Manny Machado's contract shows the madness of wage ceilings

MAnny Machado made history on Tuesday afternoon. The announcement of the news concluded that he had agreed to sign a contract with the San Diego Padres.

The 26-year-old third-base goalkeeper is about to sign a $ 300 million, 10-year contract with the club. it's the biggest free agent contract in the history of American sport.

After a season of 66 wins, the Padres have not broken their record of wins since 2010 and have not qualified for the playoffs since 2006. They have signed a remarkable record as Machado, a four-time star, who managed 37 circuits last. season, shows their commitment to improve and perfectly illustrates why professional sports leagues should eliminate their salary ceilings.

Before signing Machado, the Padres already had two big contracts on their payroll: one with first baseman Eric Hosmer, eight, $ 144 million, and another with fighter Wil Myers, six years, with 83 million dollars. Together, these contracts represent over half a billion dollars in salary commitments. Padres owners have the money, are willing to spend it and want to win, so why should there be restrictions as to what they can do with it?

Flexible salary caps such as those that the MLB and the NBA have put in place penalize teams subject to a "luxury tax" if they spend more than a certain amount in the hope of deterring them from being taxed. do the same, although wealthy homeowners can simply pay the fine if they wish on the limit of the payroll. In the NFL and the NHL, severe salary caps prevent teams from playing unless their payroll is below a specific number. It simply means that teams must be frugal and that players end up receiving less money while the owners benefit.

While expenses can help teams succeed, this does not guarantee it. The Kansas City Royals won the World Series in 2015 despite their payroll of $ 112.9 million, ranking 17th out of 30 MLB teams. Last season, the Oakland Athletics and Tampa Bay Rays, ranked 28th and 30th, were 97-65 and 90-72, respectively. Meanwhile, the San Francisco Giants, who spent more than $ 200 million and ranked second, lost 73-89.

It should also be mentioned that the NFL salary cap has not prevented the New England Patriots from winning six Super Bowls since 2002. Even when applied, the salary cap is not a guarantee of a competitive equilibrium.

Pay caps are hurting teams that want star players. After all, no MLB team that spent 20% of its payroll on a player won a world series, according to FiveThirtyEight. That said, when it is harder to place a team around a star, the team is less likely to experience overall success.

One of the problems that salary ceilings often overlook is the state income tax. Teams located in states or provinces where income tax is high and progressive on the highest-paying people, such as California (13.3%) or Ontario (13.16%) , are at a disadvantage compared to low-tax, no-income-tax states like Texas and Florida. This is now even more true, thanks to the 2017 law on reducing the tax on employment and employment, which limits local tax deductions and to only $ 10,000 when filing national or local tax, as the Associated Press points out.

To put things in perspective, the difference between the amount that Machado would pay in income tax from his contract he had signed with a Florida or Texas team was $ 39.9 million, almost $ 4 million per season In theory, this means they could offer less money to Machado and earn more money, which would make it a better deal while having the advantage of staying below the salary cap.

Leagues should perhaps start by considering a floor, like the NHL, a floor of $ 58.8 million in addition to their ceiling of $ 79.5 million. Or perhaps the leagues could let the teams operate as they wish, because they are the ones who put the capital and make the investments.

Tom Joyce (@TomJoyceSports) is an independent writer published with USA Today, the Boston Globe, Newsday, ESPN, the Detroit Free Press, the Pittsburgh Post-Gazette, the Federalist and several other media outlets.

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