At the end of a recent episode of HBO’s Real Time, Bill Maher suggested that financial parity is the reason the NFL has become more popular than Major League Baseball. He didn’t use those words precisely but he suggested that the reason football is more popular than baseball is because in football any team can win while in baseball only the rich teams can win.
Maher’s obvious political metaphor aside, he was referring to the NFL’s salary cap, its revenue sharing agreement and the perceived parity they contribute to the game. Was Maher’s assertion correct? Does baseball need additional revenue sharing and a salary cap to reap the benefits of parity?
There are two components to this analysis. The first is the distribution of payrolls from the NFL. We can’t project the impact of the successful NFL payroll policies onto baseball if those policies have been ineffective. The second component is the distribution of payrolls from MLB, to see if baseball lacks parity when compared to the NFL.
The graph below shows NFL payrolls by team, for 2008 and 2009, the most recent reliable data I could find. The data are sorted from largest payroll to lowest payroll for 2009, with the 2008 data presented for comparison. USA Today is the data source.
There is a strong suggestion of parity there, but the graph alone won’t tell the whole story. To make some sense of it, see the chart below, which contains some basic measures of comparing the maximum and minimum payrolls in the NFL.
At first glance there isn’t all that much parity there. In either season there is an obvious high team and the difference between the highest and lowest paid teams is a wealthy NHL team. If there is an accurate measure of parity, it would be the proportion of the median NFL salary to the maximum NFL salary, because this is a scaled measure of the difference between the middle payroll level and the team with the highest payroll in either season. That number is just a hair above 80%, which suggests some degree of parity. The real question is whether or not these ranges differ significantly from the payrolls in MLB.
The graph below is identical to the one provided for the NFL, except it has data for MLB teams for 2011, 2010 and 2009. The graph is ordered by the 2011 salary data, which are estimated and come from Baseball Reference. The 2010 and 2009 data came from Ask.com.
As before, the graph is important, but the real story will come from the measures that compare maximum, average and minimum salaries, which are posted below.
Comparing the two tables tells a lot. Obviously baseball has some outliers at the high end of its payroll scale, but the difference isn’t all that extreme between the 2008 NFL high salary and any of the Yankee payrolls (come on, we all know who the prime offenders are here) from the past three seasons. The real story comes at the bottom end of the data, not the top. Despite having several teams each season with a higher payroll than the highest in the NFL, MLB has a lower median and average salary than the NFL each season. That outcome is surprising. If baseball’s problem is its heavy spenders (the Yankees, Red Sox and Phillies, etc.) then its average salaries should skew upward when compared to the NFL. Instead, they skew downward, suggesting the lack of parity isn’t due to the big spenders. It’s due to the cheapskates.
The minimum salary in the NFL in 2009 was $81.8 million. That was higher than the median salary in baseball the same season. Fifteen teams in baseball had payrolls below the lowest NFL payroll that year. That same season 10 teams had payrolls below $70 million, almost the equal to the nine teams that had payrolls above $100 million in 2009. Can we still be so certain that baseball’s problem is the high end of the payroll distribution? It looks as if it has at least as much of a problem at the bottom. Salary cap defenders will be quick to argue that the NFL has revenue-sharing, which helps its poorer teams compete with the wealthier ones, but that’s a cop-out. MLB has revenue-sharing as well.
Maher was no different in his analysis than virtually all of the other sports’ prognosticators who criticize baseball’s lack of a salary cap. He left out a component of the sport’s parity that is just as important, if not more important than its salary cap and revenue sharing program. The NFL has a salary floor as well, set to 75% of its salary cap in any given season. This aspect of the NFL’s pay structure is almost never mentioned when baseball is criticized for lacking a salary cap. The Pirates and the Royals can’t exist in the NFL because instead of pocketing their revenue-sharing dollars those teams would be forced to reinvest a large chunk of that money into their on-field products. Did I mention those two teams are profitable? Yet there are still those that think the Yankees are what’s wrong with baseball.
These data suggest that a salary cap may be a useful tool to introduce more payroll parity in baseball (which I have not argued the sport needs — that’s another post) but it wouldn’t be just to start there. Unlike football, baseball revenues are heavily localized. The Yankees’ main revenue generator is the YES Network, not the money it gets from a TV deal with Fox. The network is a Yankee asset that the team built up to meet demand in its market, not a potentially shared resource the way a national TV network would be.
Why punish an organization that chooses to use its resources to put a better product on the field, especially when the on-the-field product helps every team in baseball? If baseball wants more payroll parity, the way the NFL has, the teams at the bottom of the payroll distribution are more obvious targets. If baseball had a salary floor, just like the NFL has, then teams like the Pirates and Royals would have to in
vest in their product, which in turn would attract more fans. If, after that, baseball fans not in the New York and Boston areas still scream for a salary cap, then maybe they have an argument, but they don’t right now, not when the league has revenue-sharing and allows its cheapest spenders to pocket that money.
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The reason the NFL is more popular is gambling. If it were impossible to bet on football, nobody would ever watch a game that did not involve his home team. Simple as that, baby.
What Communist came up with that idea? Andy Rooney of CBS News, who's only been going New Yawk Footbawl Giants games since they were in the Polo Grounds. It was true 30 years ago when he said it, and it's true now.
Thank you for this. I love it when anyone makes Bill Maher look like an idiot, or a jackass, or an idiotic jackass. Not that it is especially difficult to do so, but still.
I wouldn't give a fig for any NFL game other than the Super Bowl. I am geeked up about college football, though.
I am torn about how good a thing parity is in the NFL, but I have said before that the Yankees have an inherent advantage in MLB because their revenue streams are enormous compared to those of most teams.
Yes, Texas beat NY with a MUCH smaller payroll. And no, the biggest payroll doesn't guarantee a championship. We all know those things.
But most teams can't afford to spend much more than half of what the Yankees can. Without a cap, that makes it tough to stay competitive when a team or small group of them have an inherent advantage and can sign the prime free agents almost every time (thanks to Cliff Lee for being the exception to that rule).
I do agree with the main point here, though. I think that a floor is a welcome change. I understand the concept of revenue sharing and think that the inability to FORCE the Pirates and Royals to spend the RS money.
Thanks for the thought-provoking piece, fellas.
Oh and by the way, Maher is a self-righteous, smug little a$$hat.
Hi Dean,
Thanks for the thoughtful comment.
I'm glad you agree with the general premise. At the end of the day, before MLB introduces a salary cap to punish the teams at the high end of the spectrum the sport has to begin with the low spenders because revenue sharing is already in place. It is shocking that teams with losing records and low payrolls are allowed to pocket the RS sharing money.
If the game introduces a salary floor or, say, $75 million then I'd be more open to the discussion of a corresponding salary cap. But until then, so long as the Yankees are just subsidizing the Pittsburgh ownership its a non-starter.