MLB weighs a salary cap as potential lockout looms in 2026

NBC News

10-04-2025

For decades, Major League Baseball has stood alone among the major U.S. sports leagues as the only one without a salary cap.
Team owners may test that dynamic at the end of next year.
MLB owners as well as Commissioner Rob Manfred's office have begun privately contemplating what a new league economic structure could look like as the league heads toward a new Collective Bargaining Agreement with players, according to people familiar with the matter. The league's current CBA expires on Dec. 1, 2026.
MLB officials have discussed adding both a salary cap and a salary floor, said the people, who asked not to be named because the discussions are private. The Major League Baseball Players Association, however, has long been against a salary cap, and the group says its position hasn't changed.
The result is a potential lockout in December of next year when the current CBA expires — one that appears increasingly likely given the opposing positions of both sides.
If MLB owners are ultimately successful in forcing through a salary cap, it would end decades of limitless spending that's led to increasingly disproportionate spending between teams in the league. Critics of the format say the variability results in a competitive imbalance that reduces fan enjoyment and retention of star players in small markets.
The remaining three major sports leagues in the U.S. — the National Football League, the National Hockey League and the National Basketball Association — all have salary caps. The NHL adopted its cap in 2005. The NFL introduced a cap in 1994, and the NBA has had one since 1984.
While MLB maintains a luxury tax and revenue sharing, there's no formal limit on what teams can spend on a roster.
Manfred addressed the issue of a salary cap last week on FS1′s 'The Herd.'
'We do hear a lot about it from fans, particularly in smaller markets,' said Manfred. 'But the reality is we're two years away from the end of the [bargaining] agreement. We're just not in a position where we are talking about or have made decisions about what's ahead in the next round of bargaining. I think that a lot of water is going to go over the dam before we need to deal with that issue.'
In the meantime, the delta in spending between MLB's highest spending teams and the lowest has reached an all-time high. This season, the New York Mets are spending $323 million on players. The Miami Marlins are paying just over $67 million. There are nine teams spending more than $200 million on players in 2025, and there are five spending less than $100 million, according to MLB calculations obtained by USA Today.
When including the league's luxury tax, the Los Angeles Dodgers will spend more than $500 million — a record amount — given the value of their contracts this year, which include deferred payments. The Mets will pay more than $400 million.
The large gaps are evidence of 'a massive disparity problem,' Manfred said in a New York Times article this week.
'I am really cognizant of it, and I'm sympathetic to fans in smaller markets who go into the season feeling like they don't have a chance in the world to win,' Manfred said. 'I think our game turns on fans having hope when you enter the season. I think it's a really important issue that we need to pay attention to.'
This isn't the first time MLB has considered installing a salary cap.
In 1994, a stalemate over spending led to an MLB strike and the cancellation of the World Series that year. Players successfully prevented a cap then, and nothing has changed, according to Tony Clark, the MLBPA president since 2013.
'We've always believed in as free a market system as possible, such that the individual player can realize his value against the backdrop of teams that are interested in his services,' Tony Clark, MLBPA president, told The Athletic in February. 'A cap is an artificial lever that is the ultimate salary restrictor, independent of where you are on the salary food chain.'
Both sides appear to be preparing for an impasse.
The MLBPA has a so-called 'war chest' of money to help non-star players afford a work stoppage, and it's prepared to use it as soon as December 2026, according to people familiar with the union's thinking. The money derives from licensing fees from baseball cards, video games and other merchandise.
The size of the war chest is unclear, but people close to the matter say it's larger than that of the last round of bargaining, when it was considered a record amount.
The union executive board voted in December to withhold 100% of 2024 licensing money to prepare for bargaining to replace the current labor contract, said the people familiar.
Diverging spending
While the concept of introducing a salary cap has consistently been a nonstarter with the players' union, there's some evidence suggesting reforming MLB's economics could be good for players.
The average MLB salary hasn't kept pace with the league's increase in revenue, which has grown at a rate of 4.1% per year in the past decade, according to Joel Litvin, former president of league operations for the NBA and a lecturer at Columbia University, who teaches a course called 'The Business of Professional Sports Leagues and Franchises.'
That's not the case in the NBA, NHL and NFL, which have a cap, said Litvin.
'Had salaries been tied to revenues (as they are in the other leagues), the players would have earned an additional $2.3 billion in salaries over that period,' Litvin wrote in a Sports Business Journal op-ed last month. His calculations conclude players' salaries have increased 3% per year over the past ten years.
'The best outcome — for both teams and players — would be a salary cap/revenue-sharing system, which would promote competitive meritocracy and eliminate economic risk faced by both players and teams of a revenue/salary imbalance,' wrote Litvin, who worked for the NBA from 1988 to 2015 and managed the NBA's salary cap for years.
While the MLBPA isn't against a salary floor, it views any restrictions on what a player could earn in a free market as unacceptable, according to people familiar with the matter.
Unrestricted spending has led to outsized deals in baseball, such as the Mets' 15-year, $765 million contract for Juan Soto this offseason — the largest contract in the history of American sports. The deal surpassed Shohei Ohtani's 10-year, $700 million contract signed in 2023, though Ohtani's $70 million per year remains tops in the U.S. on an annual basis.
Still, while the best MLB players benefit from the current rules, most of the league's players don't see the big bucks. This isn't all that different from any sport, where stars command the biggest contracts.
But that's where the concept of a salary floor could help tip the scales for the MLBPA. Small market clubs would be forced to pay higher salaries for their 26-man rosters.
Competitive balance
While the commissioner's office, owners and executives legally can't discuss the upcoming CBA publicly, talk in private of changing the rules has started to heat up. Executives across the league have hinted at a growing desire to address the problem — including, surprisingly, those that work for the Dodgers and Mets, the two teams who benefit most from the current league rules.
'I think greater parity would be a benefit to the game,' Dodgers CEO Stan Kasten told CNBC Sport just days after the Dodgers won the World Series last year. 'It doesn't help that our revenue per game is 10 times that of a team on the bottom. It really isn't good for anyone. We have revenue sharing in our league, so we hope to close that gap, but I think there are other ways to achieve that. We see a lot of examples in the other sports.'
Mets President of Baseball Operations David Stearns echoed Kasten's sentiments in a CNBC Sport interview earlier this year.
'I think there is a conversation that needs to occur, and it is ongoing, as to the importance to baseball closing some of those spending gaps,' Stearns said. 'I think it's primarily important because markets like Milwaukee, markets like Tampa — when you draft and develop, sign and develop a star, you should have the ability and the capability to really keep those stars in smaller markets. We've seen other sports figure out how to make that happen. Baseball has had a tougher time figuring out how to make that happen.'
While some sports fans may enjoy dynasties, more parity generally increases fan engagement — at least that's the case in the NBA, Commissioner Adam Silver told CNBC Sport in October.
'The data is absolutely crystal clear that the more competition you have, the more it drives interest in the league,' Silver said.
Eight out of the last 10 World Series champions have payrolls in the top 10 most expensive for that specific year. As the Wall Street Journal noted, since 1998, teams ranked in the top five in payroll have averaged 89 wins a season, while teams in the bottom five have averaged 74 wins.
Still, the randomness of the MLB playoffs has equalized the World Series winner. The league has had 16 different World Series champions since 1998, more than any other of the major U.S. sports leagues. Yet, just one team has won the World Series with a bottom 10 payroll since 1998 — the 2003 Florida Marlins, who ranked 21st in terms of spending.
The MLBPA views stingy owners as the principal problem in competitiveness rather than outsized spending from teams like the Mets, who haven't won a World Series since 1986, and Dodgers, who have won just two championships in the past 36 years.
The RSN problem
As the Dodgers' Kasten noted, part of what's causing spending discrepancies for MLB teams is local media revenue.
Even with nationally broadcast games, MLB teams have heavily relied on regional channels to house much of each team's games. While NBA and NHL also air games on these networks, a broader assortment of games are nationally available.
While the Dodgers make more than $300 million per year from their 25-year deal with Charter Communications (originally signed with Time Warner Cable in 2013), smaller market teams like the Marlins make about $50 million.
Those figures may decline as fewer people subscribe to the cable bundle and regional sports networks are increasingly tiered by pay-TV providers to more expensive packages, further diminishing subscriber numbers.
Main Street Sports, the largest portfolio of these regional networks, emerged from a lengthy bankruptcy earlier this year after renegotiating deals with teams. Some teams accepted lower fees, while others walked away from their networks for other options.
MLB's national media rights deals expire in 2028, and the league's goal is to sell more packages of games to both new and old media partners, similar to the NBA's recently inked $77 billion deals, people familiar with the matter have said. MLB also hopes to take back many of their local rights to sell them as new national packages, which would replace the current RSN-dominated model.
Industry bankers and consultants, however, are skeptical MLB could garner a blockbuster media rights deal akin to the NBA or NFL, even with a larger package of games. A salary cap could help MLB if it can't generate the same type of huge TV rights fees as the NBA and NFL.
MLB has recently struck deals with streamers — but they have yielded far less revenue. Roku pays $10 million a year for 18 games for its free ad-supported streaming Roku Channel, while Apple spends $85 million annually to stream 'Friday Night Baseball.' ESPN opted out of its $550 million-per-year deal with the MLB earlier this year because the sports media giant felt it was overpaying.
'Everyone knows that 2028 is going to be a reset,' said Shirin Malkani, co-chair of the sports industry group at Perkins Coie. 'The league will have a new collective bargaining agreement, and I do think they will try to get a salary cap. Without a salary cap, it's a system of haves and have-nots among the teams. Layer in the local media rights fee disparities and there can be a real disparity in terms of funding payroll.'