The league responded one day after the MLB Players Association made its opening proposal in the ongoing negotiations for the next Collective Bargaining Agreement. Clubs and their owners have proposed a salary cap beginning in 2027.
The League's Proposal
According to ESPN, the league is proposing:
A salary cap, including benefits expenses, of $245.3 million;
A salary floor, also including benefits expenses, of $171.2 million;
A 50-50 revenue split between clubs and players, with local revenues centralized and shared equally.
Because benefit payments—including pension contributions and health insurance—are included, determining which teams are above the cap or below the floor isn't straightforward. The competitive balance tax (CBT) or luxury tax provides the best proxy for payroll calculations, as it uses the average annual value of long-term contracts and includes player benefit costs.
Current Impact on Teams
According to Coty's Contracts CBT payroll estimates, nine teams would likely exceed the proposed cap this season. The Detroit Tigers, with a 2026 CBT payroll of $245.2 million, would just barely miss the cutoff.
Additionally, 12 teams fall under the proposed payroll floor when benefit payments are included.
As Craig Goldstein notes, the amount needed to bring all teams within the thresholds represents an $18.7 million loss in aggregate player salary. With teams paying roughly $23 million in player benefits annually, the proposed figures translate to approximately a $222 million cap and $148 million floor on cash payrolls.
MLBPA's Stance
The MLBPA has steadfastly refused to agree to a salary cap in CBA negotiation after CBA negotiation, spanning decades. There is no reason to expect a different outcome this time.
In contrast to MLB's proposal, the union proposed a "competitive integrity tax" levied against teams that don't spend a minimum on player payroll, along with increasing the minimum salary from $780,000 to $1.5 million.
Context and Controversy
Among major North American sports leagues, MLB is the only one without a cap on team payrolls. While the league attempts to frame its call for a cap as a means to promote competitive balance, there is increasing belief among owner groups that not having a capped system is hurting franchise valuations. Notably, the small-market San Diego Padres recently sold for a record $3.9 billion.
Another point of contention involves the calculation of the 50-50 revenue split. Teams will likely seek to carve out various real estate developments around ballparks, while the union would argue those developments would not exist without baseball games and players.
The league's call for centralized local revenues reflects Commissioner Rob Manfred's efforts to manage tensions between small- and large-market owners over shifting to a national model of broadcast rights. Flagship clubs that own their regional sports networks likely required persuasion to agree to increased revenue sharing, and pursuing a cap on the highest payrolls is probably essential to their acquiescence.
If the push for a cap fails, clubs may renew resistance to a nationalized broadcast model. Additionally, any changes to the revenue-sharing system require collective bargaining approval from the players and their union.