𝕏: ItsRickyLogan Roger Straz: LocalSportsMatter
Payroll:
December 1, 2026. Remember this date. This day is when the current MLB Collective Bargaining Agreement (CBA) expires. What is the significance of this? Well, there will be lots of behind the scenes bargaining between the players’ union and the MLB owners in the next two years. Also, there will be ideas tossed around publicly in the media for our consumption. One idea that was discussed recently, (and by an owner!) was the idea of a baseball salary cap. The new controlling owner of the Baltimore Orioles went on record to say that MLB may one day have a salary cap like the NFL and the NBA. Currently the MLB works with a luxury tax model called the Competitive Balance Tax (CBT). A club that exceeds the CBT threshold is subject to an increasing tax rate depending on how many consecutive years it has done so. The 2025 Salary Threshold is $241 million. Right now, the reigning World Series Champion Los Angeles Dodgers have the highest payroll of $380 million! The last time that a team was not in the top 15 in payroll to win a championship was the 2017 Houston Astros. So can a salary cap really work in baseball?
A clubs’ payroll is not the most important factor of a winning ball club, but for small market teams, it can really make or break a team’s ability to plan for the future. Being able to keep that potential star player that you drafted, or signed at a young age in the international signing period, could be the difference between fighting for the playoffs and possibly a championship or potentially going through a postseason drought. Major League Baseball does not currently have a salary cap. That means there is no limit to the amount of money one team can put into their team’s payroll or specific player. The NFL in 2024 had a salary cap of $255.4 million. That means teams have to be strategic about the amount of money given to a player. Overpay for player A, negotiate lesser deal for player B or make trades and cuts to accommodate the team’s salary to be near the salary cap limitations.
Spending Trends:
According to Stevetheump.com, the Baltimore Orioles lead MLB in payroll with $71.9 million in 1998. The Montreal Expos had the lowest payroll at just $8.3 million. The next lowest payroll was the Pittsburgh Pirates at $13.7 million. On Opening Day 2024, the New York Mets lead MLB with a team payroll of $301.7 million, with Oakland being the lowest payroll at $47 million. 26 years later, the lowest team payroll is still nearly $22 million less than the highest salary in 1998. That would also be lower than 14 other team’s payroll in 1998. What does this all mean? Teams generate the majority of their own revenue, which in turn, generates the amount of money they can spend on payroll and other expenses. Major League Baseball is mostly a regionally funded sport that is reliant on local television contracts, unlike the NFL, which is funded by major National TV contracts. MLB partners with Major networks like FOX and ESPN, but they mostly show large market teams anyways. Apple recently partnered with MLB in 2023 for “Friday Night Baseball” live on Apple TV+. With the problems teams have had with their TV deals recently, mainly Bally Sports (now Fanduel), teams are even more bottlenecked on spending due to the fear of these contracts abruptly ending, considering Bally has their own issues with bankruptcy.
Possible Solutions:
If MLB was to not implement a salary cap, what else could Rob Manfred and Major League Baseball conjure up to help the smaller market teams feel more competitively balanced with the high spending teams, like the Dodgers, Yankees and Mets? More draft picks? Competitive Balance Draft picks were added during the 2012-2016 collective bargaining agreement. Below is an excerpt from MLB.com on the Competitive Balance Draft process.
The 10 lowest-revenue clubs and the clubs from the 10 smallest markets are eligible to receive a Competitive Balance pick (fewer than 20 clubs are in the mix each year, as some clubs qualify under both criteria). All eligible teams are assigned a pick, either in Competitive Balance Round A or Round B. Round A falls between the first and second rounds of the Rule 4 draft, while Round B comes between the second and third.
Could MLB give smaller market teams even more draft picks? Or, could you take away the top 3-5 highest payroll team’s first round draft pick away to give the other teams a better chance at a can’t miss prospect through the draft? Small market teams already get an advantage in the international pool, could they increase the gap even more? Teams currently revenue share 48 percent of their local revenue evenly amongst the other teams, estimated around $110 million if not more each. They also split national revenue, around $90 million. Could they implement a “competitive balance revenue plan” similar to the competitive balance draft picks and give the 10 lowest earning teams a boost and take away from the higher spending teams? Maybe 10 percent each way? I doubt any owner would agree, simply because it wouldn’t be fair to that 11th ranked team, or the 19th ranked team being treated differently than the 20th and so on. It’s a complicated issue.
If there is one thing that Major League Baseball is known for is having the strongest player’s union in all of sports in the United States. The stance of the union has always been against the salary cap. A cap would be a limitation on the earning potential of their union members. So if the player’s union was to give up on earning potential, they would have to get something in return. To entertain the idea of a salary cap, the MLBPA would most definitely demand it be coupled with a salary floor. That way a team like the Miami Marlins (2025 current payroll is $43 million) would have to spend more in the offseason and refrain from offloading salaries at the trade deadline constantly in order to save money. Because the MLB does not earn as much revenue as the NFL or even as much as the NBA, most owners of baseball clubs are not willing to spend money if they don’t have to. As much as the small market teams would vote for a salary cap to limit the bigger markets, they would not be on board to sign off on a salary floor.
Outlandish Solutions:
Baseball has in the last 30 years become more and more of a regional sport as other sports like NFL and NBA have risen to prominence nationally. Also, MLB does not have a very good national TV deal (around $1.5 billion each year) compared to the other major American sports (NFL makes around $11 billion each year). Maybe, baseball could operate kind of how another regional sport does (NCAA Football). The local fan base could donate to a NIL Collective to help fund the salaries for players they are wanting to keep in town. Although, this could backfire with the affluent in the bigger markets putting in large sums to lure a player like Elly De La Cruz away. Or possibly we can put into all of the major sports bylaws that if your franchise has not advanced in the playoffs in the last 15 years, your team will be put up for sale. That way, owners will be compelled to put together a winning squad or lose their franchise. Although, this could lead to Elon Musk or Bezos owning all of the teams.
What Should Happen:
One way to change the current MLB setup could be to change the Luxury Tax rules. In 2021-2022, the NBA’s Golden St Warriors blew through the Luxury tax threshold by so much that the next NBA collective Bargaining agreement, the owners and the players’ union of the NBA decided to implement a 2nd Apron of the Luxury tax. The teams that go over the 2nd Apron of the luxury tax threshold face more tax penalties and restrictions on how they can make deals and trade for players. This could very well happen in the 2026 MLB collective bargaining agreement. This middle of the road solution could help the smaller market teams be more competitive and the larger markets to be less willing to overspend with more possible tax penalties. It is much more likely than implementing a salary cap and a salary floor.
If MLB was reliant on a National TV deal like the NFL, I believe there would be a salary cap and floor. Unfortunately, without it, it’s very difficult to implement. What do you do with players current contracts? Most large contracts are upwards of 11 years in length or even longer. Teams that have these contracts, have planned out their entire pay structure around these deals, like differed payments and other payment arrangements, and that could cause some major issues. You don’t want to destroy the higher spending teams for the sake of giving small market teams an edge. In my opinion, I think the simplest change would be to give the lower market teams more draft picks, possibly taking a first or second round pick away from teams at the luxury tax threshold for more than two consecutive seasons. Giving smaller market teams more chances at a top prospect can give that team a short term advantage, even if that player ends up leaving for a large market team in free agency.
MLB needs to make changes to how they handle payroll. It’s beginning to feel like there isn’t a reason for a thirty team league if four or five teams are the ones who are the most able to go all in for the best available talent.
A huge thanks to Roger Straz from LocalSportsMatter on Substack for collaborating with me. Go follow him for more Cincinnati sports content. Follow me on 𝕏 for my current thoughts on the Reds
Photo Credits; 𝕏 Grok, Reddit, Wikipedia, mlbplayers.com
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