MLB and Union Disagree on Salary Cap as Cable Networks Crumble
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SCOTTSDALE, Ariz. — Fearing that Major League Baseball’s team owners are gearing up for a push toward a salary cap, the head of the players’ union unequivocally stated his side’s position on a cap the day after spring training games began.
“We’re never going to agree to a cap,” Tony Clark, the executive director of the M.L.B. players’ union, said in a meeting with reporters at the union’s new satellite office in the Greater Phoenix area on Saturday.
He added later: “A salary cap is the ultimate restriction on player value and player salary. We believe in a market system. The market system has served our players, our teams and our game very well.”
The latest labor deal, which ended a contentious 99-day lockout between M.L.B. and its players, will be one year old in a few weeks. It won’t expire for another four years, so a new round of haggling and bickering over the structure and economics of the sport should still be a ways off.
But in recent weeks, Commissioner Rob Manfred and the owners or top executives of some teams have expressed their concerns about the economic system that they agreed upon. And the league itself formed a new economic reform committee to examine major issues.
“We do have a disparity issue in the game on the revenue side and consequently on the ability to spend on players,” Manfred said this month. He commended Peter Seidler, an owner of the small-market San Diego Padres, for his massive payroll, but he wondered about its sustainability.
“There are real underlying issues facing revenue disparities in the game that are so different from capped leagues and leagues like football, where you have real shared national revenue,” Bob Nutting, the principal owner of the Pittsburgh Pirates, told The Pittsburgh Post-Gazette. Nutting’s club receives help from other teams as part of M.L.B.’s revenue-sharing system, yet has the third-lowest payroll in M.L.B., at $91 million, according to Cot’s Baseball Contracts. He added, “That’s a longer discussion, but I think one worth having.”
“I believe the vast majority of players, agents and clubs dislike baseball’s economic system,” John Henry, the principal owner of the Boston Red Sox, a big-revenue team, told the Boston Sports Journal. His team’s payroll entering the 2023 season was an estimated $211 million, 12th most in M.L.B. He added later: “The system needs change. Competitive balance continues to be a huge issue for clubs.”
Tension between management and labor is inherent in baseball. Most teams’ finances are not public, and M.L.B. is the only one of the major North American men’s professional sports leagues without a hard salary cap. In the N.F.L. and the N.B.A., revenue is split between team owners and players at a fixed rate.
And although there are concerns in the sport about the crumbling regional sports networks model, which provides substantial cash to teams, M.L.B. is a lucrative business. During the 2022 World Series, Manfred said M.L.B.’s gross revenues in the 2022 season were going to be “just shy” of $11 billion — the amount reached in 2019, the last full season before the pandemic.
During the collective bargaining agreement talks before last season, players conceded on some matters to get more money for their younger counterparts and to raise the thresholds for the so-called luxury tax, in which teams that go over certain amounts are penalized.
As a result, teams have spent $4.2 billion this winter in free-agent deals and contract extensions, according to Spotrac. Chief among them: big-market teams such as the Yankees ($574 million), the Mets ($498 million) and the Padres ($838 million).
“It begs the question as to why they made that decision and why others aren’t,” Clark said of the Padres compared with other small-market teams. “It’s very clear, from the public comments that the owner of San Diego made, that they want to compete, they’re able to compete, are excited about the team that they built there in San Diego. It should be celebrated, not questioned.”
Clark said teams have the flexibility to spend what they want and sometimes go through cycles of winning and spending. But he said it was “to everyone’s benefit to invest in the product” because when it is better, it attracts more fans and thus more local revenue.
Based on the labor history of the sport, Clark said he believed M.L.B.’s new economic committee — which felt similar to the Blue Ribbon panels of the 1990s and 2000s — was a part of a renewed desire for a salary cap, which, he also noted, wasn’t a new idea.
“What is interesting is the comments coming a year into a new agreement,” he said. “What is interesting is the comments finding their way into the headlines against the backdrop of a remarkably exciting off-season where teams competing and engaging in the free-agent market created a level of excitement that I would think is a positive.”
In past labor talks, Clark said, the union proposed tweaks to the revenue-sharing system that it believed would have incentivized teams to spend and compete, but M.L.B. opposed any changes. He also said players were open to a salary floor, which would require teams to spend a minimum amount, but the league proposed one that came with a corresponding luxury tax system that was much stiffer than now, which the union opposes.
Even though the luxury tax system has been treated like a soft cap by some teams, several teams have ignored those limits at times. The Los Angeles Dodgers and the Yankees — who have often gone over them — were among the six teams in 2022 to exceed the $230 million tax threshold. The list also included the Philadelphia Phillies, the Red Sox, the Padres and the Mets.
They have all either won titles in the past five years or contended for them, and remain among the World Series favorites — minus the Red Sox — in 2023. The 2022 World Series champion Houston Astros had the eighth-largest payroll in M.L.B. Money doesn’t always correlate with titles, but it has certainly helped teams improve their postseason odds.
Clark cautioned against making definitive statements about the current labor agreement only one year in. It takes time, he said, for all of its provisions to take effect and then be studied.