MLB introduced Thursday a seven-year CBA proposal to the union that would include a hard salary cap and floor system and a 50-50 revenue split.
Starting in 2027, a mandatory salary floor for all 30 teams would be set at $171.2M. The salary cap, which no team can exceed, would be set at $245.3M. Additionally, there would be a centralization and equal share of all local media revenue to address blackouts and revenue sharing reform, with MLB seeking to do a national streaming rights deal, like the NBA, after the 2028 season.
The union has been vehemently opposed to a cap for decades. In its initial proposal on Wednesday, the union proposed revenue-sharing reform in lieu of a cap.
The last time the league proposed a cap was 1994, which led to a players’ strike and the World Series being cancelled.
“Our payroll gap from top to bottom is $446M. That’s not a fair fight,” MLB Commissioner Rob Manfred said Wednesday night on “The Pat McAfee Show.” “And the numbers really bear out that it’s not a fair fight. If you have a high payroll, you’re much more likely to make the playoffs. And if you have a high payroll, your chances of going to each of the successive rounds are massively higher than a low payroll club. And fans want competition. That’s what it’s about at the end of the day, and we need to get that one fixed.”
The $446M gap represents the total payroll (including both salaries and luxury taxes) between the 2025 Dodgers (MLB-record $515M) and the Marlins ($69M). L.A. paid $169M in luxury taxes last year en route to winning its second straight World Series, or $2M less than the proposed floor.
To reach the salary floor, 12 teams, based on 2026 Opening Day competitive-balance threshold (CBT) payrolls, the Marlins, Guardians, Rays, White Sox, Cardinals, Nationals, Pirates, Twins, Brewers, Athletics, Rockies and Reds, would have to increase payroll a combined $617M.
To reach the hard cap, eight teams, the Dodgers, Mets, Yankees, Blue Jays, Phillies, Red Sox, Padres and Braves, would have to reduce their payrolls by a combined $578M.
The current CBT threshold of $244M would be less than the proposed hard cap.
The league would discuss timelines for phase-in and procedures for implementation. The CBA expires Dec. 1.
Manfred has said players received 47% of revenue in 2024, as opposed to 63% when he started as chief labor negotiator in 2002. Interim MLBPA Exec Dir Bruce Meyer told The Athletic the split over the life of the current CBA is comfortably over 50%. The caps in other sports lead to roughly 50-50 splits.
The Dodgers this season are seeking to become the first team since the Yankees (1998-2000) to capture three consecutive World Series titles. Meanwhile, the last small market team to win the Fall Classic was the Royals in 2015. Small market teams, including the Rays, Brewers and Guardians, however, have been consistent winners with lower payrolls in recent years, albeit failing to win it all.
The union does not believe owners desire a salary cap for the purposes of competitive balance. Rather, it believes a cap would provide owners with fixed-cost certainty, with the goal of raising franchise values.
As Manfred reiterated, MLB is enjoying a resurgence, with upticks in national TV ratings and attendance. But all the momentum could be thwarted if games are missed. The league is also looking to secure a lucrative national TV deal after the 2028 season, which could potentially be impacted depending how long the battle ensues.
“There’s no one who wants to avoid a work stoppage more than I do. Believe me,” Manfred said.
Due to the collapse of the RSN model, local TV revenues have widened. The Dodgers’ TV deal averages $334M annually through 2038. Meanwhile, their 2025 NL Championship Series opponent, the Brewers, who did about $35M in rights fees last year, was expecting a $20M loss by going under MLB’s TV umbrella.
Dodgers and Red Sox executives have been among those to publicly support centralized MLB media rights.
“It’s good for the entire industry,” Red Sox President & CEO Sam Kennedy told SBJ last October. “Our distribution model has been disrupted by technology, and we’ve got these territories, and we’ve got to make sure that our consumers, wherever they are, whether they’re watching the Red Sox in Boston, Nashville or Singapore can easily find our games or consume our games on a device in a format they want. So we’ve been part of trying to help examine how this could come together.”
MLB has continued to point to its internal fan polling, which shows fans in some markets do not believe their respective teams have a fighting chance for success.
“The one thing that (fans are) the biggest on right now is the lack of competitive balance in the game, and I think that’s going to be the cornerstone issue of the negotiations with the MLBPA,” Manfred said. “From our perspective, we think if we can improve competitive balance, we’re going to grow the game in a way that will be beneficial to everybody -- players, owners, the whole group.”
Meyer responded to MLB’s opening counter proposal:
“Yesterday, the MLBPA presented a comprehensive package of proposals designed to improve compensation for players at all levels, and to incentivize and reward competition on the field.
“The owners responded today with a demand for a salary cap system, something generations of players have fought against. The last time the owners made such an explicit push for a cap -- over 30 years ago -- it led to the longest work stoppage in MLB history. For generations, our members have fought against cap systems because they harm players at all levels, erode or eliminate contractual guarantees, pit player against player, lead to more work stoppages, not less, and get worse for players over time. Caps don’t lower ticket prices for fans, eliminate tanking or ensure teams are run with equal competence. They suffocate competition by offering owners an all-purpose excuse for inaction and mediocrity.
“Baseball is experiencing unprecedented momentum and owners are enjoying record viewership, revenues and franchise values. Billionaire owners are not seeking to cap their profits or asset values, only player salaries. This isn’t out of generosity or a desire to protect the game’s well-being. It’s a play to control costs, increase profits and maximize franchise values -- all at the expense of players past, present and future. We’ll continue our review of the owners’ proposal and stand ready to negotiate system improvements that benefit players and fans alike.”
