A day after the Major League Baseball Players Association released details of its first proposal in a new collective bargaining agreement, the league sent a counter-proposal to the union, as expected. Although MLB has not officially released the details to the public, ESPN’s Jesse Rogers reports that the league’s proposal contains a salary cap set at $245.3MM and a salary floor set at $171.2MM.
The Athletic’s Evan Drellich added that the league is proposing a 50-50 split in revenue. It’s not clear how that would compare to the higher numbers suggested by the department. In the case of a percentage-based revenue sharing split, the cap and floor will be fluid and dependent on revenue.
We have seen fluid play in other leagues. NBA players, for example, were only paid 90.9% of their reported salaries for the 2024-25 season after the league’s revenue came in below projections. (The NBA’s collective bargaining agreement requires 51% of the league’s revenue to go to players.) The NBA held 10% of player salaries in escrow to start the season, and 91% of that money ended up going back into the pockets of the teams rather than the players. It’s possible that the $245.3MM cap and $171.2MM floor are based on current projections for the 2026 season, but specific details about the proposal have yet to emerge in full.
Rogers also notes that the proposed MLB facility includes player benefits (insurance, travel expenses, etc.). Player benefits are already included in each team’s luxury tax book of up to $18MM per year. It’s not clear if the $1.667MM each team contributes annually in the league’s pre-arbitration bonus money is counted in that spending category as well, but that amount is counted in the team’s CBT calculation. If both player benefits and pre-arb bonus pool contributions are factored down, that $171.2MM floor proposal (however calculated) would actually cost closer to $150MM of spending on player salaries.
That’s still a higher sum than a dozen baseball teams pay. A $245MM cap, by contrast, would require at least eight teams to drop the payroll. Whether that’s an actual cash payment or a luxury tax payment (calculated based on the combined values of the team’s annual average contractual obligations) also remains unclear, although it seems likely. Either way, the cap/floor system will likely be used less and less. The Dodgers certainly wouldn’t be forced to cut $200MM from their payroll, just like the pitchers wouldn’t be forced to add $90-100MM to the bottom line in one season.
The cap system has long been a complete non-starter for the union. MLBPA interim director Bruce Meyer and his charges strongly oppose the use of any type of ban on player earnings. The union has quickly withdrawn the union’s proposal. Bill Shaikin of the LA Times has a full, lengthy response for those who wish to read it in full. Internally, the union made a specific claim that the owners do not want to close “out of charity or a desire to protect the welfare of the game” but rather “to control costs, increase profits and increase business values.” The MLBPA statement also said:
“The last time the owners made such a clear push — 30 years ago — it led to the longest work stoppage in MLB history. For generations, our members have fought cap programs because they hurt players at all levels, destroy or eliminate contract guarantees, player-versus-player, which leads to more stoppages, not less, and it’s worse for players when players cut prices or teams cut ticket prices over time. Equal power shrinks competition by giving the owners an excuse for idleness and idleness.”
Baseball is the only of the four major North American sports that does not currently have a salary cap. The league will focus its arguments on the need for a cap to equalize the field and create greater equity, using the recent World Series titles of the big-spending Dodgers as evidence “that the current system cannot work. The union, in contrast, will no doubt point to poor starts from small-market clubs like the Rays and Brewers (to say nothing of the flops from high-paying clubs like the Mets, Astros, Giants and Red Sox) as their own “evidence”. that the existing system is not a barrier to competitive balance.
It makes little sense to get too deep into the weeds on the initial proposals. The start for both sides would always be a complete non-starter for the other team. That the league and union began exchanging proposals more than six months before the current collective bargaining agreement expires (Dec. 1) may be a moot point. Finally, they started negotiating even before that, and the two teams still spent the 2021-22 season in a 99-day lockout that stopped all major league events (ie. Both sides kept hitting “deadlines” for negotiations until a tangible, real-world deadline – Opening Day 2022 – was very close).
It would register as a major surprise if Meyer and commissioner Rob Manfred were able to work out a new deal before the current deal expires. However, the fact that a lockout is almost inevitable doesn’t mean the same is true of missed games in 2027. The league’s official proposal for a cap/floor system is intended to reflect a strong position, as was the union’s proposal (which, among other things, includes a soft salary floor without a limit, an increase in the league’s minimum salary, an increase in the early salary pool, and the previous free agency method).
That said, it is in the best interest of the league and players to avoid any suspension that sees games lost in the 2027 season. The league would claim the cap is an obvious necessity, but MLB has also taken great pride in raising attendance numbers and continuing broadcasts. The renegotiation of national media broadcasting rights and live streaming agreements with platforms such as Netflix, Apple and Peacock are all close on the horizon again, in 2028. Similarly, the union can point to the decline of the “middle class” of players, but there have been significant gains with the increase of the minimum wage and the implementation of the final pool salary, the final pool bonus. keep getting up. And in the event of lost games, ownership will always try to recoup some of those losses by reducing spending on player acquisitions in the years following any season with lost games.
Put more briefly: the details of these first propositions will seem irrelevant. Neither party expects anything but direct opposition from the other. The league and the union both seem to be always fighting for the upper hand in the PR war with the fans, although it would be better if they conducted the discussions behind closed doors as many proposals from either party tend to alienate a certain section of the fans.
Finally, the significant takeaway from today’s proposal is that the league has come out swinging with a hard cap/floor system. Players are also raising goals similar to previous free agency and a significant increase in early career potential. Both sides will be on their heels. The next calculations will be made, but it is unlikely that we will see any serious movement in the negotiations before November, and more likely, the closing of the door will drag the negotiations on a new CBA to 2027.
