MLB Owners Propose Salary Cap and Floor Tied to Revenue Growth

Major League Baseball owners proposed a hard salary cap to players on Thursday, their first firm cap proposal since 1994. 3 million, starting in 2027. Those figures include player benefits and are calculated the same way as under the current competitive balance tax system.

The current collective bargaining agreement expires December 1. If the sides cannot negotiate a new deal before that date, owners are likely to lock out the players. A lockout would mean players have no contact with their teams and league business involving players such as trades and free agency would halt.

League spokesperson Glen Caplin said in a statement that fans overwhelmingly support a salary cap and floor like in the other leagues because they do not believe a $446 million spending gap from top to bottom is a fair fight. Caplin added that the salary cap and floor proposal levels the playing field while sharing baseball revenue with the players 50/50 as the game grows together.

Under the proposal, 12 teams would need to increase their payrolls to reach the minimum while eight teams would have to shed payroll to get under the ceiling.

The salary floor and cap would increase as league revenues increase. The league is also proposing a centralized fund for all local media revenues with money distributed equally among the 30 teams. Union head Bruce Meyer said in a statement that billionaire owners are not seeking to cap their profits or asset values, only player salaries.

Meyer added that the proposal is a play to control costs, increase profits and maximize franchise values at the expense of players past, present and future. The union made its first overture to the league one day before the owners' proposal. That offer included higher competitive balance tax thresholds, a higher minimum salary, and a tax on teams spending less than $150 million on payroll.

The union proposal did not include a hard salary floor or cap. The league did not address reserve clause issues like free agency or arbitration in its proposal. It also did not provide any exceptions or carve-outs within the cap system.

The sides are likely to meet again in the coming weeks.