MLB and the MLBPA Have Made Their Opening Offers
It’s May 29, roughly two full months into the regular season, which means, given the year, that it’s time for everyone’s favorite pastime: parsing competing proposals for a new collective bargaining agreement. Wednesday, the MLBPA released its first proposal for a new agreement. Thursday, MLB followed suit with a proposal of its own. Both are best thought of as opening offers, likely to be heavily modified as the negotiations heat up ahead of the existing agreement’s December 1 expiration. But that doesn’t mean that they’re meaningless. I think these early offers are revealing of what each side cares about most. The specific numbers quoted are unlikely to survive multiple rounds of bargaining, but the concepts and structures that each side favors at this stage could tell us a lot about what an eventual compromise looks like. So without getting too bogged down in the details, let’s peruse both proposals and try to tease out what each side is trying to accomplish.
The MLBPA’s Proposal
The players’ first salvo focuses on two things: revenue sharing and early-career pay. Revenue sharing is going to be a key point of discussion in this negotiation. The league has raised competitive balance concerns for years, and it’s clear that there’s public interest in leveling the playing field. Collectively bargained labor agreements don’t solely play out in the court of public opinion, but making the sport more interesting and marketable is a benefit for both sides, so a more balanced system of distributing revenue seems like a clear path towards sustaining the game’s recent growth.
The central piece of the MLBPA revenue sharing proposal is a redistribution of TV money. Currently, teams share a flat 48% of all local revenue, TV included. The MLBPA proposal would change that significantly. In their framework, the first $50 million from each team’s local TV contract, and two-thirds of the amount above $50 million, would be pooled centrally, along with all national TV revenue.
Without comprehensive TV rights details, the exact redistributive nature of this proposal isn’t precisely measurable, but it’ll be a lot. Based on the last public set of local TV revenues I was able to source, local TV revenue sharing under the current CBA amounts to roughly $1.1 billion in pooled and redistributed money. The union’s proposal would increase that pool to roughly $2 billion. That’s a rough match for the league’s current national TV revenues.
The new method for pooling TV money would be redistributive, particularly for teams at the top end. The Dodgers and Yankees each have deals that reportedly pay them well into nine figures. A team that makes $200 million in local TV revenue today keeps about $140 million of that money after accounting for what they pay into the revenue sharing pool plus their share of the pooled local TV money. Under the new system, they’d only keep around $116 million. Conversely, a team with a $35 million local deal takes home $55 million in total local TV money under the current system; they’d get $67 million under the union’s proposal.
This TV money goes towards one of the union’s headline points: Each team will receive $240 million in revenue sharing from the league (subject to increases over time). To handle the fact that TV revenue is uncertain but $240 million is a fixed number, revenue from local income streams aside from TV would be redistributed at a flexible rate determined by the minimum amount necessary to fill the pool enough to distribute $240 million to each club. The numbers are inherently subject to change, but given the current amount of central revenue and national TV deal money already being divided, this would result in a meaningful decrease in local revenue sharing, partially offsetting the increase in TV-based sharing. In other words, teams would pocket a greater amount of their in-stadium revenues, but share the wealth on broadcast deals, resulting in a net increase in redistribution.
A number of ancillary proposals further this attempt. Teams that receive revenue sharing money – “payees” – would be eligible for a variety of incentives, from extra revenue sharing for posting a winning record or making the playoffs, to bonus draft picks for signing top free agents. A “competitive integrity tax” set at half the CBT threshold would withhold revenue sharing from teams that don’t meet a minimum payroll. Proposed changes to the allowable structure of transfer payments between RSNs and teams would make it tougher for teams to hide revenues behind co-ownership deals with local networks. Broadly speaking, the union’s proposal would increase revenue sharing, and it would focus on TV revenue to do so.
On the player compensation side, the proposal contains a laundry list of changes. There’s one clear throughline, though: increasing compensation for players who have not yet reached free agency. First, the minimum salary would rise to $1.5 million in 2027 and continue increasing from there. Similarly, the minimum arbitration tender would become $3 million – a de facto minimum salary for arb-eligible players. Finally, past arbitration awards would be adjusted higher for the purposes of future comps – by 20%, up to a maximum of $2 million.
The first two changes are self-explanatory. The last one is more complex, but it would increase arbitration awards, with the greatest percentage increase going to players who earn arbitration salaries in the high single-digit millions. As a ballpark figure, I estimate that these early-career salary reforms would add $450 million to $550 million to annual player salaries, meaningfully narrowing the gap between the salaries paid to free agents and those paid to the rank-and-file players who populate the league.
A number of additional changes are designed to further these goals. The pre-arbitration bonus pool would more than double, and it would no longer pay incentives to players who have signed long-term extensions. Draft pick rewards for early promotions would be expanded. Super-Two eligibility would be expanded. Certain older players would reach free agency a year earlier, though their team could guarantee them a salary similar to the current qualifying offer to retain that extra year of team control.
The MLBPA proposal also contains a number of points that I think we’re too early in the process to have much clarity on. The proposal includes an increase in the CBT threshold, naturally. The exact number ($300 million) and the new thresholds, bands, penalties, and so on are all subject to change. I don’t take concrete numbers exchanged this early in a negotiation process seriously. Finally, a number of small changes – tweaks to the draft lottery, guaranteeing arbitration awards, ending the qualifying offer – will no doubt be negotiated further, but don’t seem to be a part of the key points being debated here.
At its core, the union’s proposal is about overhauling revenue sharing and increasing the salary paid to early-career players. I think their revenue sharing changes are good, but they don’t radically alter the existing landscape. The increased redistribution of TV money makes good sense to me. The amount that revenue sharing would change by comes out to just around 15-25%, per my back-of-the-envelope math. What’s more, the total change in revenue sharing payments would likely be lower because of the proposed higher CBT thresholds. But given that those higher thresholds are likely to change, and given that teams change their behavior based on those thresholds, I didn’t feel comfortable estimating the magnitude of that effect. At the end of the day, though, this proposal mostly leaves baseball’s revenue sharing intact, with its main effect being that it bulks up the existing system’s ability to redistribute TV money.
The increase in salary for early-career players is something I’m strongly in favor of, and I think that the union’s proposals are steps in the right direction across the board. I also think that leaving the existing arbitration system mostly intact makes sense; if we were starting from scratch, I’d prefer designing a different system, but there’s strong institutional inertia that isn’t worth counteracting. Making changes to the league minimum and adding to the pre-arb bonus pool are both huge, obvious wins for the players.
MLB’s Proposal
As expected, the league proposed a hard salary cap and floor, the first time MLB has proposed such a system since 1994, with an initial $171.2 million minimum and a $245.3 million maximum. Players would receive 50% of “baseball revenue,” left mostly undefined by the league but used for the remainder of this article as a term of art. Teams would share all TV revenue, both local and national, equally. Those are the key parts to the league’s proposal. Everything else appears to be left either vague or simply unaddressed so that more attention can be focused on the cap/floor system.
The cap numbers look arbitrary, but they seem based around keeping the total payroll outlay in the league unchanged. If you apply MLB’s cap and floor numbers to our estimated 2026 payroll numbers, bumping the 12 teams below the floor up to $171.2 million and moving the eight teams above the cap below $245.3 million, league-wide projected CBT payroll moves from $6.185 billion to $6.189 billion. In other words, this initial offer seems based specifically on stabilizing the amount that teams are paying to players at the current amount, with levels chosen with that goal in mind.
I don’t think you should focus too much on the specific numbers in the league’s proposal, though. “No increase in player payroll” on its own would be an aggressive stance to take into a contract negotiation. Offering that while also agitating for a salary cap, the single biggest line for the union, suggests to me that these numbers are either a public negotiating stance or simply an illustration of what the cap might look like if applied to this year’s payrolls. Leagues with a salary cap don’t have hard, negotiated limits; the cap fluctuates based on revenue. Thus, the devil here is in the details.
A cap and floor system depends on several things. First, it isn’t workable without a strong revenue-sharing mechanism. Second, it isn’t credible without a contractually guaranteed split of revenues, with a fixed percentage earmarked for players. The league’s proposal addresses these two aspects, but only in generalities; specific information is likely to emerge at a later date.
The league goes slightly further than the union proposal in reallocating TV revenues. MLB’s proposal would pool all local TV revenue, period, while the union proposal is more like 90% of all revenues after applying their sliding scale. For the most part, though, the two sides seem to agree on this point. That’s a good sign that some version of expanded local TV revenue sharing will end up in any eventual agreement.
The rest of the team revenue sharing changes are broadly unaddressed. The league’s proposal is heavy on broad, un-fleshed-out ideas. I approximated the change in revenue sharing in the MLBPA proposal, but an estimate based on the league’s proposal is impossible without more details than we currently have. I think a reasonable assumption is that transfer payments would be largely unchanged under this proposed system, because the increased TV money would be offset by the roughly $400 million in tax payments that the nine teams that exceeded the 2025 CBT threshold made last year vanishing. About half of that was transferred directly to revenue sharing receivers. No luxury tax, no luxury tax transfer payments.
It’s likely that there are some unreported mechanisms for further revenue sharing, but I was unable to confirm any specific details. A fuller discussion of the particulars will no doubt happen over the coming months. But it’s likely that any mechanisms will be heavily focused on one thing: increasing franchise values. The league has been clear and open about this. Any change in revenue sharing, and indeed the push for a salary cap, will be built around finding a way to make teams worth more money. Thus, the more important part of the league’s proposal is how it defines the amount of money going to the players.
In keeping with the rest of the publicly available details of the league’s proposal, we don’t know much about how MLB would define “baseball revenue.” It’s clear that this is a difficult needle to thread. Rob Manfred himself has said that players received less than 50% of baseball revenue in 2024, the most recent time he spoke on the split, which makes the league’s position somewhat confusing. The league seems to have picked its cap levels to keep payroll constant, and it also declared that there would be a 50/50 revenue split, but it appears to believe that players currently receive less than 50% of baseball revenue. Something doesn’t add up, which only furthers my conviction that this plan is aspirational, not specific.
Total revenue for a sports league is hard to define, and it’s particularly hard to define in baseball, where TV rights are sold locally, partial team ownership of regional sports networks is common, and more than a few teams own real estate ventures around their stadiums. A robust proposal for a salary cap would include an exhaustive accounting of how revenue is calculated. The incentives to hide or miscategorize revenue are meaningfully larger when payrolls vary as a function of revenues. We’re probably too early in the negotiations for that, and neither side is likely to trust the other to define it correctly, but it’s worth keeping an eye on as negotiations continue.
The exact details on what “baseball revenue” entails would be important if this offer from the league were a serious negotiating stance, but I think it’s fairly clear that it’s just posturing. This proposal contained no details about minimum salaries, arbitration, player salaries, service time, pre-arbitration bonus pools, carve-outs to the cap, implementation methodology, or even a discussion of how a salary cap might come into being in 2027 while the Dodgers are more than $100 million over the proposed upper bound in committed salaries. It’s clear that nothing about this deal is supposed to be binding or a final offer.
The league’s complete lack of interest in details makes sense if you believe that it’s committed to gaining a cap and completely agnostic about how the players divide up whatever money is allotted to them. If you add a salary cap, player compensation becomes a zero-sum game. Free agency details? What does the league care? It’s set a contractual level of payroll. Increased minimum salaries? That money wouldn’t be coming out of ownership’s pocket.
The cap and floor numbers are also quite wide for a salary-capped league. The NFL floors team salaries at 89% of the cap, on a four-year average basis. The NBA floors team salaries at 90% of a soft cap, but “cap” isn’t well-defined in basketball thanks to an escalating structure of over-the-first-cap rules that approximates the current MLB competitive balance tax. The NHL floor is around 75% of their cap, though at much lower levels than the other leagues. The proposed MLB structure would set the floor at 70% of the cap, the widest by a fair margin and much wider than the sports that MLB is most directly akin to – the NHL is just a far smaller outfit overall.
That leads to further questions about the structure that would also need to be fleshed out. With a contractual salary split, a team moving from the bottom of the band to the top of the band could mechanically push other minimum-salary teams below the minimum, thanks to the way escrow and clawback mechanisms work. Likewise, a team reducing its spending in one year could push other high-spending teams above the cap as equalization payments went out to players. Tighter bands between ceiling and floor would make this less of an issue, but I’m fairly certain that MLB pushed the floor as high as they could given the contingent of small-market owners who have consistently resisted any increase in spending. The resulting system seems very difficult to balance, at least until we get further details that change my understanding of this agreement.
I’ve seen a fair bit of handwringing that the distance between these proposals, and the language in them, signals that we’re sure to lose games next year. That may well happen, but here I’ll just note that negotiations involve antagonistic bargaining. No negotiator worth their salt would say that the other side’s initial offer was good. For that matter, no negotiator worth their salt would propose something the other side might accept as an initial offer. Brinksmanship means that an agreement is unlikely until we face real deadlines, and hyperbolically portraying your opponent’s position in public is a time-honored negotiation strategy in labor disputes. Why do you think both sides are talking about competitive balance so much in a negotiation about franchise values and revenue splits?
In any case, my takeaway from these two competing proposals is that they had very different goals, and thus were very different, to the point of being in different languages. The MLBPA proposal is incremental; it goes into great detail about a few specific changes – TV revenue sharing and early-career salary – and largely leaves the broad structure of baseball economics alone. MLB’s proposal is the opposite. It’s so alien to the existing system that they didn’t really bother with details. It’s a think piece, essentially – imagine the league if it were very different, then try to fill in the details at a later date. Neither of them has a remote chance of being accepted without major modifications.
It’s easy to understand why the league’s proposal is unlikely to be accepted. The MLBPA has drawn a bright line around a capped system, and the league isn’t even offering a single enticement to try to change players’ minds. That’s not a real offer. The players’ offer doesn’t touch a third rail in the same way, but it purposefully asks for more than the owners will accept. They want to increase early-career pay – great! They also want to raise the CBT by a ton, and let guys reach free agency sooner, and rebuild arb, and make more players eligible for Super Two, and plenty more. There aren’t a lot of concessions in this proposal, not much to entice the owners. It’s an initial position, so that’s kind of the point, but neither of these is a realistic picture of what baseball will look like next year.
There’s a lot of room between the two initial proposals, but I think that it’s fairly clear that TV revenues are going to get shared more evenly at the end of this process. That’s one of Manfred’s long-term goals, which makes it an owner priority, and it’s also a clear way to increase competitive balance without directly constraining player salaries, which means the union is on board. What else will come out of this? I’m not sure. But so far, the opposing sides aren’t speaking the same language. Baseball is in full swing, and there’s little pressure to bring this negotiation to the foreground while fans are focused on actual on-field delight instead of dry arguments about money. Come November, the urgency will pick up. But at the moment, my only takeaway is that next year, TV revenues aren’t going to be shared the same way that they are now, and we have a long way to go before we get there.
Ben is a writer at FanGraphs. He can be found on Bluesky @benclemens.
Not that I disagree that whatever deal ends up being struck ends up looking very different from either of these opening proposals – but curious about your statement that the owners’ proposal does not “offer[] a single enticement” to offset its touching of the third rail w/r/t the salary cap. Isn’t the “enticement” – persuasive or not – the corresponding salary floor? Like, if we believe that there are a lot of talented players who really would like to stick around in Miami, Minnesota, Kansas City, etc. if only those organizations (1) were willing to pay those players competitively and (2) were willing to spend to surround them with other talented players, the existence of a floor would be great news for those players! If anything, MLBPA’s proposal – which weakens and raises the CBT thresholds and would introduce a soft floor – seems more obviously “And why would the owners have any interest whatsoever in this” to me.
Love how fans continue to think it’s the players that need to fix the competitive balance in the league
it feels like there’s just a lot of talking past each other on the competitive balance front.
Is there a perfectly linear relationship between payroll and wins (or WS win probability)? Obviously not. Is there a strong relationship between them? Yes.
Could many owners spend much more than they do? Yes. In particular, teams like the Giants, Cubs, and Red Sox seem to have revenue streams that would support spending much more on their product than they do, and teams like the Guardians spend so little that it’s inconceivable that they couldn’t spend more. But would Guggenheim operate a team in a market like Cincinnati the way they do in Los Angeles? Absolutely not, and some of the “yOuR tEaM cAn dO tHiS tOo” rhetoric every time a team with a $300 million payroll makes a $300 million payroll team move has worn on me.
The following all seem like viable stances:
(1) There is no competitive balance problem. MLB postseason is high variance, and a lot of the small-market teams are clumped into divisions (cough cough, the Centrals) with each other, plus the playoffs have been expanded. There’s no difference between being a contender to make the playoffs and a contender to win a championship.
(2) There’s a competitive balance problem. Sure, teams like the Guardians, Brewers, and Rays are good bets to make the playoffs in any given year, but they’re also good bets to get steamrolled by the Yankees, Dodgers, etc. Plus, there are certain teams for which it is strategically optimal to constantly trade stars before they hit free agency, meaning that certain fanbases are in a perpetual state of watching their favorite players cycled out to keep a contention window going.
(3) The big-market teams do indeed enjoy some inherent advantages, but suck it up. When Brewers owner Mark Attanasio rhetorically asked whether his job was to win a World Series or to “provide a summer of entertainment,” he was onto something. Guess what, Brewers fans? You’ll never experience a 5-year window when your team is the World Series favorite at the start of each year. But you seem like you’re having a great time! And even if being the Dodgers isn’t broadly replicable with good front office personnel, being the Brewers probably is.
What isn’t a viable stance, IMO, is “The difference between the Dodgers and 25 other teams is that Dodgers ownership cares about the fans and, if those other owners cared as much, they’d be right there too.”
100% agree on that last part. The Dodgers ownership is acting just as rationally as the rest. Their additional spending correlates with additional revenue that increases overall profitability. They aren’t lighting money on fire for their fans’ entertainment.
How would the Guardians improve their team by spending money? What is the hole that can be filled on their roster by spending tens of millions?
Um, spending on any number of talented hitters in any given year? They roll out one of the weakest lineups every year because they refuse to spend even a little on hitting.
I instinctually agree with your premise that Hal Steinbrenner either needs to own his competitive advantage or shut the FUCK up about wages…but you’re missing a trick:
What if the same class of people who lied to you to stop High Speed Rail in California, and lied to you about invading Iraq, and lied to you about avoiding foreign wars, are lying to you about this?
You do realize revenue distribution is a part of the CBA?
Agree and fwiw this rationale is why I don’t really understand MLBPA’s line in the sand on the issue. I get it from an emotional appeal standpoint, but I think their line is very much capitulating to status quo rather than figuring out how to safeguard the league and players for the next X years.
As Ben mentions the level of detail in a status quo proposal of course is much higher than a proposal / de facto past-due reckoning to change the game.
I say past-due reckoning because I think MLB is very fortunate to be so successful despite tremendous imbalance between teams.
I’d sooner bet on: the logic that a greater share of 30 teams meaningfully competing for the playoffs each year is better short and long term for league and teams and players all.
I would NOT bet on: league success thus far as proof that the status quo is a strong bet for continued success.
I say past-due reckoning because I think MLB is very fortunate to be so successful despite tremendous imbalance between teams.
Is that true, strictly speaking? There’s plenty of examples of sports leagues with tremendous imbalance that are still quite popular. College football and European soccer leagues come to mind immediately.
I’ve got to talk to a fan of some consistent mid- to lower-table EPL team some time, because as someone who grew up an NFL fan and became a baseball fan a little while later, that experience seems completely alien to me.
Like, what do you mean, you’ve known your whole life that it’s extraordinarily unlikely that your team will ever win the league (unless it’s bought out by a sovereign wealth fund) so you simply take joy in avoiding relegation and occasionally pulling off a win against one of the big clubs?
There are not 162 games in the Premier League, for one thing. You can sustain some malaise across 19 home games. Not 81.
Yes. While everyone dreams of becoming the next Leicester, supporters of mid-table clubs much less relegation contenders realize that is wildly unrealistic. European clubs are very much about the community and the experience of attending matches. Most clubs will go decades without a trophy.
To be honest, some of my favorite moments being an Orioles fan were the tanking seasons when we pulled off an unexpected win against the Yankees or Red Sox. Hearing British schoolchildren on a field trip chanting Antony Santander’s name because Santander is a major bank in Europe had a magic that few things can top.
I want the O’s to win, and I get frustrated when things go badly, but I never want my fandom to be dictated by winning. I want to enjoy the experience and support the team regardless of the result.
How dare you describe your lived experience to a 2026 joiner who was operating in SUCH good faith?
You probably blame Jeffrey Loria for Montreal and Miami!!!
If you’d like to talk to a Browns fan, I can accommodate.
You’re right. Its not strictly speaking true…your comment’s illuminating my biases (aka, a preference that a league of 30 teams has 30 teams that are trying, and an idealistic belief being that 30 trying teams will yield more lifelong fans of the game). IMO a tightband between cap and floor seems the best way to get there.
Breaking the cartel via relegation seems far more likely to alter their behavior than acceding to all of their lies.
Would be likely to alter behavior, but with no realistic chance to be implemented. Nothing wrong with thinking about radically redesigning the system, but that’s not on the table in current collective bargaining.
Prepare to be sued by FSG.
It has been a long, long time since I was involved with a CBA negotiation so if someone could fill in the details I would appreciate it, but my understanding is that as of now the salary cap is a permissive subject, and if they start engaging with it then it might not stay that way.
i believe that even if they do engage, a permissive subject cannot result in an impasse in bargaining. at least that’s how it’s gone in my experience with teamsters. not sure it’s apples-to-apples.
In any case there are a lot of reasons to think that competitive balance is an issue, but I think the MLBPA proposal actually does a pretty good job of dealing with that.
The other big threat to the game is the fact that owners whole business plan was to hold consumers hostage via cable packages, and that is no longer viable. The owners haven’t seriously considered competing for fans with other leagues for years, and it shows. They should be promoting baseball–not just their product–like crazy to every community with kids in the USA. And every single MLB game should be close to a sellout because most kids who go to a games regularly becomes an adult who is a fan of the game. There’s an entire generation of kids who are now young adults who didn’t go to baseball games as a kid because they were too expensive. Things are going to really fall off a cliff for them if they don’t figure out how to convert more kids into being baseball fans.
This is a good point. I’m an upper middle class dude with kids and even I hate paying $12 for a beer. Taking my family of four to a game ends up being a $200 experience, minimum. If it was cheaper I would go to more ball games.
It’s not entirely baseball’s fault, though, for the lack of kid baseball fans. Kids just spend less time outdoors now. There is a lot more competition in the kid activity space.
I really think that it should be possible to get a family of four into the ballpark with actual seats in a semi-normal part of the stadium for $120, and $150 with food and soda. Minimum of four tickets, and two of the tickets have to be used on people under 16. Maybe under 14? They don’t have to be great seats.They just have to be seats with a back where you can see the game.
Honestly it probably should be $100 and $125 but everything is so much more expensive now I don’t think that is realistic. I also make pretty good money and it is just shocking how much it costs to get four people to the park, let alone get them hot dogs and lemonade.
I live in NYC, life long Mets fan, but I take my son to more Cyclones games because we can’t afford MLB. If the owners want to present a salary cap for the players, how about capping their own income with a ticket & concessions price cap?
Jack Welch disagrees – and you can trust his judgment based on how much money he ransacked from the dying husk of GE!
At least the chucklefucks gutted the minors, and don’t think they’ve gone far enough?
Things are going to really fall off a cliff for them if they don’t figure out how to convert more kids into being baseball fans.
I hear this frequently, and have for a couple of decades now. But I’m not sure how true it is.
Baseball continues to break revenue records, and there’s just not much competition for professional sports eyeballs and dollars in the summer.
Time will tell of course, but I think that given the population of the US there will be plenty of fans out there that will be more than happy to support a winner.
I guess the piece of MLBPA’s proposal I’m wary of, which also predisposes me to a high hard-cap floor, is: “A “competitive integrity tax” set at half the CBT threshold would withhold revenue sharing from teams that don’t meet a minimum payroll.”
I just dont think thats strong enough. Maybe that’s a better mechanism than a hard flat fee floor. But its still a wide band.
That doesn’t address your points about ballpark costs….and by extension, lifelong fans by way of television vs. park….but thats a much larger discussion!
The fact that the owners’ plan includes a pooling of all TV revenue indicates that they recognize that the salad days of RSN rights packages are coming to an end.
As to general affordability … all of the major sports are grossly expensive to attend in person. In as much as MLB ownership might want to position themselves as more attractive than other sports, they’re unlikely so slash tickets/merch/concession costs so drastically below that of the other sports.
I once mentioned to a MLB executive that my wife, who has no interest in sports, knows what sport Babe Ruth played; she knows what sport Micky Mantle played; she knows what sport Magic Johnson and Michael Jordan played; however, she has no idea what sport Mike Trout plays. He admitted that Baseball had a problem with promoting its stars but didn’t explain why.
This may be less of an issue with Shohei Ohtani and (to a much lesser extent) Aaron Judge now but I am pretty sure they are the only ones who are recognizable to non-MLB followers. Pedro, Ichiro, Randy Johnson, Greg Maddux, Albert Pujols, Miguel Cabrera, Mariano Rivera…I don’t think they have any idea who they are. I don’t even know if non-fans know who Derek Jeter is, and he was in TV ads and such.
My wife knows Ohtani. That’s it.
You’re assuming quite a lot of functional business ability on behalf of a collection of weird losers whose daddies gave them a baseball team because they had better shit to do than parent.
I am assuming they can *hire* people who are functional business people but I am also assuming they will not.
What defines “meaningfully competing for the playoffs”? Would you have considered the White Sox as “meaningfully competing for the playoffs” before the season? How about the Nationals? The Rays? Because I’d say all three of those teams are “meaningfully competing for the playoffs” as of the 1/3 mark of the season.
In the expanded playoff era, “meaningfully competing for the playoffs” is already quite a large share of the league. It’s never going to be 100% in any given season (if it is, you’ve likely expanded the playoffs too far), but what is the right percentage?
MLB existed for many, many years where the percent of teams “meaningfully competing for the playoffs” was a much, much lower % than it is now.
Thats fair but I suppose I’d still call it early. A heuristic for meaningfully competing might be buying vs standing pat vs selling at deadline. For example until the Nats went over .500 plenty of outlets thought the Nats would flip Griffin at deadline.
It will never be 100% but I think what ppl find grating is teams that very obviously do not and will not try. And floors at least penalize non-competing.
There are two sources of profitability for MLB franschises. 1. Yearly profit (revenues less expenses, which is sometimes, for some teams, negative). 2. Increase in the value of franchises, which is not a small amount — Cohen bought the Mets for $2.4 billion six years ago and they are now estimated to be worth $3.5 billion (which seems a little low considering the Padres’ sale price),. The players get zero benefit from 2, and the owners are proposing that they share revenues 50-50, which almost assures annual profitabilty for the owners. I don’t know about you, but I don’t go to the ballpark or turn on the tube to watch the owners. It has hard to quantify what value, if any, they add (and in a number of teams they clearly detract from value). If competitive balance needs to be fixed, MLB should not be asking the players to pay for it. It’s the owners who have set up the system, the owners who are reaping the profits of increasing franchise value and the owners who will benefit most if greater balance improves the fortunes of the sport.
This to me is the main point and the one thing owners could do to get players to bargain on revenue sharing and a salary cap. If revenue was defined broadly enough so that every time an owner sold or a team, half the appreciation in the value of the team went into salaries (divided over the next five or ten years), you might convince the players that a partnership model works better than the current system. As it is, you have owners pretending literally trying to con the players into letting them keep their main source of profits while claiming to be partners.
The enticement to the owners is “we won’t look to closely at the books.” If you are going to have a true revenue share system, which is the basis of all other leagues with caps, the owners have to open their books and this they have been unwilling to do.
The owners have opened their books to the MLBPA for many years, the MLBPA is just not allowed to publish what they see in them.
And THIS is why I believe the 2027 season is in grave danger. There has been (as far as I can tell) no “Come to Jesus” with ownership about opening books. The NFL did that, but Manfred is just a lackey/water carrier.
More importantly, he’s fucking BAD AT IT.
Far too focused on winning every interaction than understanding what his clients want, why they want it, and how to get them as much of it as possible.
How does a salary floor entice players when total spending on payroll won’t increase? Why should the union prioritize the tiny minority of talented players who play in small markets at the expense of the rest of the players?
Is that a tiny minority? It seems to me that the actual tiny minority is “players who hit free agency and are offered contracts by large-market teams that small-market teams would be unwise to match” (I think Edwin Diaz is a good example here, since certainly every team ‘could afford’ to pay a player $25 million a year, but it would be disastrous for most of them to allocate so much money to a relatively low-impact, high-variability spot) and that the majority of players would be more greatly affected by increases in league minimum salaries or reforms to the arbitration process.
If you’re narrowing it down to
then yes, that is absolutely a tiny minority. Plenty of those players sign extensions and do stick around those places: Witt, Maikel Garcia, Salvy, Buxton, Jose Ramirez, Brent Rooker, Lawrence Butler, just to name a few.
The floor offered by the league doesn’t mention anything about increases to minimum salaries or arb numbers. Until they say otherwise, there’s no reason to believe a floor would include them. Seems to me that teams currently under the floor would be slightly more likely to offer extensions to pre-arb players, but would largely operate the same as they do now, save for filling out the margins with 1-2 year free agent deals for veterans to meet the floor. At that level, I think the floor is much more likely to get Lucas Giolito, Luis Severino, & Chris Bassitt paid than Elly de La Cruz or Steven Kwan
A cap-and-floor is redistributive, and the “players” are not a monolith. Practically, a cap would push down the salaries of the top top players (can’t spend $50M-$60M on Soto or Tucker when the cap is $245M) and raise it for everyone else. That’s an incentive for the majority of players (and a redistribution that most people would support philosophically, I imagine) even if it’s a strong disincentivize for a small-but-vocal group of the union.
The league’s proposal does not specify how this would raise the salaries of the majority of players. Without specifying guaranteed increases to minimum salaries and arbitration, what is enforcing this redistribution?
The league’s proposal doesn’t get into the details of how the players would divide up their pie because it is the owners’ interest for the superstar players and the ham-and-eggers to be at odds with each other.
If most (or all) of the TV money is thrown into a pot and shared back out proportionally to every team, then the threat of withholding it is the easiest mechanism by which to enforce any sort of spending rule.
I’m sure the owners would love to include max contract amounts and length, but no point crafting a detailed proposal if it won’t be considered at all.
Show your work, lad.
A salary cap and floor always comes with an increase in total spending. Part of the CBA will be requiring that a certain percentage of league revenue (not profit) be given to the players.
jd, some folks don’t like facts…
While I’ll certainly agree that the number of player with such preferences is not zero, I’d be very surprised if net-net the players felt a positive intangible pull towards Kansas City and Cleveland over the cultural deserts of LA and NY.
You have to remember that Fangraphs <-> MLBPA. Fangraphs does not do analysis on the CBA, they rationalize for the union leadership.
The reality is the players did not make a proposal. They submitted a wishlist to Papa Manfred, and asked him if they could take the car out on Friday night. It’s the weakest proposal I’ve ever seen the MLBPA make.
MLB’s proposal increases the salary floor beyond what the players asked for, and does it in a way that not only guarantees greater player compensation overall but spreads it out to more players. For Ben to claim that this includes no enticement for the players is frankly misleading his readers; at minimum it would negatively affect a small, small minority of stars (and even them only a small amount).
This has long been Fangraphs’ approach to CBA, along with the MLBPA’s: they miss the forest for the trees, then yell at clouds. The echo chamber leads to MLBPA continuing to get their ass handed to them in each round of negotiations, and that will happen even worse this time. MLB is about to sign broadcast deals worth potentially $100 billion, yes that is with a ‘b’. As of now the PA is entitled to none of that, and they’re quibbling over arbitration processes that are designed specifically to *limit* their value? Because, like, tradition?
The world has changed. The old economic model is no longer viable. I suspect the only thing the owners will offer under the current economic model is: this, an extension of the current deal. Exactly what we have now, no alterations. No increases to minimums, no additional contributions to bonus pools, no increases for inflation.
Why? Because the MLBPA has been led by a soon-to-be felon, who has been claiming the owners negotiate in bad faith when he was the one doing it, in order to enrich himself and his friends. There is no reason to offer concessions to an organization set up like a mafia organization.
The MLBPA is out to have a civil war, the owners know it, and they are willing to wait it out. The players have nothing to offer them under the existing economic model.
LMAO
This criticism of FG and the MLBPA having standpoints that are too similar was definitely true when Craig was writing the updates. But then he literally went to go work for the MLBPA because of that alignment. This is nothing like that.
Without making any reference to your comments about my impartiality, let me just get this straight:
-The owners are about to have an incredible, life-altering windfall of money hit them
-Instead of just doing nothing, agreeing to demands that aren’t a big deal compared to the scope of money you’re talking about, and pocketing that hilarious geyser of money, they’ve decided to risk blowing up their sport to enrich the players, at the expense of their own future profits
-They’re doing this out of, I suppose, the goodness of their hearts?
There’s an easy test of this. If the owners are interested in continuing the old way, all they have to do is not lock the players out when this CBA expires. It has a provision that if no new CBA is signed, the old one remains in force. If what you’re saying is true, there won’t be a lockout, because the owners would obviously love to continue under the old deal and with this huge life-altering amount of TV money just around the corner. We’ll see!
This is an interesting viewpoint. I have seen this negotiation as the owners wanting to radically change things and the players mostly wanting to keep the status quo. In that context, I question why the players would propose anything at all; then the owners come across as being more demanding because they are the ones really trying to shake things up and usually in union negotiations, the shoe is on the other foot. I think the players would like certain changes, but if they got offered to extend the current deal with no changes, they’d probably take it. Would that be a terrible outcome for them? For baseball overall?
lolol
He makes the 2026 joiner look smart, equivocal, and dispassionate!
I’m genuinely sorry that, despite your best efforts, you didn’t suffocate on the billionaires’ boot.
The tragedy of your survival has forced so many people to read this post…and all of us are dumber for it.
Yeah I thinking “there’s no enticement” is if you’re looking at the total compensation of players across the league not changing, but I agree that the way in which you reach that total matters. The big losers here are the guys looking for mega contracts, because teams intending to just sneak over the salary floor will not be handing those out, and the teams butting up against the salary ceiling (I don’t know why we have a floor and a cap and not a floor and a ceiling!) can only give so many.
But the winners are baseball’s middle class. Suddenly they have a lot more teams bidding for them, because they have to hit that salary floor. I think this system would move from “the rest of the league picks through the bin of players the Dodgers, Mets and Yankees passed on” to “The Dodgers, Mets and Yankees hand out the whopper contracts, suddenly the entire league is bidding on everyone else”. The total amount of money in the system stays the same but the bell curve gets flattened.
What baffles me about the MLBPA proposal is what good they think the changes to revenue sharing will do, if we already have a problem with teams just pocketing that $$. If you’re going to increase revenue sharing, it has to be paired with a hard floor, not just with an implicit floor created by raising the minimum salary.
The MLBPA’s proposal has a tax on teams who don’t spend.
Did you read it?
I’m amused that the top comment on a contentious topic like this has 0 likes/dislikes a day later.
Obviously the revenue sharing/cap/floor will be the major issue, but I like MLBPA’s expansion of the promotion incentives. From this fan’s perspective, the promotion incentives in the last CBA were a big win.
Yes it’s been a huge improvement where teams are much more willing to break camp or do early call ups rather than do service time manipulation which was a plague. One thought is that they could also give teams a small increase in their draft bonus pools if they had rookies play enough to exhaust their rookie eligibility. Not sure what the impact would be but it would be a small incentive and give newly drafted players a small increase.
As simply a fan who is agnostic toward where my dollar spent at the stadium or on my TV package ends up, I am a lot more interested in seeing a cap and floor (hopefully higher than is proposed) system that forces the Pirates and Marlins of the world to actually participate in acquiring veteran talent in a meaningful way. But it feels incredibly unlikely the MLBPA will soften their stance on a cap unless that cap/floor is at a level the owners will never agree to. I am actually surprised the initial figure on the floor was as high as it is. just because that’s how low my expectations are for some of the owners in this scenario.
I will also disagree with Ben’s stance on arbitration. I understand unwinding that system would be a huge task, but it was antiquated 20 years ago. I would love to see an escalating scale of minimum salary based on service time, then restricted free agency after 4 or 5 years like we see in other sports. I doubt that radical of a change happens though as well.
I don’t think leveling the payrolls will prevent having 5 perpetually god-awful teams. The floor isn’t gonna stop the Rockies and A’s from cutting corners in non-player parts of the club. The Angels aren’t gonna magically get good at drafting nor will they necessarily acquire the right free agents.
I often disagree with your articles, but there is no denying that you do an amazing amount of in-depth research. Great and informative read!
As a fan, the MLBPA proposal is almost exactly what I would like to see. The last time they did a big CBA negotiation I thought their ideas were simply bad. IIRC were proposing things like “withhold revenue sharing from teams that are losing,” which is just a bad way of doing things.
But this is great. Massive changes to revenue sharing so that pretty much all teams could spend up to $140M, and a tax below that and above $300M is basically what I think would work. Big increases for pre-arbitration players too.
It’s absolutely aspirational, but it’s also weird that it more or less would actually work? The bottom tax line is a touch too high, but at $140M is probably closer to the right level with this sort of revenue sharing proposal, and they could easily get to $150M with the owners’ revenue sharing proposal. This would smooth out a ton of competitive imbalances while preserving flexibility for both players and teams. A team could go over or under the tax lines if they needed to, but that’s easily addressed with incentives to not stay beyond the lines for too long (kind of like how they already are for the above-tax line).
You knock the lower tax line down to $140M, add another bracket to the top of the luxury tax system, and it feels totally workable. It’s too bad the final deal won’t look anything like this.
Players want a floor without a cap, and a massive increase in the minimum salary. Why should MLB agree to this?
Because they wouldn’t have to open their books and show how profitable they actually are.
This line needs to be retired. Union already has access to team financial statements. It’s written into the CBA — you can check it out for yourself, pages 159-160.
There is a debate over what constitutes baseball revenue, as Ben alludes to: the union thinks that the real estate ventures constitute baseball revenue. But framing that as “the books aren’t open because the union can see traditional baseball revenue but not real estate revenue” is disingenuous-to-incorrect.
Good luck with logic around here
The thing is, most real estate ventures directly in proximity to the stadium aren’t like opening up a clothing store, they’re hard to argue as anything but baseball revenue. I’ll focus on the Cubs BC they’ve been the most prolific in the news.
Over the last 15 years, they’ve bought out 11 private businesses that operated on rooftops near the stadium to offer gameday views and made them more focused on being about the baseball experience. What makes them non baseball revenues if they’re explicitly marketed as a gameday viewing experience, the fact that they have rooms for corporate meetings?
They also bought property they turned into a hotel that is EXPLICITLY Cubs themed. Will this be considered “non baseball revenue because less than 100% of people who stay there watch a game at Wrigley”? They also bought land recently to expand their parking lot that is used for gameday parking, does the same logic apply that not everyone who uses it and go to a game?
Lastly, the Cubs bought property to turn into a partnership for a DraftKings sportsbook, that’s obviously baseball revenue. While DK pulled out this year, they’re turning it into a restaurant/bar & sports entertainment venue.
This is just one team but one that gives a good sample of what adjacent property ownership entails, it’s not buying up high rise apartments (although some revenue may come from that), it’s largely revenue that only exists because it is part of the MLB gameday experience.
Yeah this is cruc of any revenue sharing agreement. The MLPA has been really hesitant to file grievances against teams for violating the current CBA because it’s so hard for them to get what they need to prove their case and that’s a much simpler thing than accounting for all baseball revenue across the league. That language needs to be pretty specific but their needs to be a way it’s fully accounted for. So it needs to have both the right to access and the capacity to evaluate it essentially annually there would need to be some form of audit. I’m not sure how you would deal with some of the ways owners can move money off the baseball related revenue balance sheet.
I think considering the sums involved you would need an independent firm that is paid for through the CBA directly to verify baseball related revenue and then allow both the owners and MLPA the ability yo have their own agents review and contest. I don’t expect it to happen but ideally that’s how it could be structured but owners would still have the advantage of having all of their books and deeper pockets.
“because it’s so hard for them to get what they need to prove their case and that’s a much simpler thing than accounting for all baseball revenue across the league”
No, it’s because the owners aren’t actually colluding against the players.
Atlanta’s books are already open and have been for years. This narrative that the owners are secretly hiding massive profits is utter nonsense.
That’s naive. Atlanta is unique in that regard. They have to follow SEC requirements and if they don’t the MLPA is the least of their problems. To make revenue sharing work you would need something that’s similarly tightly regulated.
Oher teams don’t and the owners often say they are losing money. They’ve back off on those claims a bit due to Atlanta. Toronto is part of a publicly traded company but compared to Atlanta it’s significantly harder to tease out the baseball related revenue and expenses and that’s with regulated reporting requirements. All the other teams have close to zero requirements and nothing is standardized.
Take the A’s for example for years they were taking in more money from revenue sharing than they were spending let alone locally generated revenue and they kept saying they were loosing tens of millions of dollars. There has been no incentive for the majority of owners to open their books.
I’ve heard that “floor without a cap” framing from a few places and I have literally no idea what you all are talking about. If the soft floor in the players’ proposal is a “floor”, isn’t the existing luxury tax a “cap”?
In which case, the owners have wanted, and got, a cap without a floor for years and all the players want is fairness.
What am I missing?
Not a soft floor. The MLBA proposal calls for teams that don’t spend at least half of the CBT “base” to proportionally forfeit their revenue sharing. According to Passan’s ESPN article this equates to a hard floor of 150 $MiO.
Existing luxury tax is not a hard cap. High revenue teams just spend more.
That’s what you are missing.
Are you sure that the tax rate suggested is meant to be 100%?
The actual text of the proposal doesn’t seem to be public, but based on the press release I think a “competitive integrity tax” is far more likely to refer to something symmetrical to the existing luxury tax than a complete capture of any payroll shortfall.
Did Passan have sourcing on that claim? It just doesn’t fit well with what I’ve read about it.
(And, in fact, I’m now seeing an article from Passan yesterday where he describes the player proposal as a soft floor. So maybe you just saw an early take that has since been corrected.)
I don’t think they will. That is why I don’t think this is going to happen.
In theory, it’s not a floor any more than the luxury tax is a cap. In practice, the owners don’t have to say “yes” to this and so they probably won’t.
It was a mistake for the players to not negotiate for a tax floor when the luxury tax got put in place, and I don’t think there’s any way back to it.
Players essentially proposed a soft floor to go with the (already-existing) soft cap of the CBT.
It’s actually similar in spirit, but different in kind, from the MLB’s hard floor-hard cap proposal.
If we take both offers as made in reasonably good faith, there seems to be some sneaky agreement about a couple of things: revenue sharing needs to be overhauled, and there needs to be a higher baseline expectation for team payroll.
I’m certain that one reason the Dodgers structured some their recent long-term contracts the way they did was so that they could say to the other owners that they could not share their revenue more than they currently do as then they could not pay those contracts.
Your last line is exactly where I’m at – providing a proposal that will actually help the sport at this point in the negotiations is a deathknell for baseball.
Passan’s article stated that the MLBPA proposal essentially would result in a floor of roughly 150 $MiO/team, similar to the MLBPA proposed floor. So basically both sides want to share TV money, and set a salary floor. MLB wants a cap to go with the floor, the players have made it clear they will not accept a cap. This prompts two questions. One is what is the MLBPA prepared to offer to preclude the cap? The other is the minimum salary increase enough for the “rank and file” player who will never get a big FA payout to decide they are willing to accept a cap?
One of the toughest parts I think for us as fans (at least for me personally) is to stay vigilant not to implicitly accept one side or the other’s framing of the issues. To me, the notion that a floor is only possible without a cap if MLBPA offers something more to “preclude” the cap reflects implicit acceptance of how the owners want the issue framed. I’d offer an alternative framing of the floor: a reality that small market owners must accept if they seek increased revenue sharing from the large market teams. My point is that I really don’t see why discussions about a salary floor must involve a salary cap discussion other than that the owners want the discussion framed that way.
Aren’t you just accepting the MLBPA framing then?
All the other major NA sports have hard floors and caps. I’ve yet to see an actual argument against a hard floor/cap except that the MLBPA wouldn’t accept it. Or that people who want a cap are pro owners, or accept their “framing” whatever that means.
Now the ownership proposal doesn’t make any sense at all. The “it doesn’t add up” part that Ben notes is definitely true. IMO this is probably because the league will opportunistically say whatever they thinks plays best at the time, regardless of what the truth is or what they said before. Maybe they were telling the truth before, maybe they are telling the truth now, but most likely everything they say is totally nonsensical. They don’t open their books so we don’t know.
But even beyond that I have serious questions about how this would work. I think they can only afford four defections before the owners won’t approve it. The Dodgers and Mets definitely wouldn’t want this, and this would be a huge blow to the revenue that the Yankees, Blue Jays, Red Sox, and Cubs get too. I have a really hard time believing that all four of those teams would sign off on a deal that shares all TV revenue, even if the Red Sox and Cubs are ideologically hardline enough that they might go for it anyway. It’s a huge blow to their bottom line.
And then it’s hard to believe that the Rays, A’s, and Marlins would accept any deal that forces them to spend up to $175M or whatever it is. I’m not even sure that pooling 100% would get the Marlins up to the point where they could spend $175M, and there are a lot of other teams that would also struggle to spend at that level. I think the Marlins and A’s would go bankrupt if they were forced to spend up to that amount every year. The fact that those teams are largely responsible for their own predicament by alienating their own fans doesn’t make it easier for those owners to swallow.
I don’t know that they have the votes for their own proposal!
All the owner’s “proposal” says to me is that they are very happy with the current CBA and would like to continue it. As you said, probably half the owners in MLB wouldn’t vote for that proposal, either because they don’t want to spend $170M, or they want to spend more than $250M. It’s not bargaining in good faith.
I think you might be mixed up. The owners specifically are UNHAPPY with the current CBA (presumably because of lagging franchise valuations as compared to the NFL and NBA). If I’m not mistaken, the rules are that if a new CBA isn’t negotiated, baseball would simply continue under the current CBA. That’s why we’re talking about a “lockout” next year, and not a “strike”. The assumption is that the players would be fine to show up for spring training next year under business as usual.
The reason there would be a lockout instead of a strike is because the players make their money in the regular season and the owners make their money in the postseason. So the players would show up, get paid, then strike in August or September. The owners learned that lesson in 1994 and that is why 2021 was a lockout and not a strike.
I think for this specific proposal it’s probably more like 7 owners that wouldn’t vote for it. I’ve got 7 in mind based on how much money they would stand to lose under this proposal and / or their team spending habits: NYM, LAD, TOR, NYY, ATH, TBR, and MIA. Even if I’m wrong about one or two of them, that is three more defections than they can afford. And it’s entirely possible that some other team’s ownership like the Phillies or Pirates might also be against it.
The teams that would be most in favor of this are the MLB’s middle class: The Mariners, Nationals, D-Backs, Rockies, and Tigers. These teams can easily spend up to $175M in normal times, and it’s unlikely they would lose money from this. You also might see small market teams that legitimately want to win support it, like the Royals and Brewers. And then there are the owners who are known hardliners, like the Red Sox, Cubs, D-Backs (again), Angels, and probably Giants and Rangers.
I think they would like to tear down the current CBA and replace it with this, mostly because I think they really want a hard cap.
But I don’t know what happens when the hard cap part doesn’t gain any traction, because I sincerely doubt it will and definitely think it won’t for another calendar year. They want the MLBPA think that they are prepared to lock out the players indefinitely until they get what they want.
And that’s what it would take. They would have to say that there will be no more baseball until there is a hard salary cap. And they would have to make the MLBPA believe that. To send that message it would probably require at least a month of cancelled games and potentially the whole season.
But that would also cost them an enormous amount of money. A comically large amount of money. I think it’s 50/50 on whether we get to a month’s worth of cancelled games. If they’re not prepared to follow through–which would be really tough on them, so I don’t think that’s a given–then they really are going to have to settle for a variant of the current system. So maybe they are fine with it deep down? Or at least okay enough with it that they can’t think of anything better other than a hard cap?
That’s certainly the message of this proposal. We’ll see how the negotiations go, but I think they have to mean it at least a little bit to have their opening offer be this close to an open threat of a lockout.
A biblical amount?
If the owners get a cap every team is worth double on sale and the tv contracts go up by 25% or more. There is far, far too much at stake for the owners to give in right now.
But is every team worth double on sale if a year-long lockout has tanked MLB’s overall brand value and alienated lots of fans? Surely a full-year stoppage would be worse for the business than losing “just” two months of games and the postseason in 1994.
I’m not sure where you’re getting the TV contracts going up 25% or more.
RE: The team valuations doubling–I guess if they want to cash out quickly, or they can ride it out a while until they sell in 20 years. I have some serious doubts whether they want that though.
I think the main story here is that they want a cap because it guarantees that even if they run the sport or the franchise into the ground they’re not going to lose money on player salaries. This is what the owners have always wanted: A guarantee that they will always make money. But the TV deals that did that are mostly gone.
I was also wondering how unified the owners are. Their interests as a group feel much more divergent than that of the players. I would expect MLBPA to come up with some proposals to try to split them.
I don’t know they have to work too hard if this is what they came up with. The only thing they agree on is they want a hard cap at about $300M.
If the cap doesn’t make it in, the rest of MLB’s proposal is unacceptable to 20 out of 30 teams
They are either going to lock out the players for a non-trivial chunk of the 2027 MLB season to try and get a cap…or they’re going to have to keep things roughly the way they are except the numbers change.
The ownership proposal was just generally very light on details.
I suspect the owners just hoped the proposed floor-cap numbers would make headlines. In reality, the nitty gritty of revenue-sharing models, what defines “baseball-related revenue”, and how teams would be expected to become floor-cap compliant, are left very ambiguous.
If we take both offers as made in reasonably good faith, there seems to be some general agreement from both sides about a couple of things: revenue sharing needs to be overhauled, and there needs to be a higher baseline expectation for team payroll.
There are a couple of reasons big-money teams could be onboard with the ownership proposal, which Passan details a bit in his article this morning. The first would be the potential windfall from big-time national TV deals that this new CBA could set the stage for. The second is that fixed costs related to a hard floor-hard cap system make franchises more attractive to buy, thus raising MLB franchise values as a whole.
I think the above couple would be very attractive to all teams except for the Dodgers and Yankees, who pretty much exist in their own stratosphere.
What’s missing from your economic analysis: many big market teams actually want a cap. Evan Drellich of The Athletic has alluded to this at various points, but they would love an excuse to cut spending so they can make more money. That’s not possible given fan expectations. Enter a hard cap, they’re forced to cut payrolls, and therefore they can give up more in revenue sharing because they’re still coming out ahead financially.
Are you so sure the Dodgers and Mets wouldn’t publicly bemoan this but privately rejoice? Guggenheim’s executed their plan perfectly: they’ve built a juggernaut, the franchise valuation has soared, now they get to cash in. And I imagine Uncle Steve’s patience is running out with the lack of ROI on his Mets.
It’s entirely possible that Mets’ ownership is running out of patience. I don’t know the details there.
But the Dodgers have zero incentive to see anything change. They are making so much money, and this would be devastating for them.
I do think that the Yankees are very interested in a cap, but they would lose so much money under this proposal I can’t see it. I think we as fans have difficulties understanding the scale of the Yankees / Dodgers / Red Sox / Cubs money-making machine. But the Red Sox and Cubs owners are hardliners, so I think they could gladly take a hit in exchange for a cap.
It really doesn’t. The cap and floor should be recalculated annually. Owners would love a 7 year deal with no increase in the floor and cap but I also see a major downside for owners. We’ve seen the diamond tv disaster and many deals are up in 2028 a 7 year covers a period when we are not sure what future revenues will look like. I really think the spread between the floor and cap is to narrow and will really impact player movement.
“Doesn’t add up” is a euphemism for “they’re liars.”
I agree with all of this…but do feel compelled to note that Hal Steinbrenner hates baseball even more than he does making money.
A lot of the teams that are below the floor have quite young teams is that right? I’m just curious how much the increases in arbitration pay would move the needle in getting a lot of these underspending teams closer to the floor without having to break their banks on a star player or two. Between the revenue sharing and the improvements in arb salaries, do we think those underspending teams would move meaningfully towards cap compliance?
I really don’t understand how a hard salary floor would work. Partly because I think that there are a couple of teams that just don’t have the money to do it, but also because it would incentivize teams to do weird gaming-the-system stuff with players already under team control. If they’re looking like they are $10M under, they’re going to approach players about restructuring contracts to make the accounting work. And they’re going to keep doing that repeatedly, in ways that make very little sense for the team. (The players wouldn’t mind, they could probably extract some extra money out of it)
I really don’t understand how a hard salary floor would work. Partly because I think that there are a couple of teams that just don’t have the money to do it, but also because it would incentivize teams to do weird gaming-the-system stuff with players already under team control.
Presumably the pooling of all TV revenue would take care of the 1st part.
As for the 2nd, I fear absurd shenanigans and unintended consequences aplenty – I think it would be a disaster.
The easiest way to come up to the floor is to sign a journeyman vet to a one year contract. I imagine that large segments of the MLBPA would be tickled pink at the idea of guys like Miguel Andujar and Aaron Civale kicking around forever, continually signing one year deals for a million or two above the minimum just to goose some team’s salary floor numbers
The NFL might be instructive on your second point. Those contracts are funny money and the headline numbers are basically meaningless because of all the games that go on. Makes things kinda opaque for the type of fan that’s inclined to nerd out about contracts (i.e….you and me).
NFL contracts are usually mostly unguaranteed beyond the 1st year or two, which is the main difference. This is because NFL owners endured a strike decades ago and were willing to play scabs, resulting in eventually winning a big one over the NFLPA. It’s also partially due to NFL careers, for most positions, being much shorter than other sports, so long contracts with long guarantees are rarer. Unless you greatly outperform your contract, most players who sign multiyear FA deals with unguaranteed money are cut before the end of their contracts. The NFLPA obviously wishes this was different, but, well, they’re viewed as the weakest major sports union for a reason.
The other way NFL contracts are funny money with regard to the cap are the signing bonus. The salary cap hit for signing bonuses are spread out among the life of the contract, and NFL teams have taken to tacking on additional “void years” to the end of contracts to spread out the signing bonus cap hit beyond when a player is contracted to play for the team. So if I sign a contract that pays me a salary for 3 years, has 3 void years at the end, and I get a $30M signing bonus, the cap hit for the signing bonus is prorated at $5M over 6 years, not $10M for 3 years. By doing this, you essentially trade future cap space for more current cap space. It should also be noted that, as the money is a signing bonus, it’s paid instantly, which is always better for players, and thus the NFLPA has no qualms with the system. If teams want to pay players more upfront to push cap hits into the future, it’s to the players’ benefit.
The above two aspects of NFL contracts are essentially what make the bread-and-butter of NFL salary cap manipulation relative to stated salary amounts. I don’t really expect either play a big part in any MLB system, although I could be surprised.
Funny thing is about NFL careers, they’re often much longer than the traditional numbers that are reported. What’s shorter maybe is on the more micro level of “effectiveness” that it’s easier to stick around in the NFL. it’s a league with 53 man rosters but only 25 “starters” once we include K/P/LS and most of the time reserve players get (most do appear in games) is a few special teams plays.
There’s more of an on field incentive to give fairly regular starts to a replacement level high paid position player in MLB than a special teamer. Starting roles are much harder to keep in the NFL.
I was reading that an NFL player who makes the opening day 53 man has an average career of 6 seasons, meaning they make it to FA. The median career of an MLBer is less than the years of team control, only 15-20% reach free agency. Just wanted to mention this since this is why imo it’s so important to raise the base salary floor which is something the league avoided discussing
On careers, maybe I should have worded it that “peaks” are shorter for most positons. I think you’re correct in that NFL rosters are big enough that, if guys want to, they can hang around and be backups/play special teams if they have proven capable in the past.
I think options and the minors also play a part in career length, as well as the 26-man vs. 40-man roster distinction.
The NFL has no development league, and if you’re trying to sneak a player onto your practice squad, you risk losing them to another team. So sometimes developmental players hang around for a very long time on NFL rosters with barely any playing time. Many rookies drafted after the first 3 rounds barely play their first year while making NFL salaries.
With options and the minors, this simply doesn’t happen in the MLB. There are a lot of guys out there who are 40-man worthy, but not opening day 26-man worthy, or who maybe aren’t even 40-man worthy yet but need to protected from the Rule 5 draft to let them develop. These guys would be riding the pine and collecting paychecks as depth in the NFL, but they don’t in MLB outside of injury callups and the like.
NHL is more instructive as they have a hard cap/floor rather than the non-guaranteed void year funny business going on with the NFL
What happens is the top markets just dump the back end of bad deals on teams trying to get to the floor. When they had a cap freeze, they had to pay in draft capital to do this. Now they’ll take guys for more or less free to add a vet to a young rebuilding squad
Easy. If the floor is $150m and you’ve only spent $130m, then you put $20m in a pot that is distributed amongst the players on your roster in whatever manner you come up with. Either everyone gets an equal share of the $20m or they get proportional shares based on service time or something.
With the (in theory) agreements on leaguewide revenue sharing, this would generate the revenue to ensure most or all of the teams under both current floors would be able to meet it and maintain profitability. The real issue why the league’s proposal feels flimsy is they don’t have any details on player salaries making it near impossible for some teams to meet that mark quick enough.
It’s a real issue. Increasing minimum salaries helps close the gap somewhat but it’s still a problem. Will a team have to sign some random player to a 1 year 20m deal just to make the floor and block a young player? I think the players would be happy with the proposed floor but we will need to see what the details are. It doesn’t make sense for a team that is rebuilding ideally what would happen is that then the players on a team that is under would get a prorated bonus at the end of the season to make up any gap.
An important win the MLBPA could secure through their proposal would be a publicly known number of how much each team receives via revenue sharing. Having that would allow every sports writer to debunk teams’ future claims of being financially restrained due to being in a small market.
That schematic is out there from time to time. Its not earth-shattering info. Exactly what you’d expect
Yeah I thought this was available to mlbpa. Because it’s cited as a basis for the grievance against the As? Or I thought I read that.
I think the best solution moving forward is an NBA style soft cap that provides exemptions or discounts for signing your own players. Thus the Tigers could sign Skrubal to a long term deal, but have it count less for the cap. Any cap and floor system is predicated on the owners actually opening their books to show revenue and expenses as happens in other leagues. Until owners do that, which for whatever reason, they won’t, they won’t get a cap. Other factors that might entice players to take a cap are shortening the time to free agency, raising minimum salary, etc.
As a fan, I’m less concerned about year-to-year competitive balance and more interested in seeing teams being able to keep homegrown stars.
As I’ve debated this with friends, I learned that a) by using top ten cities by population and top ten media markets half the teams in the MLB are “large market teams” including Tampa Bay. If Tampa Bay is in a top ten media market, why are they considered a small market team? Did they sign the world’s worst tv deal on a lifetime contract? Oakland was a large market team having been in a top 10 media market (although perhaps they didn’t have access to San Jose televisions because of Giants complications?). St. Louis has certainly spent like a big market team (ie: top 15 in payroll) in the past, even though they aren’t in either top 10. Ditto Detroit, Baltimore, and Seattle. They Angels have consistently run a top 10 payroll to no avail.
TL;DR without owners actually opening their books, the players have no incentive to enter into a floor/cap model because they have no way of knowing if they are getting a decent deal or not.
So I see where the owners are trying to “incentivize” the players accepting a cap. The tell is in this line from the MLB.com article on the MLB proposal:
First off, if that’s what MLB is willing to admit, you have to imagine the actual disparity is higher. I don’t trust any self-reporting of revenue from the league, while player payroll is (mostly) public information.
The bargaining angle does seem to be “See how bad we’ve been screwing you over? If you give us what we want, we promise not to screw you over as much.”
That having been said, I was actually kind of shook by the initial proposed floor figure from the league — more than double of Miami’s and Tampa’s current expected payrolls. It does create some questions for me about why they can’t spend at those levels (or even close to them) now, but I digress.
Also, I’m very in favor of increasing the pre-arb bonus pool. I’d argue that’s about as effective a structure as we’ve seen in helping “subsidize” certain teams while also getting more deserved money to the pre-arb players that provide a lot of value to the game.
But overall, you’re right to parse these as somewhere between mission statements and wish lists.
Comparing league revenues to player payroll is fairly disingenuous. Businesses have expenses (costs) and revenues. Looking at the percentage of all revenues and comparing it to player salaries doesn’t give the whole picture.
MLB expenses by category:
Player salaries: 35-50%
Coaching/front office/scouting: 5-10%
Minor league/player development: 5-10%
Stadium ops/staff: 10-20%
Travel/marketing/admin: 5-15%
Debt service/revenue sharing/luxury tax: varies widely
Revenues may be up 247% and player salaries 149% (assuming those numbers are accurate) but that doesn’t necessarily mean owners are pocketing the money, it could also mean they are spending more on front offices, scouting, player development: all things that the Moneyball era has made common sense in the last 10-5 years. I would also argue that marketing, travel, admin, debt service, luxury taxes have also likely grown quite rapidly.
The Padres just sold for $4 billion. If you’re going to consider operating costs, you need to consider equity as well. It would be disingenuous not to!
Honestly, the owners have shown the players so much bad faith over the years, I simply cannot imagine agreeing to a cap structure even if the details were deemed fair.
Maybe if the owners ceded all control over the clubs to MLBPA appointed trustees, and then just received a dividend for their cut of the money. But obviously owners don’t want that.
I hope the owners don’t force a lost season, but I’m worried that’s where this is headed.
A whole season is unthinkable, but IMO losing games next year is almost inevitable. How are the two sides going to budge off the fundamental issue of cap versus no cap without some real pain?
It’s been long enough that the players might no longer remember the 1980s collusion cases. But in general I agree with you. The players were mostly around during the shortened COVID season, and those talks were not smooth at all. The last CBA was also not especially harmonious. And IIRC there are good bargaining reasons for not being even willing to discuss a cap, due to what counts as a mandatory vs permissive subject. I think that a cap is basically a non-starter and the only way to get one is to lock the players out until they submit. And I’m not looking forward to that.
If you owned a business, would you turn it over to your employees for nothing?
It’s only because capital is self-organizing that the inertial structure for most economic activity is capital hiring labor. Everything works just as well if labor hires capital.
But, to your specific point, a lot of capital is perfectly happy to take passive income without any share of operational control. If the owners believe their asset would be most valuable with a hard cap and if labor-appointed control is the cost the union demanded for that, I don’t think there’s any good economic reason for the owners to refuse.
I do think on a human emotional level, these guys like running teams because they get to experience feelings of control and ownership that they would not get if they just received quarterly checks. It’s quite exhilarating to be in charge of something, and that’s very separate from simply being rich.
There’s also a possible financial explanation – which is that they are depending on their operational control to preference their interests over other stakeholders. Which is to say, that they are cheating or intend to cheat in order to seize a larger portion of the revenue than agreed. This may well be true, but it’s a very bad reason for us to support their continued control of the sport.
I absolutely would! Next question.
CBA discussions are the worst. Fans of small market teams direct their anger towards fans of large market teams instead of their cheap owners. This discussion really comes down to this: do you support the product (players) getting paid, or owners who do basically nothing and try to make as much money as possible?
There are industries where I’m at least a little sympathetic to capital claiming that it’s taking on risk and helping to create value, but sports ownership is pretty far down the spectrum towards complete rent seeking.
I wouldn’t even object to the league being forcibly nationalized and run by trustees as a public good. Players would make way less money in that case, but tickets would also be $20.
MLB owners are mostly rent-seekers and have no idea what to do now that cable isn’t reliably generating money from a captive set of customers. I think many of them have pivoted to being literal landlords extracting literal rent now.
If I thought the owners would actually try to grow the sport’s appeal I would be partly sympathetic, but I have seen very little evidence of that.
doesn’t really seem fair to say fans of small-market teams are directing their anger towards large market teams INSTEAD of at their teams’ owners. Roughly 25 fanbases are constantly excoriating their team’s owner for not spending more. Hell, I see Yankees fans complain that Steinbrenner The Elder would’ve never countenanced such low payrolls!
If you’re a fan who wants your small-market team to spend something more closely approximating what the large-market teams spend, which seems more likely? (1) Castellini or Nutting or so on saying, “Wow, I see these angry fans so I’m going to raise our payroll” or (2) some change to the league’s financial setup?
Well, yes, the Yankees owner is objectively cheap. They’ve cut payroll to get under luxury tax thresholds after highly competitive seasons, not addressed obvious needs, etc. They can spend a lot of money but also be cheap. Both of those things are not mutually exclusive. Well they can just not support the team, right? Make your statement with your wallet. And changing the league’s financial setup drastically is to the detriment of the sport overall. Same with cutting out minor league levels under the guise of better conditions for MiLB players. There may be a middle ground to be met for a cap, but the owners would never agree to anything fair.
I’m in local groups with Guards fans and so many people saying they’re on the owner’s side bc they’re tired of struggling in the playoffs and losing to big market teams. When there’s no discussions about league structure, yeah these fans show more discontent at their own ownership, but still harbor a lot for big teams.
However, lots of small market team fans seem to want a cap and be on the owner’s side IF it will hamper teams like the Yankees and Dodgers
Those greedy business owners. Imagine – trying to make money!
*clutches pearls*
See, the precise issue is that they’re not “trying to make money.”
They’re trying to increase the percentage of the money they extract.
People actually familiar with how business works talk about a concept called “growing the pie.”
A great example?
The Dodgers and Padres.
The Brewers and Cardinals (at least the Cardinals of years past) have been really good at that. The Cardinals historically made a ton of money by developing a loyal fan base. The St Louis metro area is the 23rd largest metro area in the US (and about 23rd in market size too, due to LA / Chicago / NY having two teams). They’re about 2M people below Denver and 4M above Pittsburgh. And they’re typically 12-15th in revenue.
The Brewers are an even more extreme example, because they have historically had the worst TV deal in MLB due to them being in the smallest market (by quite a lot). But their attendance is typically in that 12th-15th range. They are outdrawing the Nationals, Rangers, White Sox, and D-Backs. Those metro areas are far larger than MIL and this is not an unusual difference from past years either. This year they are outdrawing the Twins and Athletics put together!
I was babysitting for some friends last night. This is a family of Pirates fans, so a good portion of the night was me sitting and watching the Cubs-Pirates game with their 10-year-old son, who is a baseball junkie.
But even at 10-years-old in the midst of his rabid Pirates fandom, this kid made several comments about how Skenes won’t even be on the team in several years. It just made me sad to see this type of cynicism in such a young fan.
I think this gets at something perhaps a bit deeper than just competitive balance. There is a lack of trust from small-market fans in the MLB system that is so deeply ingrained it bleeds into 10-year-old kids.
Well they would also get 6 years of cheap Paul Skenes because they were so bad that teams like the Yankees and Dodgers never get access to. So there is give and take there. His new team would have to pay him appropriately and pay for any decline years too. But also even the Pirates can afford to pay Skenes. They aren’t broke. I mean they agreed to a 150M floor or whatever that last proposal said.
as Jon Becker pointed out on Twitter, the fact that these owners agreed to a floor well above what many of them currently spend isn’t really a gotcha, since their proposal also includes the total redistribution of all local TV revenue, which would give Pittsburgh significantly more money to spend in the first place.
Sure, but they also had a 100M payroll 10 years ago. You’re telling me that they can’t afford a 50M bump in payroll in 10 years? 100M went a lot further in 2016. I find that hard to believe. Especially after keeping low payrolls for several years. They already are getting significant revenue sharing money.
I wasn’t really adjudicating whether the Pirates can or can’t pay Skenes, or whether they should or shouldn’t.
It was more an observation that there is a flat belief by fans that, in the current system, it’s fait accompli that Skenes won’t be retained by the Pirates past his team control, and that there is a nihilism that this belief creates in fans.
That’s fair, but that’s just where we’re at. Stars have and always will gravitate towards bigger markets even in leagues with salary caps such as the NBA and NFL. Why live in Milwaukee when you can live in Miami and also make more money in endorsements? But you should tell that kid that the system rewards losing and that they have his rights for 6 years for a fraction of what he’s worth on the open market. If he’s going to complain, he should have the full picture lol.
but thanks to a salary cap, these effects are significantly diminished in the NFL! sure, Buffalo and Green Bay are at a disadvantage for free agents but both franchises semi-regularly sign big name guys and it’s not seen as an inevitability that every big name guy will be drawn to Chicago, LA, or NY.
The MLBPA has turned the salary cap into a golden calf. Instead of fighting the cap/floor, use it to extract % of revenue guarantees, better service time, and pre-arb/arb pay from the owners.
Won’t / shouldn’t the players counter any system with a cap to a system that ties franchise valuation to the revenue share going towards players? It seems clear owners want a system that increases the value of the organizations. Any time an organization is sold (or what ever form of valuation is done for stadium building, securing loans, etc.) should be factored in and reset earnings accordingly.
The starting point for anyone approaching the negotiations needs to be addressing the long-standing loathing of the players by the owners. They hate the people who make them money.
Teams spent roughly 6.5B in payroll + luxury tax last season. That’s about 217M per team. This new salary structure would not equate to that number. Additionally, it should increase every year, and by the time we get to 2027 it’ll likely be closer to 7B. A more equitable number for cap and floor would be 300M/200M, which of course the owners would never agree to because it isn’t about leveling the field between the Dodgers/Mets and everyone else, but it’s about suppressing salaries, like it always has been.
Dude, if you hate the owners so much, why don’t you vote with your feet and move on to a different sport? You as the consumer have all the power here, do you understand that?
^ found the commenter whose dad owns a team.
Or maybe just a guy who’s convinced he’ll join the ranks of the wealthy someday and just carries water for them in the meantime.
Unless you’re suggesting people who are this critical all become Packers fans, ALL major US sports have billionaire owners.
Do you actually not realize this or are you playing dumb when you suggest people move to a different sport?
Ive not got a ton of sympathy for the owners here. They can fix imbalances simply by adjusting existing revenue sharing
There is a de facto cap already, why not just make penalties more severe without calling it a real cap? Then add a floor (lower than proposed) and create a broad cap and floor model that can be squeezed furthur in future iterations
I don’t like the top end guys being throttled on how much they can earn. These are the guys fans pay to see. They deserve whatever they can get
It will all work out – but it will take time
Love the idea of a hard cap and floor.
Smaller media markets compete in the NFL because all of a sudden it’s about the team, not the budget your market can afford.
That’s more because the only thing that matters there is the QB position and every now and then they get Josh Allen or Joe Burrow
You’re selling a myth.
And a cap works great in the NHL as well…
Without knowing how baseball revenue is defined or what the tools are to ensure it’s actually captured as such its really vulnerable to manipulation.
I think the owners band is too narrow it’s $79m so the cost of two free agents or one FA and Skubal arb award. I’m not sure how to make it work from a completive cycle aspect. I get that these are opening positions but only having that much space will really hinder player movement. It would be better to have the proposed max as the start of a tax line then have a higher fixed cap. With this limited wiggle room I think many mid level players are going to be further squeezed they will see primarily 1 year deals and at a lower amount unless a team is below the minimum. We definitely would see more salary dumps where big market teams will flip expensive vets to teams that are below the minimum line just so they can sign or acquire a different player.
I support pay for early career players, but how would they be handled in terms of salary calculations particularly for mid season call ups or players that make the team out of spring training? Or minimum contract vets that flat from team to team throughout the season. If it was just a 40 man roster and injuries didn’t exist you could say each roster spot counts at $1.5m and salary for empty roster slots go into a pool for later distribution to players at the end of the season. Injuries happen so it would need to be something a little more complicated than that but I don’t want to see players being blocked from promotion because a team is close to the Cap.
I hate basketball’s system because it’s just stupidly complicated but the idea of Bird rights is worth considering what happens if you have a homegrown star but you don’t have enough room to sign him do you try to dump contracts or not extend offers to arb eligible players just to resign him and then kneecap your team’s competitiveness? Yes that could still be manipulated as we’ve seen in basketball and that s a reason why basketball’s system is so complicated is to deal with cap manipulation. We’ve repeatedly seen teams getting creative on structuring contracts to minimize cap exposer.
It’s likely we would see salary dumps return where teams could tank and take bad contracts for prospects and hope to have a higher draft position. Baseball is a little different in terms of the value of the draft position compared to the major sports but it’s still valuable.
The current structure and rules give every advantage to small market teams. The best players in the sport generally make the minimum or close to the minimum. With decent talent evaluation, anyone can compete with anyone because of the 25-man, 40-man and minor league roster limits. The worst teams are given the highest picks in every round of the draft. The small-market teams are literally given cash payouts by the large market teams.
Hearing otherwise is driving me crazy. With the exception of Soto, pretty much every free agent over recent years has been a player in decline, with mostly disastrous results for the teams “spending to win”. The only way to win in the current structure, no matter what your finances, is to identify talented players under 29 years old, none of whom make any serious money.
I don’t think you can say that small market teams have every advantage when they clearly are at a revenue and cashflow disadvantage. The big market teams get the same cost control for young guys, and then can spend on top of that.
I also think your last statement of “The only way to win in the current structure, no matter what your finances, is to identify talented players under 29 years old, none of whom make any serious money” is too strong of a statement and extremely easy to disprove just looking at current teams. There is at least one team who has an enormous revenue advantage and is leveraging it to prop up a winner.
The Dodgers currently only have 3 members of their starting lineup on entry-level pre-FA contracts: Andy Pages, Alex Call, and Alex Freeeland. Andy Pages is the only one who fits the bill of “star under 29 on entry-level contract.” The meat of the lineup is nearly all guys on big-money second contracts. In terms of starting pitching on entry level deals, they have Emmett Sheehan, Justin Wrobleski, and Roki Sasaki, useful players, but not really stars at this point.
I’d wager you could remove every player on the Dodgers’ 40-man roster who is on an entry level contract and replace them with waiver-wire vets, and this team would still be pretty damn good. So there is in fact at least one team who is outspending the need for cost controlled young players.
You’re saying that the Mets can’t buy a championship, and that’s true. But I would say that money is a major part of what the Braves are doing, and they currently have the best record in baseball.
If the Brewers’ or Guardians’ front offices had a $300M player budget they would be in the playoffs every year for fifteen years. Lots of John Hart disciples who would lock up their best players early.
Exactly, smart drafting and development can create a contention window for a bad-to-mediocre team. Money isn’t strictly necessary to keep it open, but it sure helps a whole lot.
That’s kind of a fallacy right? Just because you do well with a small budget, doesn’t mean you’ll do better with a bigger budget. Stearns went to the Mets and he’s poised to miss the playoffs in 2/3 seasons. Also spending little keeps your flexibility. No albatrosses on the books, no player you’re playing for the sake of his contract, etc. Obviously more money helps, but I don’t think it’s so simple to say that if you let a team spend more they’ll do much better. Sometimes you not spending lets you avoid paying Bo Bichette 40M a year lol. Or signing Aaron Nola to a long term deal and almost immediately becoming an albatross.
Yeah maybe money changes your approach enough that it wouldn’t work, but most likely they would do what Atlanta did.
And if they didn’t, I guess it would not work.
Awesome article, again. Thank you for all the insight. Love to hear if you think the Yankees and Dodgers collude..
Hal Steinbrenner voted for a salary cap lol. He is in line with other owners and would love to spend less. Mets/Dodgers is the better question.
The two takeaways
1) Owners want franchise values in line with NBA since NFL isn’t likely possible anytime soon.
2) Players want high salaries
Owners think hard cap and floor will achieve 1)
Players getting 50% of revenues via the hard cap and floor, and increasing minimum salary and arbitration salaries achieves 2)
They can argue about specific numbers, but these two principles seem perfectly compatible with each other.
Players aren’t going to get a percentage of franchise value, but they can push the 50% number if franchise values dramatically escalate by the next CBA.
Neither side cares about competitive balance.
This seems perfectly doable without massive work stoppages.
The owners have already won so much in the last several CBA negotiations. They may not have gotten a formal hard cap, but they’ve gotten something pretty close in practice. Between the luxury tax thresholds, escalating penalties, and the draft-pick penalties for going over the top tier, only a handful of teams are even willing to operate above that line.
On top of that, they’ve gotten hard caps in the draft, international spending caps, draft slot values, cut minor league teams/rosters, expanded playoffs, and a postseason format that rewards just being good enough. And I think that’s a big part of why we’re seeing so much mediocrity. Look at divisions like the AL West, where nobody is even above .500, or the AL Central, where most teams didn’t exactly push aggressively in the offseason. Expanded playoffs give teams an incentive to aim for 84 wins and hope variance does the rest. The essence of MLB is that the regular season means something and that isn’t really the case anymore.
Meanwhile, the players keep giving ground. Revenue keeps growing, franchise values keep exploding, and yet teams still act like spending is some impossible burden. The owners have basically gotten everything they wanted except the words “hard salary cap” written into the CBA.
On the question of franchise values: I think it’s worth noting that valuations can rise for two reasons.
One is by increasing expected profits by reducing labor costs. Conditional on a fairly implemented definition of baseball revenue—a big if, to be fair!—this is NOT a mechanism for higher valuations under the league’s current proposal, which sets the predetermined, guaranteed players’ share of revenue at 50%, which is roughly their take under the current market-determined system. Players in aggregate would not be made worse off. Therefore this channel for higher valuations is shut off.
Another is by reducing cost variance. Asset pricing 101 tells us: for a given expected return, an asset is more valuable when the variance around that mean is lower. This is what a cap-floor system does—it removes all uncertainty for a major component of profits. There is no risk, upside or downside, that payroll costs change over time. All else equal this raises franchise valuations.
It’s worth separating these two mechanisms because when people hear “increasing franchise values”, they think higher profits, and they think players are getting screwed. But this is not a necessary condition.
The floor proposed by MLB is a lot higher than I expected. The ceiling is too low.
I have always felt that a discussion about a cap/floor needs the owners to open up their books, otherwise we’re just taking them on their word about their finances.
Owners can point to publically available player salaries and say, ‘these are out of control and too high!’ but that’s meaningless without context of team and owner finances.
“‘’baseball revenue,’ left mostly undefined by the league but used for the remainder of this article as a term of art.“
Exactly.
The escrows I know other leagues have something similar to some extent or the other but it’s potentially billions of dollars sitting in escrow likely until after the end of the World Series and they whisper arcane verses on their books hoping that the ways the moved money out of baseball related reviews is not found. Players should have access to the majority of their salaries through the season. If the league holds back the majority of it they are reducing the present value of it as it’s essentially a small deferral it. It will likely be parked in an interest bearing account. It might seem small but if it’s billions of dollars the interest it will add up to be alot. If it in escrow for 6 months or so the owners are getting a discount of about 1.7% percent and let’s say it’s a 4% apr to be conservative. Overall the owners would be receiving a 3.7% discount on the salary. It will come down to how much is required to be in escrow. Owners will likely push as much as possible into it. And where they’ve proposed a 50/50 split of baseball related revenue will the interest count?
Somewhere an asset manager is looking on with glee.
The owners clearly don’t understand the damage they do to their own cause in trying to disrupt a tradition to make a 100x franchise sale rather than 85x so they don’t feel bad next to their Mr Burns friends who did 105x. All while crying about losing a few peanuts per year. I would stop watching baseball (like saying I’d stop breathing) if you could guarantee me 30 angry Mr Burns long term. Billionaires aren’t like us — they’re even bigger pieces of sh!t.
The point that the opening offer from the owners might be a public negotiating ploy is well taken, but I think it still signals something important. The other US major sports leagues have seen the percentage of revenue going to players decrease over time. In the NFL, NBA, and especially the NHL, players got significantly more than half at their high point, and now all are at half or less. Once you accept a cap, future negotiations tend to focus on the split, and players get squeezed more and more. Telling MLB players “take a cap, and oh by the way, start at a 50/50 split” is asking for two major capitulations at once. Owners want a cap so that franchise values in MLB grow in a way more similar to that of the NFL and NBA, but they aren’t willing to pay for it. That does not make me hopeful.
I don’t feel like I’ve got a dog in the hunt, I’m a Yankee fan content with status quo however…
Every business owner, including ones who inherited the business…, value cost surety in their business model. In addition, having a predefined revenue split between owners and players makes them business partners- their overarching goal then is growing revenue.
I try to understand why the players are adamantly against a negotiated revenue split? Is it for Juan and Shohei? It seems to me without a negotiated revenue split (and sometimes with it…) the Union perpetually thinks the owners are colluding. Is that the desire?
I would like to see what the revenue split has been over the years. I get full accounting requirements for privately held entities aren’t as detailed… however revenue is more transparent and I can’t seem to find reasonably good numbers. Any help?
Also if negotiations do go down this road, MLB costs (minor leagues, development) are higher than other sports, I could see this being tricky.
Finding up-to-date numbers is tricky, but:
https://www.royalsreview.com/2022/11/4/23438378/mlb-revenue-split-versus-nfl-and-nba
https://campus.kennesaw.edu/colleges-departments/coles/research/docs/spring-2018/spring18-02.pdf
https://www.espn.com/mlb/story/_/id/29161983/passan-20-questions-why-financial-battle-2020-mlb-season-get-really-really-ugly
As for why the players are adamantly against the revenue split: once a sport gets capped, the players share tends to diminish over time, as they’ve lost their biggest bargaining chip. Other leagues offered the players significantly more than half of revenue (at first) to introduce capped systems. MLB seemingly wants the players to give up their biggest point of leverage without paying them for it.
The thing that offends me about a mandatory increase in arb awards is paying $3 mill to guys who obviously aren’t worth it. Most obviously, there are around 30 relievers who’ve pitched at least 3 years and have WAR values of 0.0 or less.These guys are fungible and somewhat useful as mop-up guys, but I’d think the outcome for them if a hard arb figure is applied after 3 years is that they’ll be out of baseball. Nobody wants to sign a $1.2 million guy for $3 million.
I remain fascinated by the dynamics of the owners. I feel as if the MLB proposal is vague because it contains details on the only thing the owners can actually agree to: the cap.
The gulf between what the big-market and small-market teams want/need out of this is so wide (and also zero-sum), that I worry the only way to get all the owners on board is to really screw the players. And anything that doesn’t really screw the players will cost either the big-market teams or the small-market teams too much for them to accept.
As Ben says, this is all posturing at the moment, but I do wonder if the lack of details in the owners’ proposal reflects this underlying dynamic that could complicate deal-making down the road.