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Sunday, February 19, 2006

First Salvo

Came across this post on Baseball Musings related to my article "Competitive Balance and the CBA" and some clarifications I made in "Odds and Ends".

This is a first indication that large market owners may push for bigger changes to the revenue sharing system. As I mentioned in my articles, perhaps the first place to start is to ensure that the revenues collected by teams from revenue sharing are actually invested in the club per the clause of the current CBA that reads as follows.

(5) Other Undertakings
(a) A principal objective of the revenue sharing plan is to promote the growth of the Game and the industry on an individual Club and on an aggregate basis. Accordingly, each Club shall use its revenue sharing receipts (from the Base Plan, the Central Fund Component and the Commissioner’s Discretionary Fund) in an effort to
improve its performance on the field. The Commissioner shall enforce this obligation by requiring, among other things, each Payee Club, no later than April 1, to report on the performance-related uses to which it put its revenue sharing receipts in the preceding revenue sharing year. Consistent with his authority under the Major League
Constitution, the Commissioner may impose penalties on any Club that violates this obligation.

To date there have been penalties assessed.

Of course, what John Henry is talking about the in article I referenced is not specifically this issue but rather the issue of an increasing luxury tax. However, as Maury Brown pointed out in his excellent article in the THT Baseball Annual 2006, there is no penalty for first time offenders this year. So if you're not the Angels, Red Sox, or Yankees (the only teams to pay in thus far) you have nothing to worry about in 2006. And if there is no agreement by the start of the 2007 season, there will be no luxury tax next year. Also, the penalties did not increase this season for second and third time offenders and so Henry's concern cannot be that luxury taxes are increasing this season.

IMO, perhaps the luxury tax threshold should be lowered (it is $136.5M this season) along with the penalty or institute a tiered system so the Yankees are still penalized heavily for keeping $200M payrolls but other teams who are in excess of say, 150% of average, are as well.

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