Last week, former baseball commissioner Fay Vincent joined other baseball experts on a Sports Management panel at New York University to discuss the rise of salaries for players like Pujols.
The panel was titled “The Baseball Business….Where Next?” and the topic focused around player compensation. Specifically, Vincent wanted to know if Major League Baseball was heading towards a system in which ownership in teams would, at least in part, replace player salaries.
Vincent’s idea is based around the idea that the 15 per cent tax rate on capital gains is far less than the 35 per cent that players are currently paying on their salaries.
History is littered with player-coaches and player-managers, but the only player-owner that comes to mind is Mario Lemieux and the Pittsburgh Penguins (can you guys think of others?). And that situation only arose after ownership was struggling to pay player salaries.
The dissension among the panel centered around the level of distrust between the players and the owner. However, the problems would likely only arise during labour disputes in which player-owners would have an obvious conflict-of-interest. Any player-owners would likely have to abstain from labour negotiations, just as Lemieux did during his stint as a player-owner.
So, why don’t we see more players asking for team equity in place of a salary?
The simple answer may be ego. Lemieux only became a player-owner out of necessity. Most players may just prefer the big paycheck which is a reflection of their status within the sport. The bigger the salary, the more important the player is.
The first big test may come when Albert Pujols’ contract expires. Certainly the Cardinals will want to retain their star slugger. But will they be able to afford adding a $25-30 million per year contract to a $95 million payroll?
Team equity could be a way to keep both sides happy.