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Baseball Commissioner Rob Manfred worries that the owners’ salary cap proposal could lead to a work stoppage like the one that caused the cancellation of the 1994 World Series and says the plan is necessary because management concluded that the luxury tax system in place since 2003 no longer works.
Last week, the owners made their first salary cap proposal since 1994, when a seven-and-a-half-month strike caused the cancellation of the World Series for the first time in 90 years. Manfred was a junior attorney on the owners’ negotiating team in those negotiations.
Players have vowed to fight the cap for as long as necessary. Asked if he is worried about a repeat of the events of 1994-95, Manfred replied: “Of course I am.”
“We are open to any ideas people have, but we need a realistic framework that addresses fans’ concerns about competitive balance and it cannot be ignored that financial sanctions have not allowed us to achieve that,” he said at a news conference during an owners meeting on Wednesday.
Baseball owners and players initiated the current luxury tax system for the 2003 season and in subsequent agreements increased tax rates and added surcharges.
“We have tried hard over several rounds of negotiation to use a competitive balancing tax to address competitive concerns, and sometimes you have to admit that it failed,” Manfred said.
More teams have been willing to exceed the tax thresholds in recent years, with a record nine teams paying the fine in both 2024 and 2025, when the Dodgers received a $169.4 million bill. The total tax increased from $78.5 million in 2022 to $222.8 million the following year, $311.3 million in 2024 and $402.6 million last year.
“We never thought of CBT as an income-generating device,” Manfred said. “And when you see more and more taxes being paid, you realize that it is not the kind of obstacle that would help the issue of competitive balance.”
Baseball’s five-year collective bargaining agreement, agreed to in March 2022 after a 99-day lockout, expires Dec. 1. Management is expected to impose a lockout, which would halt free agent signings and trades.
Manfred did not say publicly whether management thought a layoff would be worth the cost of obtaining a cap.
“I’m not going to speculate on work stoppages,” he said. “I think the proposal we have made is cause for a constructive, back-and-forth dialogue with the MLBPA about how we can address our fans’ number one concern, which is the lack of competitive balance in the game.”
MLB would cap spending in 2027 at $245.3 million, using figures for luxury tax payrolls that include $20.1 million for benefits and the pre-arbitration bonus fund. It would also set a payroll floor of $171.2 million, forcing some teams to spend more. The Dodgers had a payroll of $415.2 million on opening day this year, while the lowest payroll was Miami at $81.8 million.
“The players are smart people,” Manfred said. “I think they understand that payroll is a significant advantage for certain clubs and that clubs with high payrolls make more than clubs with low payrolls.”
No small-market team has won the World Series since the 2015 Kansas City Royals.
“Teams that go through periods, particularly longer periods, of non-competitiveness not only have lower revenues, but they recover more slowly once they become competitive,” Manfred said.
MLB proposed a 50-50 split with players with defined income and an escrow system in which portions of salaries would be withheld to return money to the league in the event that player participation in a year is greater than 50%.
“If their proposal had been in effect in 2026 with current fan admission numbers, players would have lost more than $500 million,” union head Bruce Meyer said in a statement.
Manfred said MLB has not yet made a proposal regarding players signing initial professional contracts.
Players called for expanding free agency and salary arbitration rights, raising luxury tax thresholds and nearly doubling Major League Baseball’s minimum and increasing revenue sharing.
Baseball has had nine work stoppages since 1972, the last of which was the 99-day lockout that slightly delayed the 2022 season.
The NFL has had a cap since 1994, the NBA since 1984-85 and the NHL since 2005-06.
Expansion
MLB will not consider the possible addition of two teams until there is a new collective agreement. Among those who have expressed interest are groups from Charlotte, North Carolina; Montreal; Nashville, Tennessee; Portland, Oregon; Sacramento, California; and Salt Lake City.
“We have made it clear to all cities that have expressed interest in talking about a post-work issue,” Manfred said.
Olympics
Manfred hopes the union will reach an agreement on whether Major League Baseball players will attend the 2028 Los Angeles Olympics before reaching a labor agreement.
“I have the impression that they are thinking of going their separate ways,” he said. “I hope that’s the case because we can’t wait until we have a collective bargaining agreement to commit to that.”
Union head Bruce Meyer says a work stoppage that cancels regular-season games could disrupt Olympic plans.
Local media
MLB’s proposal would pool and equitably distribute local broadcast revenues, tied to a salary cap agreement. MLB plans to negotiate new national broadcast contracts for the 2029 season.
“There will certainly be more national games. It’s our number one priority in terms of outreach going forward,” Manfred said. “How inventory is monetized after those domestic games will depend on the market.”
With the decline of regional sports networks, MLB is producing and distributing local broadcasts for 14 teams this season. Local media revenues “have decreased significantly,” according to Manfred.
“Certainly the form of revenue sharing in the proposal was influenced by developments in the media market and where we believe we need to be to extract the maximum revenue from the media environment as it exists today,” Manfred said. “More control over rights is needed.”
parent sale
The owners have yet to approve the proposed sale of the San Diego Padres by the Seidler family to an investment group led by Kwanza Jones and José E. Feliciano. The deal was announced on May 2. The sale has an enterprise value of $3.9 billion, a baseball record, and some investors remain in the ownership group.
“I’m not ready for a vote today,” Manfred said. “It will probably be sometime this summer.”
rays baseball stadium
Manfred is pleased with the Rays’ efforts to get government approval for a new stadium in Tampa, near the New York Yankees’ spring training stadium.
“They need to get to the final documents. I understand they are on a mid-July timeline for that,” he said. “We’re hopeful they’ll get over the next hurdle.”
Associated Press information.
