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Baseball spending spree ahead
Big dollar teams did well in '05, and there will be more teams spending big this offseason.
October 7, 2005: 4:12 PM EDT
A weekly column by Chris Isidore, CNN/Money senior writer
The Yankees won't be the only team spending bucks on players in the upcoming off season.
The Yankees won't be the only team spending bucks on players in the offseason.
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NEW YORK (CNN/Money) - Spending a lot, rather than spending smart, seemed to be the way to baseball's post-season this year. And 2006 may belong to the big spenders too.

Four of the six first-place teams this year were the top spenders on player salaries within their divisions. One of the big-spending teams not to finish first, the defending champ Boston Red Sox, are in the playoffs as a wild card team.

Meanwhile, some of the teams that had been doing well with much smaller payroll budgets -- the Oakland Athletics, Cleveland Indians, Florida Marlins and Washington Nationals -- fell short of the playoffs.

And the Los Angeles Dodgers, which tried to use a former Oakland assistant GM to combine deep pockets with the baseball philosophy of the small-revenue Athletics, floundered badly.

But the biggest challenge for those budget-minded teams next year probably won't come from the top-dollar teams like the Red Sox and New York Yankees.

Instead it'll come from a new flood of cash to every team, coupled with the disappearance of the so-called "luxury tax," which penalizes the teams that spend the most on players.

Those two factors, coupled with a relatively thin field of potential free agents, could create bidding wars for players of somewhat questionable value, and drive up the prices of players overall.

The disappearance of the salary cap for most teams in 2006 is so little known that even a Major League Baseball spokesman wasn't aware of it when I first asked him about it.

But under the current labor deal, the only teams that have to worry about a penalty of tens of millions of dollars for crossing a salary threshold are the Yankees and the Red Sox. Those are the two teams with the deepest pockets, and they've shown they'll spend whatever it takes to compete.

The 28 teams that didn't pay a penalty this year don't have to worry about a penalty next year either. So teams that deliberately stayed just below the threshold in 2005, such as the New York Mets, the Los Angeles Angels of Anaheim and the St. Louis Cardinals, might now be willing to spend whatever it takes for the top players available.

What makes a spending spree more feasible for many of the teams is the flow of new money not available during the last off season. Baseball's record attendance is only part of the source.

Teams will also see a nice payoff -- likely tens of millions each -- when the Nationals are sold. The former Montreal Expo franchise has been collectively owned by the other 29 teams for the last three seasons, running up losses in the first two years before moving to Washington this season.

The teams will also see increased revenue from a new broadcast deal with ESPN and XM Satellite Radio as well as improving profits from, which sells merchandise, streaming Webcasts and online radio broadcasts of out-of-market games.

This has almost everyone looking to spend more money next year. Two of the teams with the lowest payrolls -- the Nationals and the Tampa Bay Devil Rays -- will go into the offseason with new owners who will likely be adding to the payrolls.

And management of some other teams, including the lowly Kansas City Royals, have indicated they intend to spend more as well.

Smarter-spending teams still in the game

But the spending spree is likely to give a bigger advantage to the teams that are already concentrating on finding lower-priced player talent.

"Big payrolls can give you an advantage, but smart management always gives you an advantage," said Gary Gillette, the editor of the Baseball Encyclopedia and co-chairman of the business of baseball committee at SABR, a baseball research group. His co-chair Maury Brown agrees. He said it's the wrong lesson to look at the success of the big-dollar teams this season and say the spending-smarter teams can't compete.

"A couple of wins here and an injury there could have changed the dynamic as to whether those teams that paid the most wind up in the playoffs at all this year," said Brown. "We're coming closer to some form of parity. With the wild card in play, there were a lot of teams that had a real shot of getting in there, and that gives them an incentive to do what they need to win."

It could be argued that even the free-spending Yankees were lifted into the playoffs by bargain-priced players. When the team stumbled at the start and its gold-plated pitching staff starting going down with injuries, the team promoted three players from the minors and picked a couple of pitchers off other teams' scrap heaps. In the past, the Yankees might have traded some of those minor leaguers for high-priced veterans who probably wouldn't have been as successful.

The Yankees also will have more resources to go after players this offseason. The team will also be free of a number of big dollar contracts.

It'll be interesting to see if the team learns the lesson of its own late-season success, or falls back on its old habit of throwing money at older players. But even if the Yankees aren't the ones with their wallets open this year, expect there to be a spending spree for players this offseason.

For more news on the problems of the Yankees' payroll going forward, click here.

For more news on the business of sports, click here.  Top of page

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