Zack Scott is a 4x World Series champion with the Red Sox and former acting general manager of the Mets. Today he is the founder of four rings, where top leaders inside and outside of sports are building their own AI system to make better calls on senior decisions that they can’t reverse. He is also a partner in PBI Sports, which represents more than 20 coaches and managers throughout MLB. Contact him LinkedIn.
Editors’ note: This is the first of a two-part series with a unique proposal for future panel discussions.
The owners’ opening proposal for the next labor agreement contains the best idea anyone has ever put forward to correct baseball’s competitive imbalances, combined with one idea the players won’t sign on to. A good idea is to pool the money for local television and share it equally among all 30 teams. The dealbreaker is the hard salary cap attached to it. Take those apart, add one move that no one is talking about, and there’s a deal here that owners, players and fans can all call a win. This is part one of two: why the cap is the wrong fight, and what real restraint looks like.
Their offer is a firm load at $245.3MM, a firm floor at $171.2MM, a 50/50 revenue split, and all local TV revenue pooled and shared. Integrated television is worth keeping. A hard cap fixes it at least.
Start with why the cap is the wrong fight. Money is important in baseball, and I want that to be clear up front, because people take numbers like this and conclude that spending money doesn’t buy wins. It happens. I came in skeptical about the owner’s pitch, so I ran the numbers first. I took five full seasons of each team’s tax bill and put it against winning percentage, 2022 to today, the life of the current deal.
I correlation is 0.57, R-squared 0.32. Payroll explains about a third of why teams win and lose, and a third is more. But the league’s only argument is that the cap and floor heal the competitive balance, and that’s a claim the numbers can’t bear. The other two of the three are discovery, development, health, decision room, and luck. The Brewers have used less than three payrolls for five consecutive years and remain near the top in all-time wins. The cap changes who is allowed to spend. It doesn’t change two-thirds.
The NFL comparison doesn’t help either, and it’s all over the place. But the football title rests on unguaranteed contracts. A team that signs a bad deal cuts a player, eats a cap hit they can’t get for a year or two, and cap room is recycled. Baseball contracts are guaranteed to the last dollar, so money never disappears the way it does in football. The best a team can do with a $200MM mistake is to trade the player and eat the cash, which reduces the hit but never takes it away and needs another club willing to take him. Under the cap, the remaining money still counts against the cap, so the mistake locks the team out of adjusting its roster for years.
I spent two decades inside front offices helping to decide how much to spend on that, including a year running baseball operations for the Mets. I negotiated contracts and looked at the competitive tax landscape and actual decisions. From that seat, the cap is pointed in the wrong direction. Take it off the table and there are three real problems, and the salary cap doesn’t solve any of them.
- The income gap is the local television gap, and the Dodgers are the odd one out. They pull in about $334MM a year, more than double the next club, and because of the McCourt bankruptcy settlement the league considers that money worth only $84MM in revenue sharing. They protect about a quarter of a billion a year in the lake.
- The problem of integrity was that teams rarely spent a lot of money. It’s the groups that take their money sharing checks and pocket them. The union has filed complaints about it.
- The real money in baseball is made in sales. A group can run paper losses for years and still give its owners a huge profit when it changes hands. The Padres drew the best home crowds for the game while losing money on paper, and reportedly sold for around $3.9 billion. Players make up a large portion of that amount and take none of it.
Here is a deal that was built around those three issues.
Start with the media, because the owners are already proposing repairs. Consolidating all local TV and sharing it equally pumped the Dodgers’ money into the pool like everyone else’s, ultimately ending their release, and ending up with local power outages fans have lived with for years. Half of it is already forced. The regional sports network model collapsed, Diamond Sports stopped paying its fees and aired games, and the league stepped in with MLB Local Media to keep more teams on the air. Owners have the right to legalize it. Using it as a cap ransom is a mistake. Major market owners treat that television revenue as a bargaining chip, but the sharing has to be done on your own. Books still have to balance, and I’ll get to how.
In the cap itself, give the owners to hold themselves out of the roof. The players will not accept a difficult game, and the history of labor says that they will stay for the first season. The luxury tax is supposed to create that self-control, and it hasn’t worked yet. The commissioner agrees. Rob Manfred, at the June owners’ meeting: “We’ve tried very hard in many rounds of negotiations to use a competitive balance tax to address competitive concerns. And sometimes you have to admit you’ve failed.”
It failed in two ways. Margins grew by about 1.5% per year while wages grew by about 6% and profits by about 8%, so the line stopped when the game went through it. And the fines were called at the rate of a different period. The Dodgers paid $169MM in taxes on a $417MM payroll in 2025, close to dollar for dollar over the line, and won a second straight World Series in the process. If the team pays almost 100% effective value and calls it money well spent, the tax has become a charge.
So fix both pieces, the line and the penalties. Set the initial limit to $250MM. That’s actually the owners’ cap number, but here it serves as a tax line the team can still use up by paying the incremental amounts below. It shows the bottom, leaning on the top of the league the same way the bottom lifts the bottom. Here is the layout:
- Limit starts at $250MM and average club revenue growth indicators. Indexing averages rather than league averages tracks the average franchise instead of a few at the top, so the lineup keeps up with the sport instead of lagging behind the way the current one does.
- The bottom points in the same wayit starts at $171.2MM for owners, so it never lags behind in real terms either. The essence of it comes from the second half.
- Penalties are monetary only, no draft picks or international pool money. Stripping the big-market roster of young talent in addition to taxing it punishes fans for the owner’s choice; the owner who decided to overspend must pay in dollars, only in dollars. Taking the picks and the money together will propel him to the one channel left untouched, free agency, the highest in the game.
- Dollars go up fast: 50% on the first $25MM over the line, 100% on the next $25MM, 200% beyond that. Each successive year the team stays on the line, the whole schedule goes up another step, from 1.5 times a year two times to 3 times in the fifth year.
- The proceeds go into escrow to enforce the down payment, not going back to the other owners. The money is only released to a low-income club when it reaches its required spending, turning a tax on high spenders into a subsidy that helps the smaller ones to afford the property. Because it only pays for actual spending, none can be pocketed the way money is distributed today.
And compare those international standards created by this agreement to the one it replaces. The Dodgers financed their season with $587MM while maintaining a $334MM annual television deal, most of which is secured in the sharing pool. A mid-range TV gets rid of that engine, so it charges a premium as well the existing funding will penalize them twice, and the same warning applies to all clubs whose local money goes into the pool. Compared to that simple baseline, prices still leave room for one big year.
A team can buy one run per title from its owner’s pocket. What escalators offer is the number of annual activities. Hold that same $417MM for five years running and the tax increases from about $272MM in the first year to about $491MM in the fifth year as a compounding multiple, which is close to $910MM in total, on a lower income base than today. That’s a tax assessment that acts like a cap without being one.
There is a reason to leave that door open. This game runs in its own tents. Teams like the Dodgers and Yankees drive national ratings, championships, and fan interest that increase everyone’s income, so a tax designed to add a barrier shouldn’t reduce them. The point is to make spending big year after year a real choice at a real cost, while keeping the biggest brands in flux.
That includes higher self-control: shared television, and a tax that bites without being a ceiling. But the agreement must be balanced. The strongest part, and the first, is a floor that forces teams to try, long-term promotions for young players, and one move that no one is talking about, a way for players to share the amount they spend building their careers. That’s the second part.
