MLB Owners Want A Salary Cap To Create Competitive Balance

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This is the third in a multi-part exploration of the major league baseball owners’ proposals to the players union ahead of the December 1^st expiration of the current CBA. The first two installments can be found here and here.

In those prior reports we isolated three main reasons that MLB owners want to enact a salary cap: (1) to provide cost certainty; (2) as self-prophylaxis; and (3) to encourage competitive balance. The first two articles deal with the first two issues, respectively, so today we will look at the third.

Owners’ Best Argument

While the arguments for cost certainty and self-protections do not weigh heavily in favor of the owners, the concept of competitive balance most certainly does. In fact, if the owners want to try to win the upcoming labor war, they would be well-served focusing on this one single issue.

First, let’s address the main question. Putting aside perception (which we will get to below), does Major League Baseball suffer from a competitive balance problem? And, if so, any more or less than the other major sports? The pat answer depends on how you view such matters, but the actual answer is “yes.” Here are some facts and figures:

Reality

The Kansas City Royals are the last small-market team to win a World Series, which they did in 2015. (Photo by Sean M. Haffey/Getty Images)

Getty Images

While it is fair to point out that there have been seven different World Series champions over the last decade, it also must be acknowledged that each of the last ten were large-market clubs (defined as teams from the fifteen largest media markets). According to analysis by MLB.com’s Travis Sawchik, the last small-market team to win a World Series title was the 2015 Royals. By comparison, the other three major sports leagues (NFL, NBA, NHL) have produced fifteen small-market champions over the last decade (aided, ironically, by another team from Kansas City). To get even more granular, 24 of the last 30 Super Bowl champions are from small or medium-sized markets.

But competitive balance cannot simply be measured by championships, as those tend to be crapshoots at the end of a season. A better gauge may be the regular season, when millions of fans pour into ballparks and tune in to their local broadcast every night. Well, on that score, it doesn’t get much better. Sawchik further reported that from 1998-2025, top five payroll teams have averaged 89 wins per season while bottom-five payroll teams have averaged just 74. And since 2015 (not counting the Covid-shortened 2020 season), only 37% of teams from bottom-half markets have made the post-season.

Over the past decade, even that playoff crapshoot is stacked against the small-market teams. A top-half team reached the league championship series 31 times vs. only nine for bottom-half teams. And top-half teams have reached the World Series seventeen times vs. just thee for bottom half clubs.

However, competitive balance does not mean equal outcomes. Teams with superior scouting, player development, and decision-making will always have an advantage, and market size is not dispositive (case in point: the Los Angeles Dodgers and the Los Angeles Angels of Anaheim). The big difference is that a team of any market size in the other leagues has an equal financial opportunity for success, whereas in baseball, they do not*.

_{*Some of this difference can be made up by spending on R&D off the field. The Dodgers, for instance, have committed to having a robust front office with a massive team of analysts and quants and former executives to figure out ways to make their club better. The Colorado Rockies, by comparison (and prior to this year), have had the league’s smallest front office, the least number of analysts, and a historical record to show for it.}

In addition to the salary cap, the Owners are proposing centralizing local media revenue and sharing it amongst all 30 teams. But, in a league where teams play 162 games, 81 in their home ballparks, plus another month of spring training, does this make logical sense? The Commissioner is trying to convert so many devout capitalists (nearly every MLB owner is a billionaire) into corporate socialists. It works in other leagues, but those leagues don’t have the sheer quantity of product that baseball does, so it remains to be seen if the same approach could work for MLB.

Perception

Even if none of the above facts and figures were accurate (they are), baseball still has a perception problem; and that may be an even larger hurdle to get over. If fans believe the game is unfair, if they believe their team has no chance once the season begins, will they continue to fill the ballparks in Tampa or Denver or Cleveland or Detroit? Will they tune into their local coverage (regardless of who controls the same) night after night?

A Morning Consult poll published last November found 79% of “avid” MLB fans and 69% of casual fans supported a cap-and-floor system, with 69% of those avid fans saying it would help “a lot” or “somewhat.”

Baseball fans are very much in favor of a salary cap.

Via Reddit

At MLBTradeRumors.com, they conducted an informal survey and found that 67% of fans are in favor of a salary cap. Fans want competition based on skills, not available resources. And while that may be a pollyannaish view of the world, the sports heart wants what the sports heart wants. Rationality may play into corporate finance, but it does not necessarily play into fans’ financial decisions.

MLB Players

If the owners make this issue their primary focus, the players may very easily lose the battle of public opinion. After MLB’s latest salvo crossed the transom, interim head of the MLBPA Bruce Meyer stated the following on a conference call with reporters:

“I will tell you with all honesty, I have never seen this degree of unity at this point among agents and players. I think, honestly, the league has done us a favor. Because their proposals are, in fact, so obviously and extremely bad for players at all levels, that it’s actually been a benefit for our unity. Anybody who’s banking on Major League Baseball players cracking: it’s never happened. It’s not going to happen. That’s why we’re the only ones who don’t have a salary cap.”

Bad for players but good for fans? Unity for now, but for how long? Only union without a cap, but to what end? Owners have been trying to implement a salary cap for more than 30 years, and the barbarians have been held at the gate each and every time. Will the same be true in 2026? Will owners be able to come up with enough goodies to entice the last bastion in major professional sports to cave? Will the fans turn against the players and force them to accept terms they have refused for more than a generation?

The owners have introduced a bunch of other concepts and ideas that appear to be nothing more than cannon fodder to trade down the road. We will address some of those in future columns.

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