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Major League Baseball owners presented their long-anticipated salary cap proposal to the players’ association on Thursday, a move the union has firmly rejected. This development sets the stage for a major showdown that could jeopardize the 2027 season and possibly future seasons as well.
The last time MLB owners proposed a firm salary cap was in 1994, a move that triggered a 7 1/2-month strike and led to the unprecedented cancellation of the World Series for the first time in 90 years.
Under the new proposal, MLB would cap team spending for 2027 at $245.3 million US, based on luxury tax payroll figures that include benefits and the pre-arbitration bonus pool. It would also establish a payroll floor of $171.2 million. For context, the Los Angeles Dodgers, the league’s biggest spenders, carried a $415.2 million payroll on opening day this year—some $170 million above the proposed ceiling.
Owners indicated they are willing to discuss a phase-in period to help teams like the Dodgers meet the cap. They also proposed an escrow system alongside a seven-year deal, with guarantees that all current contracts would remain intact and that guaranteed contracts would still be permitted under the cap.
MLB plans to centralize local media revenue from all 30 teams and distribute it equally, offering a 50-50 split with players. This would replace the current revenue-sharing arrangement among clubs.
“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,” MLB spokesman Glen Caplin said. “Further, by sharing media revenue equally as part of our proposal, we can address another top fan concern of local TV blackouts.”
Based on 2026 payroll figures, eight teams would need to reduce spending to comply with the cap. Those above the ceiling include the reigning two-time World Series champions Dodgers, New York Mets ($379.2 million), New York Yankees ($339.6 million), Toronto Blue Jays ($319.5 million), Philadelphia Phillies ($315.2 million), Boston Red Sox ($263.7 million), San Diego Padres ($260.1 million), and Atlanta Braves ($247.9 million).
Conversely, twelve teams fall below the proposed payroll floor and would have to boost their spending by a combined total of $617 million if the 2026 numbers hold. These include Miami Marlins ($81.8 million), Cleveland Guardians ($95.7 million), Tampa Bay Rays ($108.2 million), Chicago White Sox ($108.6 million), St. Louis Cardinals ($114.4 million), Washington Nationals ($119.1 million), Pittsburgh Pirates ($122.6 million), Minnesota Twins ($125.6 million), Milwaukee Brewers ($130.9 million), Oakland Athletics ($139.2 million), Colorado Rockies ($142.2 million), and Cincinnati Reds ($148.8 million).
The current five-year collective bargaining agreement, reached in March 2022 after a 99-day lockout, expires on Dec. 2. While a lockout is anticipated next winter, serious negotiations will likely not intensify until late February or early March 2027, as the prospect of lost regular-season games and revenue looms. If games are lost, negotiations could turn into a tense economic standoff.
Union head Bruce Meyer criticized the owners’ proposal, saying, “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.”
MLB has said its revenue has grown by 247 percent since 2003, while player payroll has risen 149 percent in the same period. Deputy Commissioner Dan Halem and Executive Vice President of Baseball Operations Morgan Sword presented the cap during a bargaining session at the commissioner’s office, one day after the players submitted their economic proposal.
Owners maintain a cap is necessary to improve competitive balance and prevent wealthy teams from assembling star-laden rosters far beyond the reach of smaller-market clubs.
Players are pushing for expanded free agency and arbitration rights, nearly doubling the major league minimum salary, increased revenue sharing from high-income teams to lower-revenue clubs, and penalties for teams that fall below payroll floors.
Unlike MLB currently, other major U.S. sports leagues operate with salary caps. The NBA had a cap in its first season (1946-47), removed it, and then reinstated a modern version in 1984-85. The NFL adopted a salary cap in 1994, and the NHL followed suit in 2005-06 after a lockout wiped out the previous season.
The Dodgers set the MLB spending record last year with a combined $515 million in payroll and luxury taxes as they captured their second straight World Series. Their total payroll was over seven times the $68.7 million of the Miami Marlins, the lowest-spending team, and exceeded the combined payrolls of the six lowest-spending teams.
Players argue that a salary cap would harm them and enrich owners. They maintain that the guaranteed contracts secured without a cap have allowed MLB stars to earn far more than top athletes in the NFL and NBA. For example, Juan Soto’s 15-year, $765 million deal with the Mets is believed to be the largest in team sports, surpassing NFL’s Patrick Mahomes ($450 million over 10 years) and NBA’s Jayson Tatum ($314 million over five years).
The last time MLB proposed a salary cap was in 1994. That system would have mandated teams maintain payrolls between 84 and 110 percent of the league average and provided a 50-50 revenue split. It also proposed cutting salary arbitration, lowering free agency eligibility from six to four years, but allowing teams to match offers until a player hit six years of service. Players rejected the plan, leading to a strike that began in August 1994 and ultimately ended in March 1995 after legal intervention and concession by the owners.
Meyer emphasized the players’ opposition to caps, saying, “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. 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.”