It’s a widespread expectation in and around Major League Baseball that there will be a work stoppage at the end of the 2026 season.
The Collective Bargaining Agreement between the Players Association and the league’s owners expires in early December, and unlike some labor talks, there are significant questions both sides want to address before a new deal is reached.
Those negotiations have actually already started, with the two sides meeting in New York City to set the table for further conversations. While initial reports suggested that these conversations would be mostly speculative, there’s now some detail coming out about where both sides are in the negotiations.
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ESPN reported on Wednesday that the Players Association side submitted its first proposal on how to adjust baseball’s financial situation moving forward. And unsurprisingly, the ownership side doesn’t seem very happy about it.
ESPN’s Jeff Passan’s post said that the players’ first proposal focuses on one of the biggest problems plaguing the league right now: cheap owners refusing to spend money on their teams. Instead of a salary cap that limits earnings, they’ve proposed a “competitive-integrity tax.”
For teams like the Miami Marlins, Pittsburgh Pirates, Tampa Bay Rays, Milwaukee Brewers and Cleveland Guardians who look to limit spending and maximize profits, MLBPA wants to essentially force owners to try to compete. Any team that doesn’t reach $150 million in player payroll would be subject to a tax.
That’s the biggest topline proposal. The others would increase the minimum salary from $780,000 to $1.5 million, and raise the first threshold in the competitive balance tax from $244 million to $300 million. Essentially allowing teams to spend more money on players before getting punished for it.
Other details Passan reported included adjusting the existing revenue-sharing distributions. Local television rights, which have become a point of contention for smaller markets, would go up. But the distribution of money brought in from a team’s home stadium would go down. The idea there being that it would incentivize owners to, you know, try to win more games.
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More wins mean more fans buying tickets, which under this proposal would mean more revenue staying put. While increasing the distribution from local TV rights would remove some of the advantages teams like the Los Angeles Dodgers or New York Yankees have over smaller markets.
There’s another revenue-sharing side to the proposal. The players want to punish teams that bring in revenue-sharing dollars and refuse to spend it. Something that’s already written into the rules, but is almost completely ignored by Commissioner Rob Manfred. If they don’t reach certain payroll levels, revenue-sharing teams would forfeit a percentage of their distribution money. But those that win more games would receive more money. Incentivizing small-market teams to spend more and try to win.
All of this sounds reasonable enough; it penalizes cheap owners, takes more money away from big teams like the Los Angeles Dodgers and Yankees, and incentivizes winning. Sure enough, the owners’ side hates it, and is already weaponizing misplaced fan sentiment to start its arguments.
Here’s where the issues start, though. MLB spokesman Glen Caplin issued a statement in response, saying, “We appreciate the union making a set of proposals and we look forward to continuing the bargaining process and working towards solving the competitive balance problem our fans are telling us needs to be addressed.
“We understand their proposals are designed to benefit players. Unfortunately, they do not address and in fact exacerbate the competitive balance problem our fans are telling us we must address. The MLBPA’s proposal would reduce the amount transferred to lower-revenue Clubs, weaken the Competitive Balance Tax, and lead to even more payroll disparity than exists today. For example, under the Union’s proposal, the Dodgers would pay less in luxury tax payments, giving them an additional $70 million to spend on payroll.”
Ah yes, there are the magic words. “Competitive balance problem our fans are telling us we must address.” This is why some have spent the winter arguing that the league does not have a competitive balance problem, because it doesn’t. And because owners were always going to use complaints over free agency spending to justify a lockout and salary cap. Which, of course, does nothing to address competitive balance.
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Ignored by the league’s statement is the fact that while lower luxury tax penalties might help LA spend more, increased revenue sharing from their television deal would also hurt their bottom line. Also unmentioned in the statement is the fact that a salary cap would not prevent the Dodgers from outspending small-market teams.
There’s two important components to address. One is the fact that baseball does not have a competitive balance problem.
The Rays lead the American League East over the Yankees. The Guardians are in first place in the AL Central ahead of larger markets like Chicago, or even Minneapolis, which has 1.6 million more people in it than Cleveland. The Seattle Mariners are in first place in the AL West despite sharing a division with teams in Dallas, Los Angeles (Anaheim) and Houston, all top five markets. The “Sacramento” Athletics are ahead of both those teams as well.
Milwaukee Brewers are once again running away with the NL Central, despite playing in literally the smallest market in the sport. The Cubs, meanwhile, despite having the advantages of the Chicago market, are in dead last having lost 10 games in a row. Two of the three wild-card spots in the NL are currently held by teams from San Diego and Phoenix. Four of the bottom five payrolls in the sport are either in playoff position or are less than a game out of a wild-card spot. The Cardinals and Pirates have the sixth and seventh-lowest payrolls, and both are either in a wild-card spot or half a game out. Meanwhile, teams from New York and San Francisco are a combined 44-67 with an -85 run differential.
Fans are caught up in the outcome of the World Series, but the MLB playoffs are the least meaningful measure of a team’s quality. Regular season success is. The Rays have reached the World Series the exact number of times as the Yankees over the last 17 years, after all. The Guardians have reached the World Series more recently than the Mets. The Kansas City Royals have won more recently than the Yankees or New York Mets. And the league could not have picked a worse season to claim that the only way to achieve “competitive balance” is a salary cap.
The other component to address is that a salary cap will mean nothing without a significant salary floor. As the players proposed. But a significant salary floor will never be accepted by the cheaper owners. There are nine teams with a payroll of $107 million or less. They’re never going to sign off on a floor that reaches into the $150 million to $175 million range. Even though that’s what would be required to meaningfully close the gap.
For example, say the cap is set at $264 million, the second CBT threshold. If the floor is set at $110 million, the Dodgers will spend $264 million and the Guardians will spend $110 million. LA will still wind up with more of the best available free agents, while Cleveland will focus on younger, cheaper players.
The only difference in that scenario will be that the players who choose to sign with LA will get lower salaries. Which does nothing for competitive balance, only increases franchise values and benefits ownership.
This fundamental disagreement is going to lead to a lockout. But the bigger problem is that owners believe they have fans on their side, because fans don’t like the Dodgers. And they’re going to use it to potentially cancel games for a system that only benefits them.
