MLB is a sport divided by historic payroll disparity — so what’s next?
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Jesse Rogers, ESPN Staff Writer
This year in Major League Baseball, almost all the attention has been paid to on-field trends, as a slew of historic rule changes impacted almost every aspect of the game. Now, MLB is turning some of its attention back to the economics of the sport.
It was only 14 months ago that a brutal labor battle between the league and the MLB Players Association ended with a five-year collective bargaining agreement. Once again, the players were able to secure a system without a hard salary cap, and MLB remains the only one of the four major professional North American sports without some form of hard payroll floor or ceiling. It has led to some dramatic differences in team payrolls and some dramatic effects on the standings as well.
And this year, a record amount of spending in free agency pushed the difference in payrolls between the top and bottom teams to new extremes. During the 2022 season, approximately $226 million separated the payrolls of the Los Angeles Dodgers and Baltimore Orioles, the largest gap in the history of the sport — at the time. This season, it’s even larger, with a gap of nearly $299 million between the New York Mets and Oakland Athletics. But they’re not the only outliers: The A’s are one of three teams with an Opening Day payroll under $100 million; the Mets are one of 14 teams with payrolls of more than $200 million (only Steve Cohen’s team crosses the $300 million threshold).
Those differences could be tied to new extremes on the field, too. In 2022, there were a record-tying four 100-win teams, and another with 99 victories. Meanwhile, there were four 100-loss teams — also a record — and another one with 97 defeats. Those 100-win teams averaged nearly $226 million in payroll, while the 100-loss squads averaged just under $87 million.
Last year, the league created an “economic reform committee,” made up of a select group of owners who assess and advise the commissioner on economic issues such as payroll disparity and the regional sports network collapse. MLB has often expressed concerns with the growing chasm in revenues and point to teams like this year’s A’s, who have the lowest payroll and are on pace for one of the worst seasons in baseball history (look out, fans of the 1899 Cleveland Spiders).
But it’s not an exact science: This year, the standings aren’t so clearly tied. If the playoffs were to begin today, three of the top four payrolls would be out, while three of the bottom four would still be playing.
The league still insists it’s worthy of attention.
“Ever since I started in the game, we have struggled with the related concepts of revenue disparity and payroll disparity and competitive balance,” commissioner Rob Manfred told ESPN. “The reason for that isn’t about making money. It’s the fact that what we sell in our game is competition and we need to make sure that we have a system in place that fans in all markets believe they have a chance.”
Payroll vs. parity on the field?
In 2000, the league commissioned an economic study and Blue Ribbon report — authored by former U.S. Sen. George Mitchell and others — which essentially concluded that baseball was headed toward financial ruin, in part because the gap between the top spender and the bottom one was growing. The difference then was $77 million.
“We believe that current trends cannot continue if the game is to remain an accessible, affordable, competitive national pastime,” the report read.
So claims of competitive imbalance are nothing new — and at various points in the 23 years since the Blue Ribbon report, there have been mixed indications of what growing payroll disparity has meant for the game.
In terms of win totals, the correlation of salary and success seems clear. The top six teams in payroll over the past five years have averaged 91 wins, up from 86 by the top salaried teams in the previous five years. And despite the relative success of small-market, lower-revenue-generating teams like the Tampa Bay Rays, the Kansas City Royals are the only team since 2010 to win the World Series with a payroll in the bottom half of the league.
“You’ve seen teams with low payrolls win, and teams with high payrolls lose, but those big markets have an advantage,” Chicago White Sox left fielder Andrew Benintendi said. “Smaller markets can’t afford some of those players. That divide is growing.”
That said, there’s no monopoly. The Houston Astros and Boston Red Sox are the only big-market teams to win more than one title since the Blue Ribbon report was released in 2000. Since 2015, 28 of the 30 MLB teams have made the playoffs. Since 2010, it’s 30 of 30.
In 2019, Manfred lauded the system, which, that year, produced equal playoff teams from both big and small markets.
“I think we have an economic system that has produced a remarkable level of competitive balance over time,” he said then.
He said something similar just last week, in another season in which so far we see parity working. If the season ended today, only the Atlanta Braves would repeat as division winners.
“Baseball is doing just great,” Manfred said at a recent hearing regarding the regional sports network (RSN) situation. “We’ve had one of the best starts to a season in decades.”
That’s thanks in large part to several surprise teams in the mix this year, but sustaining long windows of contention hasn’t always been easy for a lot of them. For many smaller-market clubs, cycles of rebuilding have become the norm, and those down years lower payrolls for players while widening the disparity between the top and bottom teams. Teams have always gone through rebuilding stages, but it has become more pronounced and strategic over the past decade or longer.
“It’s becoming a little more prevalent,” said Atlanta Braves first baseman Matt Olson, who spent six years with the small-market A’s before a 2022 trade. “It is sad when coming up with an organization you think you’ll undo the cycle, playing good baseball. Hitting the reset button seems to be happening on a decent amount of clubs. It’s OK if you’re not winning and trying to rebuild a little, but when you get to the point of having a good team and recognizing it, it’s a little deflating if you don’t spend.”
Forcing teams to spend even during a rebuild is a hard case to make, though, even for the union. The concept of a salary floor was raised during the most recent labor negotiations, but it was summarily dismissed: Any discussion of increased small-market payrolls would mean implementing a system they believed would curtail big spending on top free agents.
“If you get a floor, you get a cap,” Mets pitcher and former MLBPA executive subcommittee rep Max Scherzer said. “There was a proposal exchanged on that.”
In a perfect world, teams would spend on their own with hopes of fielding a winning team. That’s not always happening — and there’s no easy solution.
“All clubs have demonstrated the ability to compete,” MLBPA executive director Tony Clark told ESPN. “The question is whether they are willing to do so.”
The Orioles, in second place in the AL East, are a prime example of what successful drafting and rebuilding looks like — but the team suffered through years of losing and low payrolls to get to their current competitive level.
“Since I’ve been here, our payroll is what it is,” O’s manager Brandon Hyde said. “I can only control what I can control. Those decisions aren’t up to me. We do the best we can do with the group that we have.
“I’m sure as we get better, our payroll is going to increase. Our players are going to make more, too, as they get to their fourth, fifth and sixth year. I can see it going up.”
Baltimore has surprised fans and pundits alike with its success this year, but the Orioles are the exception, not the rule.
“I hate that in a lot of years, half or at least a third of the league might be out of contention on Day 1,” one executive of a big-market team said. “I like when a team comes out of nowhere and surprises the league. We see less of that now.”
Should the concern be higher this time?
The trends have become more and more pronounced as big-market teams continue to realize revenue streams in and outside of ballparks. VIP seating, team-owned television networks and even bars surrounding stadiums, along with new gambling facilities, have all added to revenues. And while those markets have always spent more on payroll, they’ve also caught up to the smaller markets in other ways, spending more on team infrastructure.
“There was a real shift when the Yankees, Dodgers and Red Sox started spending as much attention to scouting and player development and analytics as the small-market teams were,” one small-market AL executive said. “There was a time when payroll disparity was mitigated, somewhat, by systems and internal processes that were better than those teams. There was a time when we were considered farm systems for those bigger market teams. Now, they’re spending 2.5 times on their payroll and their infrastructure.”
In other words, small-market teams previously stood out by drafting and developing players at a highly successful rate. Now, those bigger markets are doing it as well.
“Call it the Andrew Friedman effect,” another executive said, referring to the Dodgers president who took his small-market mentality from Tampa Bay to Los Angeles.
“The Yankees will eventually employ a coach for every player, if that’s what it takes,” another one quipped.
With new revenue streams and more time and money spent on team infrastructure, smaller markets maintain that the imbalance is approaching “unsustainable levels,” according to one executive.
“You’re seeing the commissioner’s office spend a little bit more thoughtfulness on not only the big picture of payroll but also on teams spending a ton of money on other spaces,” Minnesota Twins president Thad Levine said. “Are there ways to regulate some of those things?”
That’s partly what the economic reform committee will be looking into. But there is no clear statistic that proves the system can’t work as is, and the players association is loath to suggest anything that could lead to a full economic restructuring. The players have been clear about wanting to avoid a hard salary cap, while rebuilding teams are always hopeful their organizations will spend when the time comes. Many have — to a point.
Again, Baltimore’s 2023 success stands out. But will a team such as the Orioles be able to sustain a window of winning in the same way the Dodgers, Astros or Yankees have? Or will they go the route of the Rays, in which trading players before they make too much money through arbitration is the norm?
“Sometimes the question comes down to ownership,” more than one executive said.
Motivated ones, such as the Padres’ Peter Seidler, seemingly don’t care about market size or perhaps, in extreme cases, even the bottom line. Over the past five years, 11 players signed deals for $300 million or more, but just three were with a bottom-15 market team. All three were with San Diego.
But even as the Padres help muddy the waters as a small-market team with a massive payroll, they also continue to highlight the disparity among the league. (Their on-field struggles complicate matters, as well.)
Just 18 months ago, the league locked out the players when the two sides stood far apart on topics such as competitive balance and payroll — and the next negotiations are coming up faster than they seem. The MLBPA already suspects the economic reform committee is just another avenue for the league to attempt to suppress player salaries in the next negotiation.
Which way these issues continue to trend will say a lot about how those talks go this time. Like MLB was 23 years ago, the commissioner is concerned.
“We increased in terms of disparity this offseason,” Manfred said. “It’s something we’re going to have to keep an eye on.”
Just when you thought the 12-team College Football Playoff was the solution … it might be messier than ever.
Five-loss Duke can win the ACC. Three of the four power conferences will have championship games that feature rematches (and Alabama might have to beat Georgia a second time to stay in the field). If both BYU and Texas Tech are in from the Big 12, someone currently in the top 10 is out.
There also are still plenty of questions: Will the committee do anything with Ole Miss after Lane Kiffin’s departure? Does Miami gain ground on Notre Dame? Which are the true bubble teams?
How the committee votes in Tuesday night’s fifth ranking (7 p.m. ET, ESPN) will be a strong indicator of how the 12-team field will look on Selection Day, but it’s not the final answer.
Bubble Watch accounts for what we have learned from the committee so far — and historical knowledge of what it means for teams clinging to hope. Teams with Would be in status below are looking good ahead of the committee’s fifth ranking. For each Power 4 conference, we’ve also listed Still in the mix. Teams that are Out will have to wait until next year.
The conferences below are listed in order of the number of bids they would receive, ranked from the most to least, based on this week’s top 12 projection. Check back following the selection show for an updated version that will reflect the committee’s penultimate ranking.
Jump to a conference:
ACC | Big 12 | Big Ten
SEC | Independent | Group of 5
Bracket
SEC
Would be in: Alabama, Georgia, Oklahoma, Ole Miss, Texas A&M. Right now, the Crimson Tide are the last at-large team in the field. Alabama will face Georgia in the SEC championship game, but the committee could have a difficult decision if Alabama loses and finishes as a three-loss runner-up. The Tide would have defeated Georgia during the regular season but lost to the Bulldogs in the championship game — and they’re already in a precarious position. How far Alabama drops could determine if the SEC gets four or five teams in the field. Alabama could finish as the committee’s highest-ranked three-loss team and still be excluded from the playoff to make room for a conference champion — as they were last year.
A Georgia win should lock up a first-round bye and a top-four finish for the Bulldogs, while a loss should still put them in position to host a first-round game. Georgia beat Ole Miss, so it would be surprising to see them drop below the Rebels with a loss, even though the Bulldogs would have one more defeat. With a 35-10 drubbing of Texas also on its résumé, Georgia would still have a strong enough résumé to finish as the committee’s top two-loss team.
It will be interesting to see if Lane Kiffin’s departure affects the ranking of Ole Miss. CFP protocol states the committee will consider “other relevant factors such as unavailability of key players and coaches that may have affected a team’s performance during the season or likely will affect its postseason performance.” Ole Miss won’t miss the playoff because Kiffin left for another job, but it could get dinged a spot or two if the committee surmises the team won’t be the same without him.
Still in the mix: Texas. The Longhorns will earn a promotion Tuesday night, but the win against Texas A&M is unlikely to catapult them into the playoff. Texas probably will be stuck behind Miami in part because of its loss to Florida, which Miami beat. Even if Texas Tech knocks BYU out of the top 12 with a win in the Big 12 championship game, bumping up both Miami and Texas, the Longhorns would still be excluded from the field to make room for a conference champion. If BYU and Alabama were knocked out with title game losses, that still probably wouldn’t be enough for Texas to get into the field, because even if Texas reaches No. 11 by default, it would still be excluded during the seeding process for a conference champion.
Out: Arkansas, Auburn, Florida, Kentucky, LSU, Mississippi State, Missouri, South Carolina, Tennessee, Vanderbilt
Big Ten
Would be in: Indiana, Ohio State, Oregon. Both Indiana and Ohio State are CFP locks — even if they lose in the conference title game — and the runner-up will still have a strong case for a top-four finish and a first-round bye. The loser’s only loss will be to a top-two team, but it could fall behind Georgia in the top four if the Bulldogs win the SEC, and/or Texas Tech if it wins the Big 12.
The Ducks punctuated their résumé with a respectable win at Washington and should be secure in their playoff position, probably hosting a first-round game. Oregon could get a small boost this week if Texas A&M drops behind it after losing to Texas.
Still in the mix: None.
Out: Illinois, Iowa, Maryland, Michigan, Michigan State, Minnesota, Nebraska, Northwestern, Penn State, Purdue, Rutgers, UCLA, USC, Washington, Wisconsin
Big 12
Would be in: Texas Tech. The Red Raiders will play BYU in the Big 12 title game and have a great case to be in the playoff regardless of the outcome. It’s highly unlikely the selection committee would drop the Red Raiders out of the field as a two-loss Big 12 runner-up — especially considering they would have a regular-season win against the eventual conference champion. It’s also possible Texas Tech earns a first-round bye as a top-four seed if the Red Raiders win the Big 12. The committee could move them into the top four on Tuesday night if Texas A&M falls out after its loss to Texas.
Still in the mix: BYU. If BYU doesn’t win the Big 12, it’s unlikely to earn an at-large bid as the conference runner-up because the Cougars are already on the bubble and would be eliminated during the seeding process if the playoff were today. It’s not impossible, though. If Alabama finishes as a three-loss SEC runner-up, it could at least open the door for debate. It could be as simple as No. 10 Alabama and No. 11 BYU flipping positions on Selection Day. The difference would be that BYU lost to Texas Tech twice, and Alabama would have defeated Georgia, the eventual SEC champ once — and it was on the road. If BYU wins the Big 12, it’s the ideal scenario for the conference because it would have two teams in the playoff.
Out: Arizona, Arizona State, Baylor, Cincinnati, Colorado, Houston, Iowa State, Kansas, Kansas State, Oklahoma State, TCU, UCF, Utah, West Virginia
ACC
Would be in: TBD. The ACC championship game will feature Virginia and Duke, and if five-loss Duke wins, it’s possible the ACC is excluded from the playoff. If Virginia wins, it will represent the league in the playoff, as the two-loss Cavaliers are ranked in the top 20. And no, Miami did not play Duke or Virginia during the regular season. Duke lost to Tulane, which is the top Group of 5 playoff contender and will reach the playoff if it wins the American. Duke also lost to UConn. And it has already lost to Virginia 34-17 on Nov. 15.
Still in the mix: Miami. The Hurricanes will still be the committee’s highest-ranked ACC team on Tuesday night, but they would be excluded if the playoff were today to make room for a conference champion. That means the ACC winner could knock the league’s best team out of the playoff. The committee isn’t ignoring the Miami’s head-to-head win against Notre Dame, but it also isn’t comparing the Canes only to the Irish. Miami also needs to earn an edge against Alabama and BYU — two teams the committee has deemed better than Miami to this point. If both of those teams lose their respective conference championship games, it would open the door for Miami to possibly enter the 12-team field with Notre Dame.
Out: Boston College, Cal, Clemson, Florida State, Georgia Tech, Louisville, North Carolina, NC State, Pitt, SMU, Stanford, Syracuse, Virginia Tech, Wake Forest
Independent
Would be in: Notre Dame. The Irish have done everything right since their 0-2 start, running the table and doing it with consistent dominance regardless of opponent. At No. 9, the Irish are safely in the field — if they can stay there through conference championship chaos. The concern would be if Alabama won the SEC and jumped Notre Dame, pushing the Irish to No. 10 — and if BYU and Texas Tech both made the playoff. If BYU wins the Big 12, both teams are highly likely to make the playoff, which means someone currently in the top 10 would have to be excluded. The Irish will watch and wait and need to hope those two results don’t unfold.
Group of 5
Would be in: Tulane. If the Green Wave win the American, it will represent the Group of 5 in the playoff. Tulane is currently the only Group of 5 team ranked by the committee, but if North Texas wins, it would be the most likely team to reach the CFP, given the overall strength of the conference this season.
Still in the mix: James Madison, North Texas. JMU has clinched the East Division and a spot in the Sun Belt Conference championship game. North Texas will face Tulane in the American, and if it wins, it’s more likely to represent the Group of 5 in the playoff than JMU because of its schedule strength. JMU could still be considered, though, if Duke wins the ACC, giving the Group of 5 two playoff teams in the 12-team field.
Bracket
Based on this week’s projection, the seeding would be:
First-round byes
No. 1 Ohio State (Big Ten champ)
No. 2 Indiana
No. 3 Georgia (SEC champ)
No. 4 Texas Tech (Big 12 champ)
First-round games
On campus, Dec. 19 and 20
No. 12 Tulane (American champ) at No. 5 Oregon
No. 11 Virginia (ACC champ) at No. 6 Texas A&M
No. 10 Alabama at No. 7 Ole Miss
No. 9 Notre Dame at No. 8 Oklahoma
Quarterfinal games
At the Goodyear Cotton Bowl, Capital One Orange Bowl, Rose Bowl Presented by Prudential and Allstate Sugar Bowl on Dec. 31 and Jan. 1.
No. 12 Tulane/No. 5 Oregon winner vs. No. 4 Texas Tech
No. 11 Virginia/No. 6 Texas A&M winner vs. No. 3 Georgia
No. 10 Alabama/No. 7 Ole Miss winner vs. No. 2 Indiana
No. 9 Notre Dame/No. 8 Oklahoma winner vs. No. 1 Ohio State
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