Why The Sale Of The Padres And Lakers Are Part Of MLB’s Salary Cap Discourse

It may seem odd that the sale of the San Diego Padres and the Los Angeles Lakers would become a flashpoint for Major League Baseball’s push for a salary cap, but make no mistake, the league and the MLB Players Association are already teeing it up.

For all the talk by MLB Commissioner Rob Manfred and other executives in the league about listening to the fans regarding implementing a salary cap, underneath the surface is something tied to it that would massively inflate owner profits: increased franchise valuations. A salary cap, with its floor, ceiling, and other constraints on player contracts, creates cost certainty and therefore improves the value of the franchise itself.

Within the last week, two club sales highlight the differences between MLB and the NBA. Both have details that provide context over some of the talking points that the headline figures provide.

On Monday, MLB’s owners unanimously approved the record-setting $3.8 billion sale to the new ownership group of the San Diego Padres, led by incoming control person José E. Feliciano and his wife and business partner, Kwanza Jones. The vote, conducted by conference call, does not close the books entirely on the sale. Approval remains contingent on closing the transaction involving the controlling interest in the club with the Seidler family, which the league said is “expected in the weeks ahead.”

As part of a statement, Manfred said, “I thank John Seidler and the entire Seidler family for their stewardship of the San Diego Padres. Continuing the legacy established by the late Peter Seidler, the Padres reached the postseason four times in the last six years, energized one of baseball’s most passionate fanbases, and strengthened the club’s role as a cornerstone of the San Diego community.”

The MLBPA immediately saw how the Padres play into the larger discussion, and framed the record sale for an MLB franchise as what happens when owners invest in players and try to win, highlighting the late Peter Seidler’s quote that “there’s a risk to doing nothing.”

There’s some truth to what ownership has done in terms of providing a solid team that has attempted to challenge the Los Angeles Dodgers in the NL West, but it’s also important to note that the Padres now own the San Diego market since the Chargers and Clippers moved to LA, as well as hosting games in Petco Park, one of – if not the – jewels in all of Major League Baseball.

To the north, the sale of the Los Angeles Lakers was not only a record for the NBA, but it is also a record for any North American sports franchise.

While Jeanie Buss may ultimately challenge the others in the Buss family in selling off the rest of their minority stake, Mark Walter --- under financial scrutiny – sold the Lakers to former Disney CEO Bob Iger and Thrive Capital founder Joshua Kushner for an eye-popping $12.5 billion, an astonishing $2.5 billion more than Walter paid barely a year ago.

Here is where MLB owners look at the Dodgers and Yankees and wonder why their valuations come nowhere close to recent NBA sales, and have internally sought a cap system to try to keep up with the Joneses. The cap system plays a part, but you also have to factor in the NBA’s new record 11-year, $76 billion media rights deal with Disney-owned ESPN and ABC, along with NBC and Amazon Prime, which drove the dramatic franchise value increase.

As has been the case with the current proposals between MLB and the MLBPA, the sides are dug in on their talking points. The Padres and Lakers – either publicly or internally – are going to continue to surface. We’re just over 100 days away from what is assuredly a lockout at just before midnight on December 1st. Who knows what other club sales could shape the narratives between now and then?

This article was originally published on Forbes.com