Jose Abreu signing shows why MLB needs a salary cap

Analytically, it’s tough to justify a three-year contract for $60 million for a guy who is about to turn 36. The latter part of the deal is almost certain to be a bad investment, so the only way it makes sense is if there is a realistic expectation of outplaying the contract by a significant margin in the first year.

Therein lies one of the structural flaws of MLB. In the NFL, NBA, and NHL, the risk of a player underperforming a contract is real, because that player is eating up salary cap space that can’t be replaced. In that context, the deal that Jose Abreu just signed with the Astros would be a huge risk, albeit less so in the NFL if the deal wasn’t fully guaranteed.

Jose Abreu shows why MLB needs salary cap

In MLB, the only risk involved in signing Abreu is to owner Jim Crane’s wallet. While that may be of importance if you are mentioned in Crane’s will, $60 million to Crane is the equivalent of about $600 to normal people. What really matters to Crane is that the Astros are near the top of MLB in revenues, with $388 million in 2022, and can likely still turn a profit while absorbing Abreu’s salary.

More importantly, should Abreu turn out to be a bust, the Astros have the financial wherewithal to eat the money they owe him and go find someone else. For now, Abreu slots into the payroll slot that was used on Michael Brantley and Yuri Gurriel last year, so he doesn’t add payroll up front. But the Astros haven’t ruled out signing either of those guys, which means they will be paying three guys in their late 30s to play first base and DH.

Point being, they can afford it. Whether or not other teams can is beside the point, but the level of risk tolerance comes down to what the owner thinks he can afford. In terms of being able to build a competitive roster, they can pay all three guys big money, then release one or stash him on the injured list all season and not blink an eye.

If this was the NBA, though, signing Abreu would mean there was no cap room for Brantley or Gurriel, so they would be gone. Then, if Abreu was a bust, there would be no cap space to replace him.  In that circumstance, the risk tolerance involved in signing Abreu extends beyond the owner’s largesse to tying up cap space on him beyond his 38th birthday. In my opinion, that makes free agency, and the entire process of roster building, more interesting in sports with a salary cap.

Clearly, the flip side of this is that some players would make less money. If cap space was a constraint, the Astros might make the third year a team option, or make the yearly salary a few million less. Guys in their 30s who aren’t stars, at least in the recent past, were already struggling to get deals for more than the minimum salary in many cases, and they would be the first guys hurt by a salary cap. One counter to that problem would be a corresponding salary floor, so that all teams would be motivated to spend on mid-level free agents.

It may turn out, though, that if free-spending teams are compelled to restrain themselves, other teams might loosen the purse strings because staying competitive is actually feasible. Suppose a salary cap of $200 million was enacted. Five teams (Padres, Phillies, Yankees, Mets, and Dodgers) would have had to cut payroll in 2022, with their cuts totaling about $200 million. Is it reasonable to suggest that the other 25 teams, with some prime free agents off the table for the top teams, might increase their spending by at least that much, if not more?

Certainly, if a salary cap acted to give more teams a realistic hope of making a deep playoff run, it would create an incentive to fill roster holes by spending money. That would probably help mid-level free agents most of all, which is another reason why a salary cap would be good for baseball.