With the NFL labor battle nearing a lockout, which would result in players not receiving pay or benefits for the duration, MSNBC published a piece today on players living paycheck-to-paycheck. They found that 380, or 22%, of the league’s players are dependent on that next paycheck.

I know it’s hard to believe, but even guys making hundreds of thousands of dollars a year live paycheck-to-paycheck. We all sit around and wonder, what does a guy do with $400,000 that he can barely make ends meet? It’s the same question a guy making $30,000 and getting by would ask someone making $100,000 and barely making it to the next paycheck.

The bottom line is that many people are slave to a natural tendency to try and keep up with his peers.  A baseball player making the league minimum of $400,000 may feel pressure to keep up with the guys on the team who are making $1 million. He wants to give his wife a nice house, park a luxury vehicle next to the others in the lot and treat his family to big vacations during the offseason.

Add in the fact that many pro athletes make loans to friends and family and invest in their second cousin’s newest money making venture, and it’s not that hard to see how things get out of contol. That’s not even taking into account the guys who drop $100,000 on a bar tab in one night.

Many football players can’t afford a lockout, but now perhaps neither can the owners. In a ruling yesterday, U.S. District Court Judge David Doty ruled in favor of the Players Association on their claim that owners left money on the table in television contract negotiations in exchange for provisions providing for payment in the event of a lockout. A hearing will be scheduled where Judge Doty will decide if any television money received during a lockout would be put into escrow and unavailable to owners. You can read more on the latest in the NFL labor battle here.

As I read dozens of columns, blogs and tweets on Albert Pujols this week, I was struck by the number of people who think Pujols is being greedy or should take a “hometown discount” to stay with the Cardinals. I’ve always said I admire players like John Smoltz and Chipper Jones who either took less or restructured their contract to stay with the Braves. I like the idea of players staying with one team their entire career. Not like the days of the reserve clause where they were forced to stay, but when they love a team and a city so much they choose to stay.

All that being said, I don’t think any player should feel obligated to give a team a “hometown discount” just because he’s played there a long time. That brings us to Pujols. National writers and commentators seem to have come to consensus that what he’s asking for ($30 million/year for 10 years) isn’t outrageous in today’s market. However, I’ve been shocked by the number of everyday fans who are disgusted that he turned down what was reportedly up to a $210 million offer over 10 years from the Cardinals.

I thought about it and tweeted out the following:

Fans tend to side with owners because they hear player salaries in the media every single day. What if they heard owner revenue every day?

I firmly believe that fans take the owners side because they hear figures like $21 million per year and think, “Wow, that’s more than I’ll make in my entire lifetime. Who needs that much money? And he’s going to turn it down?!”

First, I think if you heard owner revenue numbers every single day and compared that figure to what they’re putting into payroll and other team expenses, you’d feel differently.

Second, it’s all relative. If Pujols had taken the Cardinals offer, he would have been making less than Ryan Howard and A-Rod. The bottom line is that he’s a better player than either of them and deserves to be making more per year.

I had a follower on Twitter (you can follow me @SportsBizMiss) engage with me after the tweet I shared above. He said perhaps if player salaries were lower it would be more affordable for fans to go to games. Really? No one can really believe that just because owners are paying less they’re going to make attending games cheaper. Have you ever seen a big slash in ticket prices following a decrease in payroll for any team in professional sports? I don’t think so. Every dollar the owners save is likely going right back into their pocket.

I asked this follower if two other guys with his same job title were making more than him but he was producing better work, would he be cool with that? He said probably not, but that it’s different because these guys are making hundreds of millions of dollars.

I’m sorry, but that does not make it different. Let’s say this follower makes $75k and his coworkers make $100k. Don’t you think the guy down the block making $25k feels roughly the same way about them as this follower does about baseball players?

Owners got salaries to where they are, not players. All a player can do is ask for the money, the owners don’t have to give it to him. I don’t think any owner has ever paid more than he thought a guy could be worth to him. No owner thinks, “Gee, that guy looks great in our uniform. He’s not going to win us games or put fans in the stands, but what the heck, give him what he wants!”

So, here we are with arguably the best player in baseball right now asking to be paid more than other guys who he’s out-performed. Why doesn’t he deserve that?

Mark my words, Pujols is worth $300 million over 10 years to someone.

UPDATE: Several followers on Twitter pointed out that it’s really the fans who are to blame for rising player salaries, because it’s their money that goes to pay these guys. That’s true, whether it’s directly from ticket and merchandise sales or indirectly through advertising and tv dollars thrown at teams in order to get to fans. So, if you want to complain about player salaries, I hope you’re not buying tickets or licensed merchandise or watching games on television. Doing those things would be the equivalent of enabling an alcoholic.

I was thinking about the variety of topics I’ve discussed on Twitter in the last 24 hours – NFL labor issues, friendship, marriage ultimatums, who’s going to win the World Series and Albert Pujols – when it occurred to me that two of those topics are analogous. Pujols gave the Cardinals an ultimatum: sign me by February 16th or we’re done.

By now you’ve heard that Pujols gave the Cardinals until yesterday to get a deal done. Word is they made an offer right after the beginning of the year and while they’ve had talks since then, they have not made another offer. So, Pujols has said he’ll transition to playing mode and not discuss again until the offseason. In my opinion, this means he won’t be in a Cardinals uniform next year. If they were willing to ante up, they would have. (On a side note, I’m not sure it’s a good business move for the General Manager if their payroll remains at $100-110 million. They can’t afford for him to be a quarter to nearly one-third of their total payroll. That being said, the ownership is crazy if they think it’s good business to let him go.)

What’s really interesting to me, however, is how much this situation is like a girl giving a guy an ultimatum when it comes to marriage. She’s done wasting time having the same old conversations about the future over and over. In that situation, I think the girl figures the guy already knows what he’s going to do, so she’s giving him that extra shove so she can know for sure and get on with her life.

I think that’s what Pujols just did. He saw no point in dragging this out through the season only to arrive at the same ending. So, he set a deadline. He asked the Cardinals if they wanted to spend the rest of his (baseball) life together, and they essentially said, “What we have is great. We want to continue to be with you, but we just can’t give you what you want.”

Instead of marrying him, the Cardinals agreed they could continue to live together and act like they’re married. They’ll promise to cook him dinner evey night and take out the trash, but they just can’t commit to marriage.

So Pujols will continue to live with them until they finish out the current lease, all the while eyeing other potential suitors. He’s the most eligible bachelor in town, so he’ll find someone new. Someone who can’t wait to marry him and be with him for the rest of his (baseball) life.

For those who don’t know, you can now find me on SportsMoney on Forbes.com!  I’ll still be writing here, and mostly about different topics, but check out my SportsMoney posts as well:

The Tebow Effect (I know it’s hard to believe, but I do watch other sports sometimes!)

Why NFL’s Supreme Court Loss Isn’t Much of a Loss 

Where Does Roy Oswalt Fit?

BCS to Congress: Stay Out!

Are MLB Players Overpaid?

Is Revenue Sharing the Great Equalizer in MLB?

I’ve decided to resurrect an oldie, but a goodie, here.  I first posted this in July 2008, and it’s one of my favorites.  Without further adieu…

Last week, I engaged in one of the best debates I’ve ever had on whether Major League Baseball should have a salary cap.  This is going to require a little jumping around, but if you’re at all interested in this issue, it’s all worth the read!

Here is what you need to read – be sure you read the comments as well!  I have comments posted to both of Larry’s first two articles and will soon comment on the third.  There are some great thoughts from everyone involved!

Start here: Thinking Cap – Part 1 by Larry at It’s All About The Money

Then go here: Why MLB Does Not Need a Salary Cap by yours truly here at It’s a Swing and a Miss

Then back to Larry: Thinking Cap – Part 2 by Larry at It’s All About The Money

And Larry again: Thinking Cap – Part 3 by Larry at It’s All About The Money

Then come back here later this week (hopefully tomorrow) for my article on what the great equalizer really is…hint: it’s not a salary cap, salary floor or slotting in the first-year draft.

First off, thanks to Pete Toms over at Biz of Baseball for posting a summary of Rob Manfred’s speech at Harvard regarding the upcoming collective bargaining negotiations.  I had somehow missed this and am so glad I caught it!

Before I tell you why I’m against hard slotting in the MLB draft and what my alternative suggestion might be, I’d like to make an observation.  When I’m preparing to write something like this, I do a lot of research.  I hate being corrected or proved wrong – maybe that’s the lawyer in me.  Regardless, I came across something interesting.  What’s even more interesting is that I still find it interesting, despite it being something I already knew!  Anyhow, I digress, back to what’s so darn interesting.  Do you know how many articles and blogs there are about NBA and NFL draft slotting?  Not many.  Do you know how many there are about MLB and whether or not there should be a slotting system?  More than I can count!  NBA and NFL players make big bucks, and there are certainly some dynasty-type teams in both leagues…so why do MLB fans care SO much more about issues like this?  Well, because it’s the national pasttime, and we all want a piece of it, I guess.  Anyone who follows sports even a little knows there are FAR more analysts and bloggers in baseball than the other sports, but I still continue to find it fascinating.  What can I say, I’m easily amused.

Back to the issue at hand: slotting in the MLB first-year players draft.  If you read my salary cap post, you can probably guess that I’m not a fan of hard slotting.  It agitates that old free market economy concept I love so much.  Even so, I’ve come up with an alternative I’m still mulling over.  Before I get to that though, let’s review the NBA and NFL system and discuss why MLB does not have hard slotting at this point.

To set the stage for those who are unfamiliar with the NBA and NFL systems, here is a (super) brief overview.  The NBA does not have signing bonuses.  Instead, they have salary slotting.  A player receives a set salary based solely on the slot where he is drafted.  Period.  It’s that cut and dry. 

In the NFL, signing bonuses exist but are becoming less common.  Any signing bonus paid to a player up-front is pro-rated over the life of his contract in terms of the team’s salary cap calculations  If the player is cut before the end of his contract, the entire sum of signing bonus that remains is calculated into the upcoming season’s salary cap.  So, there is an emerging trend of little to no signing bonus and more guaranteed contract years (in the past when signing bonuses were larger, contracts were not guaranteed and a player who was cut was not owed the remainder of his contract, nor was it calculated into the salary cap calculations). 

Now to why hard slotting is absent from MLB.  First, the NBA and NFL systems will not work in MLB.  The biggest reason is because of the minor league system in baseball.  A drafted player is not expected to perform at the big league level immediately, nor is he receiving much in the way of salary in those early years in the minors (with the exception of the very top picks).     

Which leads me to what I hear most people say: shouldn’t the MLBPA support the idea of hard slotting?  I hate to pick on anyone, but one of the first articles I found was by Jeff Fletcher at MLB Fanhouse.  Here’s the pertinent part of his article:

I can’t figure out why baseball still doesn’t have a NBA-style bonus structure.

I mean, I know why. It’s because the players’ union has not allowed the owners to implement one in collective bargaining. One of these days the major league players in the union are going to realize: “Hey, all that money going to amateur kids could be going to us!”

I’m not here to blame Jeff Fletcher.  He holds the same misguided belief I once had about why there is no hard slotting in MLB.  Think about it…why would the MLBPA not want hard slotting?  Like Jeff says, huge bonuses to unproven guys is money not being spent on MLB players.  (As a side note for those who don’t know, the MLBPA does NOT represent the interests of minor league players.)  So, why wouldn’t MLBPA be begging for hard slotting?

Keep it simple, stupid.  The MLBPA loves seeing kids like Strasburg get giant bonuses.  Why?  Well, it makes it a heck of a lot easier to get more money for their players!  If some unproven kid going to minor league ball is worth some enormous bonus, what is a proven and successful major leaguer worth?  An ungodly amount, that’s how much.  Player X is a right-handed reliever who was 17-4 last year with a 2.20 ERA.  He just watched Player Y get a $7 million signing bonus from his club straight out of college.  What can the club possibly say when Player X comes in for salary negotiations and wants $9 million next year?  All Player X has to do is point out the $7 million given to the kid who might never make it to the Majors.  The club now has no ground to stand on and better start drawing up the contract! 

Bottom line: the MLBPA is not going to support hard slotting, because it will have the upward effect of depressing salaries in the bigs.  Don’t even argue with me that it might not – the point is the mere possibility that it will.  The MLBPA isn’t taking that chance.

Personally, I don’t support hard slotting.  I have the same reasoning as my argument against a salary cap – why does this have to be about restricting a person’s ability to make money?  When I was looking for my first attorney gig, there was a range of “signing bonus” money firms gave out for moving and bar expenses.  Do I think the American Bar Association should come in and set the signing bonus?  Of course not.  I should be able to factor that into my decision.  So should ballplayers.  If they say they want to play for Team X or that they will only sign for $5 million or they’ll go play college ball, fine.  That’s their right as an available employee. 

Does signability affect the draft?  Absolutely.  Have I pointed out before when a player like Jeff Francoeur says he wants to play for the Braves or he’ll go play college ball?  Yep!  Does it keep the draft from being perfectly fair?  Sure it does.  But if the Nationals can come up with $15 million ($7.5 million signing bonus and the rest in pro-rated salary over 4 years) to sign the top pick, then clearly signing bonuses aren’t keeping clubs from getting their dream pick.  So the Yankees pay first round money to guys they get in the fifth round, so what?  If the guy was really first round material, he would have gone first round and gotten the money from someone else.  Let the Yankees throw their money around to unproven players.

I can hear you screaming about fairness and the evil empire (aka, the Yankees), so I’ll offer an alternative that I could stomach.  The MLBPA won’t support my alternative idea, but I’m throwing it out to appease the rest of you.  The MLBPA might not be good at compromising, but I am!

I say MLB and the MLBPA sit down and set a threshold amount that can be spent by each club on signing bonuses for each year of the upcoming CBA.  So, let’s just say for sake of having an example, each club can spend $15 million on signing bonuses for the 2010 draft.  They can divide it up any way they choose between the rounds, but cannot exceed the maximum total amount.  This still limits the amount a player is going to receive, but there’s some flexibility.  If he’s really worth it, a team will spend a huge chunk of their allotted amount on him.  In a hard slotting system, he’s got no chance.

The system is still flawed, because inevitably the teams will simply sign the player to a  contract like Strasburg’s where he receives large sums over the next few years as salary.  Then you have to go to a system like the NBA where there are no signing bonuses and only slotted salaries.  Now I have a problem again.  My free-market sensibilities cannot handle slotted salaries.  Same reason I’m against a salary cap.  Hey, at least I’m consistent!

So, even I have a hard time defending my alternative.  It’s the best I’ve come up with if we simply must have some change.  However, I’m ultimately not in favor.  I don’t really believe that clubs are that greatly affected by the lack of  hard slotting in the draft.  Don’t believe me?  Consider what I found in an article by the Pittsburgh Tribune-Review.  The Pirates only signed 23 of their 50 picks in the 2009 draft, which John Grupp notes is the lowest number of signings amongst MLB clubs.  However, the Pirates GM, Neal Huntington, revealed their strategy: they used large signing bonuses to get top high school pitching talent that slipped in the draft.  He seems to think they were successful in their strategy.  The Pirates spent $8.08 million on their top ten picks, which ranked sixth among all thirty clubs.  What does that tell me?  The Pirates might not be the richest club (not even close, actually), but they had a strategy and used what they did have to get what they wanted.  I didn’t hear any remorse about the 37 guys they didn’t sign.  I’m guessing they weren’t worth the money they wanted.

If you ask me (which you’ve basically done by choosing to read this), the real problem is in terms of international signings.  Not all clubs can afford to play that game, which I think is a far bigger problem than signing bonuses.  More to come in the future on what I think should be done there.

I’ll close with another random tidbit I find interesting.  The large majority of my followers on Twitter and on this website are Yankees fans.  We’re here talking competitive balance, revenue sharing, the competitive balance tax, salary caps and draft slotting, and my biggest contingent of followers are Yankees fans.  Some of them even support all or some of these concepts!  I find it endlessly intriguing.  Yankees fans: watch for my post later this week about my weekend in Boston at the Red Sox-Yankees series!

The following is a post from June 27, 2007, originally appearing on Chop ‘n Change, about Scott Boras’ impact on baseball.  Essentially, not much has changed since then.  What has changed, however, is how I view player salaries.  As such, I have added a couple of footnotes to revise my opinions.  So, what do you think?  Is Scott Boras the most influential man in baseball?  Leave your comments! 

Though it pains me to ask, I often wonder if Scott Boras is the most influential man in baseball.  Not just today, but in the past couple of decades.  Players like Alex Rodriquez have him to thank for their unprecedented, multi-million, multi-year contracts.  Use the search terms “Scott Boras is Satan” on Yahoo! or Google and you’ll find a host of baseball fans equating Boras with the man down under.  If he’s not the most influential man in baseball, he certainly is the most hated.

As a fan, I’ve spent the past decade or so hating Scott Boras.  I blamed everything that was wrong with the game on him and the players’ union.  In reality, the pendulum has simply swung from one extreme to the other.¹ Let me begin with a history lesson.  In the beginning, the owners literally owned the players, in every literal sense of the term.  Owners could unilaterally decide when to trade or sign a player and how much to raise his salary (subject to very little limitation).  The reserve clause, in its inaugural form, allowed clubs to reserve only five players.  However, it wasn’t long before the reserve clause was an integral part of every player contract.  Owners convinced players that the reserve clause was essential to preserve what’s been called “competitive balance” in baseball.  The idea of competitive balance was best stated by sports economist Simon Rottenberg, who said, “But in baseball no team can be successful unless its competitors also survive and prosper sufficiently so that the differences sin the quality of play among teams is not ‘too great’.”  In fact, as late as the 1950s, baseball players testified in Congressional hearings that the reserve clause was vital to the preservation of baseball.  And it wasn’t just any average player testifying, it was players like Ted Williams and Stan Musial.  

The reserve clause, by its very nature, depressed player salaries, however.  This made it only a matter of time before the players would become discontent with the system. Things came to a head in 1970 when Curt Flood challenged the reserve clause after being traded and refusing to report.  There were cases before that, but I won’t belabor the point here (you can read my legal journal artice here if you’re really interested).  Unfortunately, Curt Flood lost his case and the reserve clause remained intact until Andy Messersmith and Dave McNally asserted they had achieved free agency for the 1976 season.  The short version of the story is that player contracts allowed owners to unilaterally renew the contract each year.  Messersmit and McNally both avoided signing their contract for the 1975 season.  Thus, at the end of the 1975 season they asserted that their owner could not renew them for the following season.  The case proceeded to arbitration within MLB instead of to the Supreme Court as in Flood’s case.  Peter Seitz eventually ruled that Messersmith and McNally were indeed free agents and the business of baseball (and the game) was changed forever.²  Fast forward to the present where Scott Boras represents free agents and negotiates for them multi-million dollar, often record-breaking, contracts.  As fans, we hate him because at one point or another we’ve all (except maybe Yankee fans) lost a player we loved because Boras was demanding more money than our team could afford.³ We blame him for the inflated salaries in baseball and for making the game about money and not about playing out of team loyalty or for love of the game.  Rob Dibble has said it before and I’ll say it again: “For Love of the Game” was just a movie.  Yes, there are guys who seem to still value team loyalty or who appear to play for love of the game and not for money.  For the Braves, these have been players like Andruw Jones, Chipper Jones and John Smoltz who have all given hometown discounts to the Braves in the past to facilitate their resigning.  But in the end, we as fans need to realize that baseball players have a far more finite career than the average person, so it makes some sense that they make a lot more money than we do.  When their career ends, either due to an injury or retirement, their earning capacity out in the real world may be very small.  Sure, some of them go on to coaching and broadcasting careers, but that’s only a small percentage of the guys who have played the game.  For those who retire young, they may not have any marketable skills out in the real world and may not have amassed very much during their playing years.  For others, they began the game at such a young age that they lacked the ability to manage their money wisely (although I hear baseball has made strides in this area by providing education and counseling).  There are a whole host of reasons why a baseball player would want to seek to maximize his earnings during his playing years, just like any other average person does in his career.  Instead, we see the multi-million dollar contracts, or we lose our favorite player to another team because our team couldn’t afford him, and we have to find someone to blame.  We blame the player, the union…and we blame Scott Boras. Though my gut feeling is to dislike the guy, I have to admit that he’s simply doing his job.  He’s supposed to be a zealous advocate for his client, and his job is get his client the deal the client wants.  If the client wants the most money he can get, Boras is the man for the job.  He’s a sharp negotiator and great at his job.  You really can’t blame him for that.  Instead, blame the owners who negotiate with him.  If no one would pay the big bucks, Boras wouldn’t be the infamous character he is.  If the owners really thought he was a detriment to the game, they would all refuse to negotiate with him.  Instead, they fork over the big bucks to one of his clients because they believe that player can make them, the owner, more cash.  I guarantee you that in the long run the owner only spends what he thinks he’ll get back in revenue from increased ticket sales, advertising, apparel, etc.  The whole system is unbalanced and sometimes simply unfair.  But it’s the business of baseball as a whole that is to blame, not simply Scott Boras.  In fact, if you read my legal journal article, you’ll see that Boras actually has some interesting ideas that clearly show his regard for the game. So, is Scott Boras the most influential man in baseball?  Ever?  No.  This decade?  Last decade?  Some would certainly say so.  Me, I think George Steinbrenner has a leg up on him, but I’ll leave it at that for now.⁴

For love of the game,

Kristi

¹ I no longer believe that the pendulum has swung to the other extreme (ie, I no longer believe players are overpaid in relation to team value and owner profits).  More on this at another time.

² This is obviously an overly-simplistic explanation.  The creation of the MLBPA and the appointment of Marvin Miller to lead the group really drove the birth of free agency.  Another interesting thing to note is that Peter Seitz was the deciding vote in the arbitration.  Who cares, you ask?  Peter Seitz representing the NBA player who defeated the NBA reserve clause.  Makes you wonder how MLB ever let that happen.

³ Is that really true? I’m no longer inclined to think so.  I don’t think it’s a matter of our team not being able to afford the player.  Instead, I think owners make decisions about how to allocate their money – not just in terms of the team, but in terms of all of their business ventures.  Will keeping the player increase their sales of tickets or boxes?  Will his salary force the team to pay an additional amount in revenue sharing or luxury tax?  Can the owner make more money using that money to improve land he owns around the stadium?  I no longer believe that any team is “poor.”  No owner has ever lost money when he sells his team.  Instead, team values continue to soar, even for teams that claim they’re operating in the red.  I won’t get into it here, but check the numbers.  You’ll see.

⁴ I’ve changed my mind here too…I think it’s basically a tie!