I’m a little late with this post, thanks to this time of year being a little tough to keep up with in Baseball, but I wanted to comment on the opening offers in the upcoming CBA labor war.
I’ve been on record for some time as being a real cynic for essentially anything that comes out of the MLB owners’ collective mouths when it comes to bargaining sessions. I’ve shown before how the owners have systematically pocketed hundreds of millions of dollars of collective salary over the past decade of CBAs, and how they’ve picked and picked at a “salary cap” for years in the form of a Luxury tax with increasing penalties.
Now, in the first salvos of the upcoming Collective Bargaining sessions for the soon-to-expire CBA between the league and its players, the owners have laid it bare: they want a hard cap.
They’ve proposed a floor of $171,200,000 and a cap of $245,300,000.
In this post, let’s talk about the Cap and Floor, specifically. This is the first time the owners have proposed a Floor, and it’s a hefty one. So, naturally you may say, “ok well the $171M floor is super high … that would guarantee a ton more money goes to the players, right?”
Wrong.
Here’s some quick simple arithmetic to show that the owner’s offer is self-serving. Using Cot’s macro numbers for each of the 30 teams’ 40-man/CBA tax figure (which includes salaries for all 40-man players, plus deferrals, plus minor leagues, plus benefits), I’m going to show you why this initial proposal is disengenuous.
| Team | CB tax rank | CB Tax figure | O/U | Amt over Cap or Amt to get to floor | Cap/Floor | |
|---|---|---|---|---|---|---|
| LAD | 1 | $420,000,000 | Over | -174700000 | $245,300,000 | |
| NYY | 2 | $379,200,000 | Over | -133900000 | $245,300,000 | |
| NYY | 3 | $338,700,000 | Over | -93400000 | $245,300,000 | |
| tor | 4 | $322,700,000 | Over | -77400000 | $245,300,000 | |
| Phi | 5 | $314,800,000 | Over | -69500000 | $245,300,000 | |
| Bos | 6 | $268,700,000 | Over | -23400000 | $245,300,000 | |
| SDP | 7 | $259,200,000 | Over | -13900000 | $245,300,000 | |
| Atl | 8 | $253,400,000 | Over | -8100000 | $245,300,000 | |
| CHC | 9 | $249,700,000 | Over | -4400000 | $245,300,000 | |
| Det | 10 | $245,200,000 | Within | $245,200,000 | ||
| Hou | 11 | $237,200,000 | Within | $237,200,000 | ||
| SF | 12 | $230,900,000 | Within | $230,900,000 | ||
| Ari | 13 | $226,100,000 | Within | $226,100,000 | ||
| Bal | 14 | $218,800,000 | Within | $218,800,000 | ||
| Tex | 15 | $207,800,000 | Within | $207,800,000 | ||
| Sea | 16 | $199,500,000 | Within | $199,500,000 | ||
| LAA | 17 | $196,400,000 | Within | $196,400,000 | ||
| KC | 18 | $185,300,000 | Within | $185,300,000 | ||
| Cin | 19 | $151,100,000 | Below | 20100000 | $171,200,000 | |
| Col | 20 | $141,900,000 | Below | 29300000 | $171,200,000 | |
| Oak | 21 | $141,400,000 | Below | 29800000 | $171,200,000 | |
| Mil | 22 | $139,700,000 | Below | 31500000 | $171,200,000 | |
| Pit | 23 | $138,500,000 | Below | 32700000 | $171,200,000 | |
| Min | 24 | $131,800,000 | Below | 39400000 | $171,200,000 | |
| Was | 25 | $122,700,000 | Below | 48500000 | $171,200,000 | |
| STL | 26 | $112,900,000 | Below | 58300000 | $171,200,000 | |
| TB | 27 | $112,200,000 | Below | 59000000 | $171,200,000 | |
| CWS | 28 | $111,700,000 | Below | 59500000 | $171,200,000 | |
| Cle | 29 | $88,800,000 | Below | 82400000 | $171,200,000 | |
| Mia | 30 | $82,000,000 | Below | 89200000 | $171,200,000 |
Sorry for the crummy formatting, but hopefully you get the gist.
- 9 Teams are currently over the proposed hard cap. They’re a collective $598M over.
- 12 Teams are currently under the proposed floor. They’re a collective $579M under.
- If you add up the 30 team’s current CB tax figure, you get to $6.228B in payroll.
- If you add up the Cap/Floor figures, assuming that the 9 over teams get under, the 12 teams currently under raise to the floor, and the middle ground teams stay where they are … you get $6.209B
In other words … the Owners just proposed a system that will see them spend LESS than they currently are. And that’s before we get any details in to the supposed 50/50 split on “league revenues” that is usually laughable to arrive at, since 28 of the 30 teams are privately owned and refuse to open their books.
Yes this is just a first offer, so presumably the next offer will raise these figures to something more palatable. There’s no details on penalties for teams who refuse to spend the floor (and you KNOW there’s going to be teams that refused to get there). There’s no details on how we possibly get to this system from where we are now, with long-term contracts that would have to be grandfathered in somehow or an incremental implementation plan.
Yes, I get it; NFL, NBA, and NHL all manage to live with a defined revenue split and a cap/floor. but, all three of those leagues also have simple, national TV contracts that facilitate and equalize revenue across teams. That instantly make playing in NYC little different than playing in Green Bay, Wisconsin. So it’s still apples and oranges. Baseball is such a regional sport, it’s just hard to imagine teams like the Yankees, Boston, Cubs, and Dodgers giving up their lucrative local RSN deals for the betterment of their co-owners. Especially when we don’t even KNOW what some of these teams actually earn from RSN deals because they, you know, own the RSN.
There’s a slew of other issues presented that go along with this, but I wanted to focus on this issue as a starting point.
The MLB owners view “salary cap” as a winning message with the public, striking when the iron is hot thanks to the Dodgers current championship run. In a society eager for simple wrong answers rather than complex better answers the owners are probably right. I appreciate you breaking down the numbers at the heart of the current flavor of BS.
I do get annoyed when the talking heads go on the MLB Network and talk favorably about the league’s positions without ever mentioning that they are talking on the platform of the league. I don’t remember the last time any of the anchors ever said anything other than skeptical about the MLBPA positions.
John C.
15 Jun 26 at 11:01 am
@JohnC i’m trying to decide what I think would be a favorable cap/floor position for the players, and i’m not sure what it would be. But, i think it may look like the below:
I didn’t put this in the article, but it’s also worth noting what the 2022-26 CBA called for as the “upper limits” and its growth per year.:
The first threshold for luxury tax is, per year:
2022: $250 million
2023: $253 million
2024: $257 million
2025: $261 million
2026: $264 million.
So, for 2027, they’ve proposed a HARD cap that’s LESS than the first luxury tax figure from five years ago?? Really? If they were serious, they’d be offering a 2027 figure that gives incremental growth to the above five figures, something like $270M. I’ll save you the XLS work, but if the hard cap was $270M instead of the #245:
– Just 5 teams are over: LAD, NYY, NYM, Tor, Phi
– They’re $425M over
– Leaving the floor where it it is would mean the 12 underpaying teams are still $579m under
– Which means the collective payroll would Rise from today’s $6.2B to $6.3B, putting $104M more into the pockets of players.
Honestly, that may be a lot more palatable for players. So, $171M floor, $270M ceiling, explicit penalties for not spending at that 171 level, a 10 year implementation plan with all existing contracts grandfathered in, and then … i’d like to see NBA-style cap exceptions added in, especially for teams to sign/extend their own players. The Larry Bird exemption. This would incentivize teams to continue to develop players knowing that they can still keep them if they wanted to, without salary cap implications.
I think those four things may really take the game closer to where it wants to be. Not saying the players would go for it … they’d probably want some hard definition of revenue split, but the hard part is getting the teams to admit what that revenue is.
Todd Boss
15 Jun 26 at 1:51 pm
With the long history of bad faith bullshit from the owners, even if the details of a cap structure were fair on their face, I would still not trust the owners to play it straight.
If I’m the players, I would need drastic governance protocols to make sure they’re acting in good faith. Forget opening team books to the union. I’d want them opening the books of any entities that share operational control or 10%+ ownership stakes with any MLB ownership group. I’d need an evidentiary standard where the burden was on the teams to prove that nominally independent economic activity wasn’t baseball related. And I’d need a hugely punitive snapback if a team got caught intentionally mislabeling revenue, or failing to disclose such an entity.
And I’m pretty sure the owners wouldn’t agree to anything like the protections I’d need, because I’m pretty sure the whole point for the owners is to be able to cheat the players out of as much revenue as possible, drive down their labor costs and increase their eventual sales prices.
SMS
15 Jun 26 at 3:25 pm
Not enough attention is given to the cohesion among the owners. The proposal put forward by MLB is not good for the Dodgers, Mets, Yankees or Blue Jays ownership, and they are highly unlikely to be in favor of making their peers more valuable/competitive at their expense, even if this is being billed as a big concession for the poor owners to raise their payrolls.
I don’t think it’s a coincidence that they’ve arrived at $245m cap because that penalizes only 9 teams, and in reality only 6, because the Padres new ownership likely have new ideas about spending compared to the late Peter Seidler, and for the Braves and Cubs, the cap is basically a rounding error. MLB owners need a three quarters majority to put forward proposals, so they need 22 teams on board. No surprise this is relatively favorable to 22 of them. This feels like a proposal pushed by the cheap/poor teams.
But as this proposal is unworkable for reasons spelled out, I wonder if the rich ownership contingent and peel off some of the middle teams and put forward a proposal that is more favorable to their interests.
The Nationals are presently the cheapest of all franchises. They, unlike most of the other lowest payroll teams (Reinsdorf and the White Sox excluded), have all the means to spend big, but choose not to. The Lerner family is one of the richest ownership groups in all of the game. They also play in one of the largest and wealthiest markets. Based on their current approach, they strike me as part of the cheap/poor contingent, but 7 years ago under Ted, that wasn’t the case. They have all the trappings to be part of the rich contingent (or at least the middle tertile), and I’d like to know where they are situating themselves in these negotiations. It would certainly be an indication if the present day cheapness is a function of the rebuild or a perpetual feature now that Ted, seemingly the only one in the Lerner family interested in paying for a quality product, is gone and no one is willing to pay them their inflated asking price.
Will
16 Jun 26 at 3:53 am
@will: Nats may play in DC, which is indeed one of the largest/wealthist markets … but they do not enjoy the benefits of this market that make it similar in nature to NY, LA, Chi, Phi. those markets have decades and decades of fans, generations handed over from father to sons. We have since 2005. Which is why we don’t have a YES network or a NESN funneling hundreds of millions of dollars to the franchise: we have a failed MASN network that never paid us what we were worth, and now we have our lot thrown in with MLP network.
When the stoppage happened in 1994, a similar division in ownership was also present. At least now we’ve moved well beyond the 1980s collusion issues that poisoned the negotiations.
Todd Boss
16 Jun 26 at 11:52 am
I have to wonder if intra-ownership disagreements are part of the issue here.
If you own the Rays, you know you’re pulling in roughly $350m in total revenue, tops. (I think that Forbes article had them lower.)
It simply isn’t reasonable to look at the Dodgers’ payroll and think “we can spend efficiently enough to compete with that” especially year-in and year out.
And the year-in, year-out part is where “but the Dodgers didn’t win last year!” argument falls apart. “a level playing field” shouldn’t mean that there are 5 teams who are in it every year, and 5 others manage to be competitive at any given time but otherwise hoard their resources fro brief runs of decency before they tap out. That’s simply phrasing “gigantic payroll disparities are fine with me”. Now, F— the owners is okay, they deserve all the scorn we can muster. But the “Dodgers sometimes lose” argument is just weak.
So if you’re Tampa, and you think it’s purely hopeless to try to match the Dodgers, it’s reasonable to just go along with a $120M payroll and hope those 80 wins satisfy the fans, because you simply can’t run $100M in the red every year so you can afford Teoscar Hernandez.
But if you know that the Dodgers, Mets, and Yankees have hard limits that are within shouting distance of you, then those teams at the bottom will have a real reason to try to compete. If the minimum is $170M, and you think you’re Foster Griffin away from winning the division, then $179M doesn’t seem that bad. But if you’re at $100M and just think “we’re 2 years away from our window even opening”, then Foster Griffin signs with the Dodgers to be a middle reliever (or their 11th starter) for $5M and the Rays are never a factor this year.
Of course, this all hinges on serious, no-way-to-get-around-it accounting from the owners. Not only do the teams need to open their books, but all the RSNs, the ticket brokerages, the radio networks, all the merch companies, etc so someone can account for all the money coming IN to each team, so they can trust that those deals are truly accounting for the revenue the owners make, so it’s being distributed fairly.
If I were a fringe MLB ballplayer, I’d go along with a max/min cap indexed to accounting I could really trust. A system like that means more guys are going to get $4M instead of $1.5M, which would not benefit Soto/Ohtani/Boras, but a lot more ballplayers are going to make more money overall.
kevin r
17 Jun 26 at 11:08 am
@Kevin R – Your point about trust is what I referring to. In a low-trust environment like this, the players would need very aggressive structures to be convinced that the owners can’t cheat. And I think the owners, or at least enough of them, have every intention of cheating and would never agree to the necessary protections.
And that is why I expect to miss games, and if the owners are as serious as they’re posturing, we’ll miss a whole season. It would take at least that long to break the union.
SMS
17 Jun 26 at 1:14 pm