With echoes of 1994, the baseball owners are once again proposing to cap player salaries. Precedent suggests that this will not be a good outcome for the sport. In 1994, the owners provoked a 232-day work stoppage that cost the league 938 games and cancellation of the postseason and World Series. According to the Los Angeles Times, the total combined financial damage of that fiasco was $1 billion for owners and $350 million for players. But these figures understate the longer-term damage to the sport: fan disillusionment caused per game attendance to plummet by 20% in 1995 and ticket sales to remain severely depressed into 1996. According to the Bureau of Labor Statistics, it took four full seasons for stadium attendance to recover to pre-strike levels.
With their proposed salary cap, owners are pursuing their interests in profit maximization, especially their calculation that a salary cap and a salary floor are the best routes to increase the market valuation of their franchises. The gap between top spending and bottom spending major league baseball teams is vast: from the top payroll of the LA Dodgers at $398 million to the lowest payroll of the Miami Marlins at $74 million (current Fangraph projections for the 2026 season). The disparity is a cause for concern, as payroll is an important factor that contributes to winning seasons and postseason success. That being said, sports economists who have studied these payroll gaps, starting with the classic work of Andrew Zimbalist Jr., have long concluded that payroll explains only about one-third of team success. The other factors include how well an organization does in “player acquisition (scouting, draft, trades, signings); development (turning prospects into major leaguers as well as continuing to develop major league talent); governance (how free is baseball ops from owner meddling); and finally: luck.” (Ken Rosenthal, The Athletic, May 29, 2026, citing a former major league executive, whose observations track the work of sports economists in the factors that predict winning in baseball).
The complexity of what determines winning outcomes in major league baseball is accentuated by the fact that successful teams depend on not just a talented 26-man roster, but on having talent and depth in 40-man rosters, as well as waves of talent in the minors. No baseball team, not even the Dodgers, can be successful just buying the most expensive free agents. That’s an approach that, by itself, will not work to produce a winning team.
The biggest issue, then, for fans of teams that spend very little, such as the Miami Marlins, is what financial model achieves the best competitive balance outcome. Is it necessary to have a salary cap that requires players to take less money for the sake of better revenue distribution? That appears to be the instinctive reaction of fans of low-to-mid market teams right now, who feel that player salaries are a significant obstacle to their teams having a chance. The problem with salary caps is that they take money from the players as a “solution” for competitive imbalance, when there are better ways to address the problem. Players, after all, are the ones that generate value for the sport. Owners invest their money as capital, but without players producing on the field, there would be no surplus value added to owners’ investments.
Players drive the sport and their opposition to the owners’ push for a salary cap is significant. The MLB Players Association noted that the owners’ proposed salary cap would have cut player compensation by $500 million had it been in effect in 2026, namely because the proposed salary cap and floor figures of $245.3 million and $171.2 million, respectively, include major league player salaries, as well as player benefits and amateur draft and signing bonuses. The owners want to use the cap to rigidly reduce salaries by counting as payroll a wider range of team obligations. A primary goal of the owners is to reduce salary obligations, player benefits and spending on amateur draft picks as a way toward leveling the cost obligations of all teams. The owners of large-revenue teams apparently agreed to a salary cap and floor proposal as a precondition for their willingness to share their local media revenue.
Major league baseball teams exist in radically different revenue ecosystems, especially regarding variations in local media revenue, and the latter contributes the most (by far) to competitive imbalance in the sport. Dan Skidmore-Hess and I wrote a book in 2006, Free Agency and Competitive Balance in Major League Baseball, which argued that the best periods of competitive balance have coincided with periods of lucrative national media deals, which have always been divided equally among the major league teams. The problem has been that local revenues, including local media revenue, have not been distributed equally. Both the owners and the players are now in favor of an equal distribution of local revenues. This could be accomplished without a salary cap, and it would be sufficient to significantly improve competitive balance, provided it is coupled with an enforcement mechanism designed to require small revenue teams to spend their revenue sharing money on player payroll. The players’ proposal attempts to provide stronger incentives for this to happen, without a salary cap.
The fundamental issue with a salary cap is how deceptive it is. On surface appearances, a salary cap levels the playing field by purporting to share revenues equally between players and owners. However, owners have long diverted their revenues into debt and tax shell games to enable them to reduce taxes on their other businesses. IRS tax law allows owners to write off 6.67% of the purchase price of the team every year over a 15-year period. This is in addition to the lavish public subsidies that owners are provided, which they get to pocket as part of their revenue stream. Unless there is a willingness of owners to expand their definition of “revenues” toward a more realistic assessment of earnings year to year, salary caps would most certainly restrict players to a 50-50 distribution of only the revenues that are most visible on the baseball side, without touching the larger revenue schemes of the ownership class.
In short, owners have advantages that are baked into our current political and economic system. Don’t let them peddle these advantages as a willingness to “share” for the betterment of the sport. What is driving the owners in their initial salary cap proposal is a scheme to make the players pay the overwhelming costs for greater “competitive balance,” while focused on the goal of further increasing the market valuation of their teams. At a time when all objective measurements say the sport has been doing very well (attendance is up, viewership is up, fan interest is increasing), the last thing this sport needs is to be held hostage by a group of billionaires with another scheme to consolidate more power and privileges. There are better ways to do competitive balance, without a salary cap.
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