be Jim Brown, right? Just say it's somebody else. I don't care. Just not OJ. This should not be hard, guys. You mentioned Lloyd Howell. He's the NFLPA executive director who resigned and just replaced him. We had Don Van Atta on the pod a little while ago. They're back at sort of square one. They have a long time to go before their CBA is up. All this one-team partners and all of this mess, what effect is it having on the MLBPA?

32:14And I'm asking this vis-a-vis sort of the CBA, the collective bargaining negotiations. I think that remains to be seen. Right now, there is immense confusion among players. Like players, they don't know what's going on. And the union is telling them all is well. And, you know, all might be well. I don't know whether an indictment of any kind is coming. But I will say this, John. If you're MLBPA leadership, you have to be preparing for that possibility. Do you not? Because if this is as seminal a negotiation as the players believe it is, if it's going to take strength and leadership to get them through it and get them to their desired outcome.

33:11The one thing that would throw a wrench in all that is if Tony Clark is in any legal jeopardy, because even let's just say hypothetically here, let's just say there's an indictment. If you're MLBPA leadership, do you stand by him at that point? If you're MLBPA, even though he's not guilty of anything. It's just it's just accusations. And and I think the answer to that is probably it depends on what the accusations are. I think it almost also depends on how close you are to resolution to the CBA actually being up. I know. And that's that it's why the timing of this is is so hard for the if you shoot somebody on Fifth Avenue, like, you know, like, OK, we'll just see you through to the end of this and then you got to go or something like that.