Last week the MLBPA and MLB each submitted their initial offerings
to each other as they staked out their arguments for what the terms of the next Collective Bargaining Agreement (CBA) should contain. There are a lot of interesting elements to those proposals we’ll talk about in detail over the coming weeks and months, but in today’s “Reading the CBA Leaves” I’m focusing on one in particular: MLB’s proposal for a salary floor.MLB formally proposed a salary cap of $245.3 million and a salary floor
of $171.2 million. The cap is a non-starter. The 2026 first tier for the Competitive Balance Tax (CBT) kicks in at $244 million. The idea that MLB would cap salaries at a substantially less than inflation increase above that is laughable. But the more interesting number for discussion today is the proposed salary floor, which almost looks compelling until you start to dig into it a little bit.
Both the salary cap and floor figures would utilize Competitive Balance Tax payrolls, which include benefit costs consistent with the current format, projected to be approximately $23 million per team in 2027. In other words, the $171.2 million floor is not a guaranteed floor for player salaries, as it includes player benefit costs and bonus pools from the start. As a savvy commenter on Twitter noted:
The devil really is in the details here. Baking those fixed costs into the salary floor allows MLB to offer a floor that looks reasonable while actually just reallocating items the players have already won to bolster a floor that frankly isn’t high enough with those elements included.
To put this slightly differently, Mark Feinsand notes that 12 teams would need to increase salaries considerably to meet this floor:
In 2027, the salary floor would be set at $171.2 million, meaning that 12 teams would be required to increase payroll by a combined $617 million to meet the floor, enabling more clubs to pursue free-agent players and retain their homegrown stars.
Those 12 teams, based on 2026 Opening Day payrolls, are the Marlins, Guardians, Rays, White Sox, Cardinals, Nationals, Pirates, Twins, Brewers, Athletics, Rockies and Reds.
It all sounds well and good that 12 teams would need to increase salaries by $617 million, but Feisand goes on to note that “eight clubs – the Dodgers, Mets, Yankees, Blue Jays, Phillies, Red Sox, Padres and Braves – would be required to reduce payroll by a combined $578 million.” That’s a recipe for relatively flat salary numbers for players with a heavy hand in redistribution.
Which payroll number you use matters more than just the bonuses and benefits that are included, as Jon Becker of Fangraphs noted when he looked at team salaries last year:
Please note that for contracts with significant deferrals, the league’s Labor Relations Department (LRD) will recalculate their value to a significantly lower number than what is displayed on the RosterResource pages to account for the discounted rate. For each year, we show the money that ultimately will be paid out to each player. So, for example, RosterResource lists Shohei Ohtani’s real-dollar payroll value for 2025 as $70 million, even though his 10-year, $700 million contract is heavily deferred.
The CBT payrolls shown on RosterResource, and in the AAV column for each player, do accurately reflect how the league discounts contracts. I wrote more about Ohtani’s deal in particular here. Ken Rosenthal wrote more about the nuances of Ohtani’s contract’s three values ($700 million, about $460 million, and about $280 million) here; RosterResource only accounts for the first two values, while the league’s LRD calculation reflects the third.
CBT payrolls include ancillary expenses that the real-dollar payrolls don’t, including player benefits (estimated at $17.5 million this year), payment into the $50 million pre-arbitration bonus pool ($1,666,667 per team), and minor league salaries for 40-man roster players (estimated at $2.5 million per team).
You should read that whole piece, and pay special attention to how using the CBT numbers for salaries impacts the amount of compensation going to players. It really is telling that MLB’s proposal would be based on a calculation that shows the 2025 Athletics paid their players $115.3 million in 2025 as opposed to the $76.5 million the LRD number indicates they paid their players. Here is the full chart from Becker’s piece:
And therein lies the rub, this isn’t a move towards competitive equity and a fairer playing field. This is an attempt to fix labor costs under the guise of moving to a more fair playing field. So of course the league is using a dataset of payroll values that is most favorable to the ownership group and includes all sorts of additional compensation the players would probably argue are distinct from their salaries.
As Evan Drellich noted in The Athletic, this is really about increasing overall franchise values by providing more payroll certainty:
The average baseball team is worth $2.9 billion, more than double MLB’s $1.3 billion average from a decade ago, per Forbes’ annual estimates. But some franchises are appreciating at a much slower rate than others. When they put their teams up for sale in recent years, the owners of the Los Angeles Angels, Washington Nationals and Minnesota Twins were disappointed by the bids that came in.
What’s perhaps most irksome to baseball owners, however, is that they keep getting trounced by owners in other leagues. The average National Basketball Association team is worth $5.4 billion, and the average National Football League team $7.1 billion, per Forbes
Drellich continues:
The owners are emboldened not only because they see a problem — they also believe they see a solution.
Every day, they watch other leagues make use of the system they want in baseball. The NBA, NFL and National Hockey League all have a salary cap and floor. MLB does not.
The leading reason MLB valuations trail is a lack of “payroll certainty,” according to Sal Galatioto, president of the sports banking firm Galatioto Sports Partners.
It is an audacious move for a league with an estimated $12.5 billion value to attempt an increase in franchise values across the board by orders of magnitude by limiting the cost of player labor across the board. It is perhaps a sign of the times that the owners and MLB believe they can define what counts as salaries in the most favorable possible terms to owners as the negotiations begin.
The terms of the debate matter a lot and $171 million just isn’t what it used to be, especially when those terms result in a salary floor that is actually closer to $128 million.
