… and depending on where this goes, it could mean a lengthy interruption for the game.
We have two MLB seasons remaining before the current collective bargaining agreement between players and owners expires Dec. 1, 2026.
And the question looming above the sport for player/owner negotiations beyond that date is: Should the sport have a salary cap?
MLB owners met last week in Palm Beach, Fla., and as Evan Drellich wrote in The Athletic, that was a key question considered by team owners at those meetings:
In a vacuum, all owners would likely back a salary cap for the cost control it provides. Some owners are deterred in practice, however, by the lengthy work stoppage expected to be required to achieve one. The Major League Baseball Players Association has long opposed a cap, and many missed games could ensue if the owners aggressively seek one. Not all owners agree that’s a reason to back down, however.
Revenue disparity between smaller- and larger-market teams, a longstanding discussion in baseball, remains a talking point. Some owners also believe a cap would also lessen fan complaints about payrolls. Today, if one owner spends — see, the Los Angeles Dodgers, who have an estimated $353 million luxury tax payroll for 2025 — other owners inherently face pressure to do the same, and sometimes criticism for not doing so.
That’s basically the summary of the problem right there. Other teams “blame” the Dodgers for what they’re doing, when it seems possible those other teams could spend their revenue on players if they wanted to. Revenue figures have reached an all-time high in MLB, as I wrote here last month, although obviously there’s a disparity between top-level revenue teams like the Dodgers and bottom-feeders like the Marlins.
The Drellich article addresses that:
Several owners and executives this offseason have publicly pushed the idea of a cap, or more vague ideas of change that at least open the door to cap talk.
Baltimore Orioles owner David Rubenstein last month told Yahoo Finance that he wished baseball had a cap.
Meanwhile, New York Mets president of baseball operations David Stearns, who negotiated the team’s 15-year, $765 million deal with Juan Soto this winter, recently told CNBC that a conversation about closing “spending gaps” should continue.
“By most metrics in baseball, we’ve actually had pretty decent competitive balance over the last decade or so. We have not had parity in spending,” Stearns said. “And so I think there is a conversation that needs to occur, and is ongoing, in terms of the importance to baseball of closing some of those spending gaps.”
But is a cap the answer? Ken Rosenthal of The Athletic says no:
The debate over whether a cap would be good for baseball is again taking place not just among owners, but also among fans. While the discussion is not unreasonable, players find the idea unacceptable, just as they did when they went on strike over the issue in 1994-95. Their opposition remains so vehement, the owners know if they take a hard-line stance on a cap, it almost certainly would lead to a shutdown of the sport after the current collective-bargaining agreement expires in December 2026.
Which, at a time when the game is experiencing something of a renaissance, would be dumber than when the owners conspired to hold down salaries in the late 1980s, costing themselves $280 million in damages when they were found guilty of three separate acts of collusion.
Rosenthal is not wrong here. A lockout is almost certainly going to happen regardless; in fact, Commissioner Rob Manfred says lockouts are good. From the Drellich article:
Manfred said offseason lockouts should be considered a new norm.
“In a bizarre way, it’s actually a positive,” he said last month. “There is leverage associated with an offseason lockout and the process of collective bargaining under the NLRA works based on leverage. The great thing about offseason lockouts is the leverage that exists gets applied between the bargaining parties.”
That “leverage” nearly cost us an entire season. I know it didn’t; in 2022, just as it seemed the season might be lost, a settlement was reached in mid-March and all 162 games were played, But that happened after a couple of weeks’ worth of games were literally cancelled — that’s the exact word Manfred used — and then suddenly reinstated and rescheduled. Who will blink first in 2027 if something similar happens?
Rosenthal has some proposed solutions that don’t include a salary cap:
Make the luxury-tax thresholds higher, but the penalties steeper; about 50 percent of luxury-tax proceeds go to small-market teams. Redistribute draft picks to give small-market clubs better positions and additional selections. Force those teams to spend by instituting penalties for falling below certain payroll thresholds, similar to the ones that exist at the top of the luxury-tax structure.
The problem with the luxury-tax proceeds going to small-market teams is that those teams (Pirates, Marlins in particular) don’t spend that money on player payroll. A cap — as long as it was accompanied by a salary floor — would force all teams to spend on player payroll. Penalties for falling below a payroll threshold, as Rosenthal hints, would likely hurt the small-market teams, not help them.
Personally, I favor a cap with a floor, as long as the total money spent is a minimum percentage of the sport’s overall revenue. Estimates of that percentage today are somewhere between 42 and 44 percent in MLB. That’s less than, say, the NBA, where about 49 to 51 percent of revenues go to players. Of course, the NBA has far more lucrative national TV deals than MLB does. So does the NFL, where all TV revenue is national. In MLB, local TV revenue varies widely, and of course the Dodgers (as well as the Yankees, Mets and Cubs) rank at the top of that list. (A bit more on baseball TV revenue is in this article posted here last month.
In my view, a cap with a floor would help increase parity in MLB and create a system where the teams with the most money win just because they have it. It would thus create a system where you’d have to have smart baseball management teams that made decisions based on talent and not just spending.
I know some here think a cap/floor system wouldn’t work. Okay, that’s a perfectly reasonable position to take. Let us know if you have a different idea… because the financial imbalance in baseball has got to change.