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Next labor deal must Improve balance

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Ken Rosenthal

Ken Rosenthal has been the FOXSports.com's Senior MLB Writer since August 2005. He appears weekly on MLB on FOX, FOX Sports Radio and MLB Network. He's a member of the Baseball Writers Association of America. Follow him on Twitter.

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Now that the shouting over the leaked financial documents is subsiding, let’s go back to the beginning. Back to the original intent of revenue sharing.

It wasn’t to help low-revenue owners profit while maintaining embarrassingly low payrolls.

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It was to help enhance competitive balance.

We hold this truth to be self-evident, but hey, revenue sharing began in 1996. The evolution of the plan never promised to be rational or orderly. Now, it amounts to a pitch that got away.

Just as certain pieces of congressional legislation occasionally need tweaking, revenue sharing needs to be tightened, fine-tuned, adjusted.

As I’ve written before, baseball should adopt a laser-like focus in its pursuit of a better future. Improved competitive balance should be the goal of every reform, every change in the next collective-bargaining agreement.

The current CBA expires after the 2011 season. Revenue sharing, unlike the amateur draft, does not need a complete overhaul. In fact, a quick fix is possible, if the owners adopt new rules to restore the plan’s original spirit.

The most significant way to do that, as first outlined by ESPN.com’s Jayson Stark, is to establish a minimum-payroll threshold similar to the luxury-tax threshold. Inducements at both ends.

The luxury-tax threshold operates as a soft — OK, very soft — salary cap. A minimum-payroll threshold would amount to a soft salary floor, nudging even the Pirates and Marlins to spend a certain amount on major-league payroll each season. Teams would be penalized at accelerated rates each time they failed to meet the threshold, just as they are at the top of the scale.

Union officials previously opposed a floor for the same reason they opposed a cap: Their belief that teams should increase or decrease payroll without restriction.

Such free-market logic is wonderful, in theory. The reality is that the luxury tax does not do enough to slow down the spending of the Yankees and other high-revenue clubs — and no mechanism exists to trigger spending by low-revenue teams.

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I’m no economist; I don’t pretend to fully understand the financial documents that were obtained by the AP and Deadspin.com. The two-year glimpses that the documents offer are not necessarily complete portraits. But the frustration of some clubs stems largely from the perceived misuse of revenue-sharing funds by certain low-revenue teams.

On capital expenses such as training facilities. On the redistribution of money to owners to pay taxes or cover expenses. And, perhaps most egregiously, on paying off debt.

The Marlins acknowledged using profits in such fashion — they wanted to improve their financial standing to secure loans for their new ballpark. The net effect, though, is that revenue-sharing contributors are funding the Marlins’ purchase of their own team.

That is hardly the intent of the plan.

One high-ranking baseball official counters by saying that as long as low-revenue clubs increase their spending on major-league payroll and scouting and player development, then they are in compliance with the CBA. Such a view not only is an oversimplification, but it also misses the point. Concerns about the misuse of funds strike at the plan’s very credibility.

The next CBA should go further than simply saying a team should use revenue-sharing money to “improve its performance on the field.” Proper and improper uses of the funds should be clearly outlined — and penalties defined.

It’s funny: For all the complaints about revenue sharing’s failings, the program’s successes — the Brewers, Twins, Rays and others — are undeniable. Even the Pirates, last in the majors in payroll, are an example of how revenue-sharing recipients can rebuild.

Fans do not yet see it on the field, where the Pirates recently clinched their 18th straight losing season. But the team has spent a major-league leading $31 million on the draft in the past three years. Whether the Pirates are choosing the right players remains to be seen. But it’s indisputable that they are trying to improve.

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  • Should MLB adopt a minimum payroll threshold?
    • Yes, it's only fair
    • No, it's fine the way it is

Another thing: While some clubs object to the Pirates’ capital expenses — a $5 million training facility in the Dominican Republic, $2 million in improvements to their spring-training facility in Bradenton, Fl., the $2 million purchase of a Single-A team — MLB and the players’ union notably do not.

The union forced the Marlins, not the Pirates, into an agreement to raise payroll. Yet, the Pirates will not be allowed to proceed on this path forever. If their rebuilding efforts do not lead to a higher payroll, they eventually will get the same slap that the Marlins did. The idea is to develop better players, players who merit higher salaries, players who become stars.

One problem with a salary floor is that it might prompt teams such as the Pirates to spend unwisely; the Royals, for example, used some of their revenue-sharing money to overpay for free agents such as Gil Meche and Jose Guillen.

Well, too bad.

The Pirates and other such teams can start by signing their best homegrown talents instead of trading them the moment their salaries begin to rise.

To repeat: Revenue sharing is not broken. Baseball just needs to make it fairer, that’s all.

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