Selig has decided to institute a salary cap, only he's not calling it that and he doesn't think it needs to be collectively bargained. On Tuesday, AP Sports Writer Ronald Blum wrote an article reporting that "baseball wants to restrict team debt". According to Blum, in a March 7th letter, Selig informed teams that he would be implementing a rule he wrote in 1975, which has not been implemented of late because of the financial stress caused by the 1994-95 strike.

Briefly summarized, the rule decrees that no team can have a debt higher than 40 percent of its asset value, which will be set at twice their 2001 revenue unless they ask for an outside evaluation. Blum reports that, presumably in addition to other expenses, debt will include "stadium debt and loans to owners" and "the present day value of long-term player contracts". Penalties for breaking the rule could include fines, loss of national broadcasting contract payments, and even the placement of the team in trusteeship; MLB will begin enforcing the rule in June.

I'm not well versed in the nuances of either the NBA or NFL salary caps, but I believe I have been able to grasp the basics. While the specifics of the NBA and NFL salary caps are quite different, they both work off the premise of allotting a specific percentage of the league revenue to the players. In the NBA, the league revenue is called Basketball Related Income (BRI) and in the NFL it is referred to as Defined Gross Revenue (DGR).

In the NFL, the Unadjusted Salary Cap per Team = ((Projected DGR x CBA Percentage) - Projected League Wide Benefits) / Number of Teams. The union negotiates the CBA Percentage in advance; it is set at 64% for 2002. I believe the League Wide Benefits refer to the player's medical and pension plans.

The NBA has a similar calculation to arrive at their team cap: Team Cap = ((48.04% of Projected BRI) - Benefits) / Number of Teams. The comparison ends here as the NBA then employs a host of additional rules, including restrictions on individual salaries and an escrow system; they also must pay a luxury tax rather than cut players to get under the cap as is done in the NFL.

Selig's revived debt restriction rule basically sets the individual cap at 80% (40% * 2) of the previous year's team revenue. While that is theoretically better than the 48.04% that the NBA receives and the 64% received by the NFL, those leagues don't include the other non-salary costs like stadium payments that are incorporated into the MLB debt totals.

For the same reason that the players object to an overabundance of revenue sharing, having variation in the money available from team to team is better for the star MLB players than the uniform cap is for the NBA and NFL stars.

However this works against Selig's stated interest in increasing parity throughout the league, as the teams who currently have low levels of revenue won't be allowed to splurge in an attempt to draw more fan interest and therefore more revenue.

If this rule is truly enacted, then I would hope that the teams would seek independent evaluation as the Yankees are certainly worth more than $484.416M (2 x $242.208M), which is what their asset value would be as determined by Selig's formula using their 2001 revenue total as reported by the AP. The Yankees are unquestionably as valuable as the Red Sox, who recently sold for $650M, though Boston would only have an asset value of $353.964M using this system.

Doubling of revenue would be an ill-advised way of determining asset value even if the revenue numbers were accurate portrayals of a team's finances. Considering the amount of tinkering already inherent in these numbers to minimize the appearance of prosperity, it's no surprise that this formula doesn't provide you with a true picture of a team's value.

Frankly, I currently doubt whether we will ever have to worry about calculating if a team can sign a player based on the amount of debt they can absorb, as I don't expect the MLBPA to sit quietly by and watch this happen. While an arbiter overturned the grievance filed in 1983, I think that if the union filed a new grievance claiming that the matter needed to be collectively bargained, they would win in the current climate. In view of the changes in baseball and time elapsed since the first grievance was filed, I believe there would be no restrictions on making a fresh complaint.

However, this proposal generates so many separate interesting discussion points that I want to spend at least a portion of tomorrow's article on this topic, if only to blow off steam at Selig's continued impudence. I didn't even get to the ramifications this will have on team's other operational procedures such as the financing of stadiums, and I want to include some examples on how this will affect specific teams if implemented as stated. I can already tell you that the Texas Rangers would be in violation of this rule if the only debt they had was the contract of Alex Rodriguez, which has a present day value of $219.27M, compared to their maximum debt of only $107.928M.