One day after the Major League Baseball Players Association released the details of its initial proposal on a new collective bargaining agreement to the public, the league submitted a counteroffer to the union, as expected. While MLB did not formally disclose the details to the public, ESPN’s Jesse Rogers reports that the league’s proposal contained a hard salary cap set at $245.3MM and a salary floor set at $171.2MM.
The Athletic’s Evan Drellich adds that the league is proposing an even 50-50 split in revenues. It’s not entirely clear how that can coexist with the more concrete numbers the league also suggested. In the event of a percentage-based revenue sharing split, the cap and floor would be fluid and dependent on revenues.
We’ve seen that fluidity play out in other leagues. NBA players, for instance, were only paid 90.9% of their reported salaries for the 2024-25 season after the league’s revenues came in under projections. (The NBA’s bargaining agreement calls for 51% of league revenue to go to players.) The NBA held 10% of player salaries in escrow to begin the season, and 91% of that money wound up going back into teams’ pockets rather than to the players. It’s possible that the $245.3MM cap and $171.2MM floor are just based on current projections for the 2026 season, but specific details surrounding the proposal have not fully come to light.
Rogers further notes that MLB’s proposed floor includes player benefits (insurance, transportation costs, etc.). Player benefits are already factored into each team’s luxury-tax ledger to the tune of about $18MM per year. It’s not clear whether the $1.667MM each team contributes yearly to the leaguewide pre-arbitration bonus pool are factored into that spending floor as well, but that sum does count toward a team’s CBT calculation. If both player benefits and pre-arb bonus pool contributions count toward the floor, that $171.2MM floor proposal (however it’s been calculated) would realistically call for closer to $150MM of spending toward player salaries.
That’s still a higher sum than a dozen teams in baseball are paying. The $245MM cap, conversely, would require at least eight teams to reduce payroll. Whether that’s actual cash payroll or luxury-tax payroll (calculated based upon the combined average annual values of a team’s contractual commitments) also remains unclear, though the latter seems likely. Either way, a cap/floor system would likely be implemented gradually. The Dodgers surely wouldn’t be forced to trim $200MM from payroll, just as the Guardians wouldn’t be forced to add $90-100MM to reach the floor in a single offseason.
A cap system has long been a total nonstarter for the union. MLBPA interim director Bruce Meyer and his charges have been staunchly against the implementation of any form of restriction on player earnings. The union has already issued a swift rebuke of the league’s proposal. Bill Shaikin of the L.A. Times has the full, lengthy response for those who wish to read it in full. Within, the union makes the pointed claim that owners are not seeking a cap “out of generosity or a desire to protect the game’s well-being” but rather “to control costs, increase profits and maximize franchise values.” The MLBPA’s statement also states:
“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 the only of the four major major North American sports that doesn’t presently have a salary cap. The league will focus its arguments on the necessity for a cap to balance the playing field and create greater parity, leveraging recent World Series titles for the big-spending Dodgers as “proof” that the current system is untenable. The union, conversely, will undoubtedly point to torrid starts from small-market clubs like the Rays and Brewers (to say nothing of flops from big-payroll clubs like the Mets, Astros, Giants and Red Sox) as their own “proof” that the existing system isn’t an impediment to competitive balance. The eye-popping sticker price in the recent sale of the Padres will undoubtedly be a talking point as well.
There’s little sense in delving too deeply into the weeds on original proposals. Both sides’ first overture was always going to be a total nonstarter for the other party. That the league and union began exchanging proposals more than six months prior to the expiration of the current collective bargaining agreement (on Dec. 1) is likely to be a moot point. The last time around, they began negotiating even earlier, and the two parties still spent the 2021-22 offseason embroiled in a 99-day lockout that put a stoppage on all major league transactions (e.g. trades, waiver claims, free agent signings). Both sides continually blew past artificial negotiating “deadlines” until a much more tangible, real-world deadline — Opening Day 2022 — was firmly on the horizon.
It’d register as an immense surprise if Meyer and commissioner Rob Manfred were able to hammer out a new deal prior to the expiration of the current agreement. However, the fact that a lockout is a near inevitability does not mean that the same is true of missed games in 2027. The league’s formal proposition of a cap/floor system is surely intended to signal a hardline stance, as was the case with the union’s proposal (which, among other things, included a soft salary floor with no cap, substantial increases to league minimum salary, a tripling of the pre-arbitration bonus pool, and an earlier path to free agency).
That said, it’s in the best interest of the league and the players to avoid any work stoppage that actually sees games lost in the 2027 season. The league can claim a cap is a virtual necessity, but MLB has also taken great pride in touting continually rising attendance and broadcast numbers. Renegotiation of national media broadcast rights and streaming deals with platforms like Netflix, Apple and Peacock are all looming on the near horizon as well, in 2028. Similarly, the union can point to the deterioration of the “middle class” of players, but there have been notable earning gains through the increased minimum salary and the implementation of the pre-arb bonus pool, while salaries on the top end of the earning spectrum continue to rise. And in the event of lost games, ownership will invariably try to recoup some of those losses by decreasing spending on player acquisition in the years following any season with lost games.
Put more concisely: the specifics of these initial proposals will prove inconsequential. Neither party expects anything other than an outright refuting from the other. The league and union both seem to constantly jostle for the upper hand in a PR battle with fans, though they’d arguably be better off just conducting negotiations behind closed doors since most proposals from either party tend to alienate some section of the fanbase.
Ultimately, the notable takeaway from today’s proposal is that the league came out swinging with a hard cap/floor system. The players are again touting goals like earlier free agency and substantial increases to early-career earning power. Both sides will dig in their heels. Subsequent counters will be made, but it’s unlikely we’ll see any serious movement in negotiations before November, and in all likelihood, a lockout will drag talks on a new CBA into 2027.
