The Future of Baseball (Probably) Doesn’t Include a Salary Cap and Floor

[Brandon Glick]

As the Los Angeles Dodgers continue to gobble up the attention of the national media by bullying the rest of the league with their wealth, it’s time to examine what the future of parity in baseball could look like.

Image courtesy of © Greg Lovett / USA TODAY NETWORK

This isn’t a space meant for belaboring what the Dodgers have been up to in recent offseasons. They may be the new “Evil Empire”, but they’ve merely taken that distinction from the New York Yankees, rather than inventing it. In a sport where the most valuable franchise is worth north of $7.5 billion and the least valuable one is struggling to scrape past a $1 billion evaluation, money will simply never be equal. Even under the most rigorous proposals, the Dodgers will always have a larger payroll than those of the Athletics or Miami Marlins. That gap can never be fully mended.

However, what is currently a chasm could become more manageable with a few bridges, perhaps to the point where it feels less abyssal. The owners, collectively, have tried implementing rules throughout the years to curb the spending of the truest free-wheeling teams, but even the “Steve Cohen Tax”—the fourth threshold above the Competitive Balance Tax line that severely punishes teams for spending a certain amount on their roster in any given year—hasn’t been enough to stop franchises like the Dodgers and New York Mets from assembling baseball’s equivalents of the Avengers and Justice League.

Naturally, that begs the question: is there any hope of seeing a little more fairness in the economics of the game?

The Omnipresent but Never-Going-to-Happen Salary Cap
Let’s get this out of the way immediately: the Major League Baseball Players Association will never, under any circumstance, go for a salary cap. The concessions the owners would have to make to get the MLBPA to willingly agree to artificially limit the salaries of its players even more rigidly than is already happening would be both unprecedented and doomed in negotiations. It's been the union's bogeyman for decades. They refuse to even entertain it over the negotiating table.

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This article is one in a four-piece collaboration across three DiamondCentric sites. For more on the current system's mechanics and viability, check out Matthew Lenz's piece today at Twins Daily. Meanwhile, at Brewer Fanatic, Jake McKibbin offers the case for more comprehensive revenue sharing. Later this week, we'll share a roundtable between Lenz, Brandon Glick and McKibbin, about what they learned from this process and what they think ought to be done moving forward.

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Luckily, I don’t have a seat at that table, so I’m free to bring it up all I want. All three of the other “Big 4” professional North American sports leagues have a salary cap, and the NFL and NHL have “hard caps”, meaning each team cannot have a payroll over a predetermined amount in a given season. The NBA’s salary cap is a bit more complex, but, effectively, it’s a soft cap that can be bypassed with certain types of contracts, though it comes equipped with a luxury tax that offers increasingly harsh penalties at each threshold, much like baseball.

CBS’s Matt Snyder did a strong breakdown of the parity in other sports that have a salary cap relative to baseball, and while the findings are now a few years out of date, the results are still relevant. Repeat champions are rarer in baseball than in any other sport, and baseball has more “newcomers” in the playoffs every season than any of the other “Big 4” sports. The NFL has had two dynasties (New England Patriots and Kansas City Chiefs) since the turn of the century. The NBA is fresh off the Golden State Warriors dynasty, which coincided with the singular dominance of LeBron James in the Eastern Conference for a decade. Since 2010, the NHL has seen the Chicago Blackhawks win three championships in a six-year span, as well as back-to-back Stanley Cup titles for both the Pittsburgh Penguins and Tampa Bay Lightning.

As for baseball? The league hasn’t seen a repeat champion in 24 years, dating back to the late-90s Yankees dynasty that won three straight from 1998-2000.

Something else worth keeping in mind with a salary cap is how it affects players in practice. Part of what makes baseball so great is the player movement—the “hot stove”, as it’s come to be called. Free agency obviously exists in the other sports, but none of them have trade deadlines as active nor free agencies as long-running as baseball's.

In football, for every Kirk Cousins (who has switched teams twice in free agency), there's a Patrick Mahomes, Josh Allen, and a Lamar Jackson, who stick with their franchises on long-term deals. And lest you think that’s simply due to the importance of the quarterback position, note that there have been nearly as many multi-year extensions handed out as there have been multi-year free-agent signings. In a salary cap world, keeping in-house talent is a necessity, rather than a luxury.

Of course, to offset the number of players who leave in free agency in baseball (often from small-market teams to those in bigger markets), the league has its own systems in place, like the qualifying offer. However, it’s the existence of “prospects” that make the whole system work. The Tampa Bay Rays have made a living out of trading star players nearing free agency, in exchange for gaggles of young players who have yet to establish themselves at the highest level. Unlike the NFL and NBA, draft picks don’t play in the big leagues right away. They often spend years percolating in the minors, developing their skills and honing their attributes. Draft picks are the currency of buyers and sellers in those other sports. In baseball, it’s prospects who determine the “brightness” of a team’s future.

In the same way that the salary cap creates boundaries and parameters for teams to abide by in order to create parity, baseball has its own systems in place that balance out the lack of one.

The Mythical (and Slightly More Likely) Salary Floor, to Go With the Cap

If baseball were to ever implement a salary cap (against all odds), it would certainly be on the condition that the league also adopted a high and firm salary floor.

We’ve actually already seen something somewhat akin to a salary floor in baseball this offseason, as the Oakland Las Vegas Sacramento (?) Athletics have started spending more money than at any point in recent memory, despite being on the precipice of moving to a minor-league ballpark for at least three seasons. While you might hope the reason for that is that notoriously cheap businessman owner John Fisher has finally chosen to invest in his team, it’s actually because the MLBPA has threatened the team with grievances about their low-spending habits.

As MLB Trade Rumors’s Nick Deeds explains: “That risk of a grievance is due to the fact that the A’s will collect 100% of their revenue-sharing dollars in 2025 for the first time under the current collective bargaining agreement. While the team received just 25% of their allotment in 2022, that figure increased to 50% in 2023 and 75% in 2024 before finally reaching 100% in 2025. The issue for the A’s stems from the fact that the CBA requires revenue sharing recipients to spend more than 150% of their revenue sharing money on MLB payroll.”

That situation poignantly articulates why some prefer MLB introduce a salary floor, rather than a salary cap. The argument effectively boils down to: owners who are willing to spend hundreds of millions of dollars shouldn’t be punished; instead, the league should be reprimanding the ones who cheap out and refuse to spend on talent. In practice, of course, getting a floor without a cap is as unthinkable as getting a cap without a floor.

While the NFL has a salary cap, it also has a salary floor, so teams cannot hold onto money perpetually. Teams must spend at least 89% of the cap over a four-year period, while the NFL as a whole must spend at least 95% of the cap. If a team fails to reach the 89% threshold, it will be forced to pay the difference to players who were on its roster during those four years. The NBA has a similar model, where teams must spend 90% of the salary cap in every season.

Here’s the thing, though: just like how the MLBPA wouldn’t touch a salary cap with a 20-foot pole, owners would feel the same about a salary floor. These policies have to be in place simultaneously to work—there’s a reason why nearly every NBA team goes over the salary cap on an annual basis, and why no NFL team in recent memory has come close to falling beneath the 89% threshold. The guardrails are put in place to ensure no team can simply outbid others for a player. If everyone has to spend something close to a certain amount, then every player will be paid “fairly” by every team (in the sense of relative positional salaries; running backs continue to be screwed by the system). There isn’t a Shohei Ohtani or Juan Soto contract in football or basketball because there simply can’t be, especially thanks to the NBA’s “max contract” system.

Would a salary floor be good for the players? In a vacuum, almost certainly. Pragmatically speaking, the inevitable introduction of a salary cap alongside it would keep superstars from exploiting the free market, though it would help lesser role players squeeze a few more dollars out of their careers.

The Verdict
Salary caps and salary floors work for the leagues they work for.

I understand that isn’t game-breaking, industry-changing analysis, but it’s true. Baseball continues to chug along despite not having one, and despite the benefits other leagues have seen from them, the structure of MLB doesn’t require their presence to keep parity at reasonable levels. The Dodgers may feel like an inevitability, but a 162-game season is a long, arduous grind, and October is half-contained chaos.

Likewise, if money was truly the only thing that mattered in baseball, small-market compatriots like the Tampa Bay Rays, Milwaukee Brewers, or Baltimore Orioles would hardly be the perennial postseason party-crashers they are today. Thanks to tools like revenue sharing, the 40-man roster and option year limits, the qualifying offer, and other forward-thinking features of the sport, teams with less money to spend are merely at a disadvantage, rather than locked in an outright Sisyphean climb to fashion themselves as serious contenders.

There’s something to be said for wanting to eliminate that disadvantage altogether, though. Whether or not baseball will ever find the right means to do so is tough to guess.

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