Why Revenue Sharing and Luxury Tax Failed

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• Metsie November 29, 2011 at 8:22 am

  Revenue sharing can work provided you penalize both extremes equally.

  In the case of the Luxury Tax thats fine provided the money goes to the teams who spend OVER a certain threshold to qualify to even the playing field of those who are TRYING but can’t spend megabucks as opposed to the bottom feeders who look to it as just another revenue stream.

  The incentive currently is to spend less and not just less but peanuts under the current system!

  If your the Pirates and want to buld from within, then you have already decided that you don’t need that money since free agents are not part of your plan. Therefore you shouldn’t get any money!

  But if you are (for example) Cincinatti who had a 76m Payroll last year, You are spending enough to be in danger of not covering the costs due to the Market you are in and that tax money would at least help you to pay for the pluses of a competitive team or help you to pay for a piece or two that could put you over the top!

  Re-Distribution of wealth has never worked for any system that has ever tried it! See Russia!, China has even abandoned it!

  It’s enough to give the HaveNots first choice in the draft while the winners pick later.
  If you really want parity in the league then there is no other way to get it other than a Salary Cap!

  Players will never go for that but thats truly the only way to even the playing field.
  The Luxury tax has never stopped the yankees from signing whoever they thought would get them into the playoffs. And the Taxes collected and re-distributed have not made teams like the Pirates a team that was an easy sell or worth going to see.

  SO I agree the Luxury Tax distribution model has failed!
  Because we rewarded people for not trying when we should have rewarded the teams who DO try, Make better baseball teams and risk losing money to do it!

  If you only spend 36 Mil to build your team then you don’t need a share of the Payroll tax!
  Give it to the middle spenders instead, those who might actually make a better MLB product with the money!
  Not this roll over and collect a welfare check we have now!
• USMF November 29, 2011 at 9:35 am

  My idea for Revenue Sharing is pretty simple and I believe that it would benefit MLB as a whole.

  Basically, you take the top 1/3 of payrolls and tax them. The larger the percentage of the Money you spend, the bigger percentage you pay out. The percentage that gets taxed is all dependent on the average MLB payroll for each given year. As the lower payroll teams increase payroll. then the average goes up and higher payroll teams get taxed less.

  Now the bottom 1/3 gets to collect on the “luxury tax” and it’s ratted on each teams payroll. The catch is, a team in the lower third has to increase their payroll in order to collect the money. If Florida is eligible to collect 15mil in shared revenue, but only increase their payroll by 5mil, then they can only collect 5mil of the shared revenue and the the rest of the 10mil goes back in the pot for the rest of the teams in the lower 1/3.

  Now this is the tricky part. Each MLB team has the right to offer their players “Franchise Positions” when they are eligible for free agency. Now the Franchise Tag works like an Arbitration hearing, but the player is guaranteed a salary and length of contract that is equal to players at their position and performance level.

  Now if a team in the top 1/3 signs a player with a franchise tag, they’ll be paying top dollar and be committed to a long term deal, but a percentage of their yearly salary gets removed from the teams total (luxury) taxable payroll. Example: The Phillies assign Rollins a Franchise contract, biased on his numbers are age, Rollins gets awarded a 4 year deal worth 10mil a year. Phillies Payroll is 175mil, but now because of their “franchise’ contract with Rollins, the can only be taxed for +/-170mil of their payroll.

  If a team in lower 1/3 signs a player to a Franchise contract, then they can collect all the money they are eligible to collect. Example, if Tampa assigned a Franchise tag to Crawford and gave him a 20mil contract and only increased their payroll by 10mil but they were eligible to collect 15mil, they can collect the full 15mil to offset Crawfords contract.

  I believe that this system would encourage lower payroll teams to spend money to get better each year and not just sit and pocket the money. It would also encourage all teams to keep their star players. I’ve lived in a small market town in the 80′s, and even when the team wasn’t winning, we knew that we still had our homegrown star player for his career and that gave the city a reason to cheer and watch the team. Then in the mid 90′s we started to see the Yankees come in and start buying up their best players because the Spanks were willing and able to spend a lot more than everyone else.
• Donal November 29, 2011 at 9:53 am

  “I’ve never been for revenue sharing because it promotes free loading, but the system is not likely to go away. If they are insistent on such a system, the receiving teams should be required to spend a designated percentage on player salaries. And, while we’re at it, there should be a minimum amount a team MUST spend on payroll.”

  We can call it the Loria Law.

  I agree, the revenue sharing plan is a joke. The problem is, the union will never allow a true method to force owners to spend, because they see it as one step shy of a salary cap.