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MLB commissioner Rob Manfred proposed a major change around local media revenues in the owners' first proposal. David Banks / Imagn Images
For a long time, it’s been clear that Major League Baseball’s owners would make a new push for a salary cap-and-floor system. The mystery, though, has been what exactly the owners want the system to look like.
Players and owners are working on a new labor deal ahead of the current one’s expiration in December. In their opening economic proposal to the players in New York on Thursday, the owners finally revealed some of the most important details — but left others a mystery.
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For 2027, the first year of the new labor deal, the league is proposing a salary cap of $245.3 million and a floor of $171.2 million, with a 50-50 split of revenues.
Those salary figures are based on average annual values of player contracts, or what’s referred to in baseball as “salary for luxury-tax purposes.” MLB projects that in 2027, each team will pay about $23 million in player benefits that count toward that figure.
Cap systems come with major changes across the board. For example: Player pay would be newly subject to an escrow system. Under that format, players would put a portion of their salaries aside, and once the league’s annual revenues are calculated, players would either give some of that money back to MLB, or receive additional payments. The NFL, NBA and NHL all have cap-and-floor systems, and versions of escrow with them.
“The biggest issue we need to solve next to continue to grow the game off the field is fixing the payroll disparity unseen in any other major U.S. sport,” league spokesperson Glen Caplin said in a statement. “Ultimately the game is about hope and competition and too many fans in too many markets have too little hope their team has a fair chance to win. Fans overwhelmingly support a salary cap and floor like in the other leagues.”
The Major League Baseball Players Association has a long history of fighting against a cap, and remains opposed. The sides also disagree on whether baseball’s parity is in disrepair and how it could be best improved.
A salary limit is “something generations of players have fought against,” union interim director Bruce Meyer said in a statement Thursday afternoon.
“The last time the owners made such an explicit push for a cap — over 30 years ago — it led to the longest work stoppage in MLB history,” Meyer said, referring to the 1994-95 strike that lasted 232 days. “For generations, our members have fought against cap systems because they harm players at all levels, erode or eliminate contractual guarantees, pit player against player, lead to more work stoppages, not less, and get worse for players over time.
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“Caps don’t lower ticket prices for fans, eliminate tanking or ensure teams are run with equal competence. They suffocate competition by offering owners an all-purpose excuse for inaction and mediocrity.”
In an expected but nonetheless radical element of MLB’s proposal, all local-media revenues in the sport would newly become central revenue, a major change commissioner Rob Manfred has sought.
That means the big-market teams with the largest television contracts, such as the New York Yankees and Los Angeles Dodgers, are willing to share their TV money — a trade-off in exchange for the other benefits they’d reap in a cap system.
It’s a change that owners probably would never be willing to make outside of a cap system.
“Our salary cap and-floor proposal levels the playing field while sharing baseball revenue with the players 50-50 as we grow the game together,” Caplin continued. “Further, by sharing media revenue equally as part of our proposal, we can address another top fan concern of local TV blackouts. We look forward to working with the MLBPA during the bargaining process to continue improving the game for the fans.”
Missing from the league’s proposals, however, were changes to the minimum salary and baseball’s overall “reserve system,” which governs how long players have to wait to become free agents.
Those are areas where the league is likely to eventually offer changes for players in an effort to entice them to take a cap. For example, the league could propose that players reach free agency in five years, rather than six.
The union’s position is that once a formal revenue split is in place, changes like those don’t matter as much as they would outside of a cap system. Nonetheless, how the league might try to sweeten the deal remains to be seen.
There’s little evidence to this point that players will seriously entertain a cap, however.
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“Baseball is experiencing unprecedented momentum and owners are enjoying record viewership, revenues and franchise values,” Meyer continued in his statement Thursday. “Billionaire owners are not seeking to cap their profits or asset values, only player salaries. This isn’t out of generosity or a desire to protect the game’s well-being. It’s a play to control costs, increase profits and maximize franchise values — all at the expense of players past, present and future. We’ll continue our review of the owners’ proposal and stand ready to negotiate system improvements that benefit players and fans alike.”
The union believes that in a cap system, contracts are effectively no longer guaranteed because what players are paid will ultimately fluctuate with how much money the league takes in.
Plus, of course, teams can’t decide to aggressively spend.
“The MLBPA has made sure players are fully aware cap proposals are consistently blind to the billions player talent adds to franchise appreciation,” player agent Scott Boras said in a statement Thursday. “The San Diego Padres sold for over $3 billion more than (their 2012 purchase price of $600 million), yet it’s the same stadium and market.
“The difference is acquisition of star-level talent which increased competitiveness and doubled attendance. Private equity recognized and responded and now serves as a barometer of the value of player talent.”
To meet the new cap and floor, MLB counts 12 teams that would need to grow their payroll by a combined $617 million for 2027 under this proposal: the Athletics, Chicago White Sox, Cincinnati Reds, Cleveland Guardians, Colorado Rockies, Miami Marlins, Milwaukee Brewers, Minnesota Twins, Pittsburgh Pirates, St. Louis Cardinals, Tampa Bay Rays and Washington Nationals.
Another eight teams would need to cut payroll by a combined $578 million: the Atlanta Braves, Boston Red Sox, Los Angeles Dodgers, New York Mets, New York Yankees, Philadelphia Phillies, San Diego Padres and Toronto Blue Jays.
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Thursday was the second straight day the league and the union held bargaining sessions. The union on Wednesday made its opening economic proposal, which included a soft floor and its version of modified revenue sharing.
MLB said the players’ proposal would actually harm competitive balance. Manfred also went on TV on Wednesday and said that payroll disparity right now means MLB is “not a fair fight.”
While the league is framing many of its arguments around competitive balance, MLB teams are not appreciating in value like those in basketball and football. Owners have great incentive to grow those prices as more private-equity money flows into the sport.
The 1994-95 strike was largely a fight over a cap, and owners have never stopped coveting a cap-and-floor system since then, in no small part because all other major team sports leagues in the U.S. have it. But today, they seem more eager to fight for one than they have in a long time.
How long an expected lockout will last, though, is anyone’s guess. In a labor negotiation, all parties are incentivized to talk tough.
MLB’s current labor deal expires at 11:59 p.m. ET on Dec. 1. The owners are expected to lock out the players at that point if a new deal hasn’t been reached. The sides are likely to still be far apart at that time.
During the last round of bargaining, an agreement was reached in March 2022, leaving just enough time to play a full 162-game schedule. If owners are committed to landing a cap this go-around, however, the sport could well miss games in 2027 — possibly even a whole season.
Almost immediately after the last round of bargaining ended, the owners started to hint they’d take up a renewed fight for salary limits. Manfred created an economic reform committee, a group of owners who were to study “disparity issues on the revenue side,” as Manfred put it in 2023.
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Steve Cohen, owner of the New York Mets, was rankling other owners with his high-spending ways. The Dodgers now prompt more hand-wringing than the Mets, considering the Mets’ continued struggles on the field.
“Whether we should have, or shouldn’t have, right, we bought in again to a system that lacked absolute upward limitation on what people can spend,” Manfred said in 2023. “I think our owners understand, that’s what we agreed to. And (Cohen) can do what he wants to do within the context of that system.”
In 2025, Manfred said publicly that the focus of the economic reform committee “from day one was franchise values. Where are we? Why are we where we are, and what can we do to fix our situation?”
Boldly, Manfred took some of the league’s economic arguments to players directly last year during meetings with individual teams. He never directly brought up a salary cap, but clear overtures toward one prompted Philadelphia Phillies star Bryce Harper to get in his face.
“The strategy is to get directly to the players,” Manfred previously said of his purpose in those meetings. “We need to energize the workforce in order to get them familiar with or supportive of the idea that maybe change in the system could be good for everybody.”
For as contentious as player-owner dynamics in baseball can be, the politics between owners can be just as messy, if not worse. Revenue sharing will be a key topic throughout negotiations.
Manfred needs a three-quarters vote to ratify a new collective bargaining agreement, a total of 23 owners. That means a group of just eight owners who are unhappy with their revenues, with their franchise values, their media rights or any other issue can carry a lot of sway throughout the bargaining process.
MLB’s revenues eclipsed $12 billion in 2024 and presumably kept growing in 2025. This year, they’ll likely climb even higher, maybe toward or past $13 billion.
With so much money on the line, all parties will feel immense pressure to find a way to play games. The league has new national media deals to negotiate for 2029, and an extended stoppage could suppress the value of those contracts if fans turn away from the game.
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