Question 1. Major League Baseball (MLB) shares with the National Hockey League (NHL) the lack of a salary cap which introduces a wide disparity in the financial value of teams ("CBA: The MLB Model" 1). This lack of a salary cap has created an outdated economic structure which has reached what some analysts call "an unacceptable level of revenue disparity and completive imbalance" which creates a growing gap between the "haves" and the "have nots" clubs ("CBA: The MLB Model" 1). The MLB Players' Association has resisted a salary cap for years and it was this issue that prompted the 1994 players' strike that wiped out the World Series and lasted for 232 days. Although the owners have at various times attempted to introduce a salary cap, the best that could be done according to Bloom (1), was a five year deal running from 2006 to 2011 which included adjusted formulas for revenue sharing, a higher threshold for the competitive balance tax, a revamped draft for amateur players, and changes in draft pick compensation for free agents.
None of these changes to the collective bargaining agreement (CBA) between MLB players and owners effectively caps salaries. Bloom (1) states that under this deal, larger revenue clubs have continued to transfer $326 million in local revenue to smaller revenue generating franchises. Net transfer amounts were designed to grow with revenue and changes in disparity while tax rates were reduced to 31 percent for all clubs and smaller revenue clubs were required to invest revenue income to improve their team's on-field performance.
Nevertheless, as Bloom (2) has pointed out, these changes did not bring about a true competitive balance to baseball. While the better performing clubs have continued to dedicate increasingly large portions of their revenues to the small revenue producing clubs, the more successful franchises are able to pay the multimillion dollar bonuses and salaries to the top tier o...