Houston Chronicle journalist Richard Justice probably doesn’t read NY Baseball Digest, but he certainly is on the same page with me when it comes to a salary cap.

Yesterday, at his blog SportsJustice, he discusses why a salary cap would be bad for baseball. He also gives Houston Owner Drayton McClane a “careful what you wish for” message.

It’s an interesting piece that I highly recommend reading, but I will summarize some key points for you:

- Drayton McClane puts less than 50% of his revenue into payroll.

- If McClane got his salary cap wish, Justice speculates that it would be 57% of total revenue, raising the Astros payroll to $114 million. Think they could have competed for CC Sabathia with that increased payroll?

- He discusses the need to build an organization from the bottom up with player development. Just a week ago, I listened to Jim Callis and John Manuel ranked the Astros farm system dead last on XM’s MLB Home Plate.

The quote of the article from Justice was “Free agency makes no sense from an economic standpoint. It only works if an organization is one or two players away”. That is why, in these tough economic times, it makes sense for the Yankees, Phillies, Mets, Angels, and Red Sox to spend on top talent. What is the point of the Royals springing for Oliver Perez when they are a few years away from contention? Do what I suggested last week and put your resources into player development.

I believe we are less than a month away from the player’s union crying collusion. If Manny Ramirez is still without an offer come late January, you might start reading columns about the 1985/86/87 free agent class that included stars such as Tim Raines and Jack Morris. According to Wikipedia, free agent salaries went down 16% even though baseball revenues went up 15% during those years.

Never has there been a balance between the owners and players union. Each has tried to get as much as possible from the “golden goose” during labor negotiations. The greater good of the game is no longer something to do for the fans; it may be something to do for survival.

The recent scandals and mismanagement of our economy shows that capitalism needs checks and balances. A system where you institute a payroll investment criterion puts the best interest of all stakeholders; the union, ownership, and paying customers.

If owners, like Drayton McClane, are forced to invest almost 60% of their total revenues in payroll you have a vested interest in putting a quality team on the field. Growing your business will increase the resources you have to spend on your product. It’s really not any different than what any company would do. The payroll investment simply establishes a fair budget since the owners can’t manage it themselves. This is the only way you can combine business with winning. Furthermore, the players union would profit because many small market teams would be forced to increase their investment in payroll. There would be no other choice but for total salaries to go up. When you include scouting, drafting, and player development to the number it gives incentive to spend wisely on player development. This would drive good behavior throughout each facet of a professional baseball team.

I don’t profess to be an economist. I have a business degree in marketing and a master’s degree in management. Neither school (St. John’s/University of Phoenix) is going to give Wharton a run for their money. I do have a common sense approach to running a business. This idea almost makes too much sense to work. That is why it probably would.

We have complicated things to the point of no return in our capitalist society. Maybe it’s time to get back to the basics and just work off the greatest concept in business history: supply and demand. Is it risky? Sure. But sports will survive even bad economic times because we need a diversion. We need to get away from the pains of real life. For some reason, I doubt American Idol will cut it over the long term.

Tags: Drayton McLane, Houston Astros, Houston Chronicle, New York Mets, New York Yankees, Richard Justice, Salary Cap