MLB and the MLBPA Have Made Their Opening Offers
It’s May 29, roughly two full months into the regular season, which means, given the year, that it’s time for everyone’s favorite pastime: parsing competing proposals for a new collective bargaining agreement. Wednesday, the MLBPA released its first proposal for a new agreement. Thursday, MLB followed suit with a proposal of its own. Both are best thought of as opening offers, likely to be heavily modified as the negotiations heat up ahead of the existing agreement’s December 1 expiration. But that doesn’t mean that they’re meaningless. I think these early offers are revealing of what each side cares about most. The specific numbers quoted are unlikely to survive multiple rounds of bargaining, but the concepts and structures that each side favors at this stage could tell us a lot about what an eventual compromise looks like. So without getting too bogged down in the details, let’s peruse both proposals and try to tease out what each side is trying to accomplish.
The MLBPA’s Proposal
The players’ first salvo focuses on two things: revenue sharing and early-career pay. Revenue sharing is going to be a key point of discussion in this negotiation. The league has raised competitive balance concerns for years, and it’s clear that there’s public interest in leveling the playing field. Collectively bargained labor agreements don’t solely play out in the court of public opinion, but making the sport more interesting and marketable is a benefit for both sides, so a more balanced system of distributing revenue seems like a clear path towards sustaining the game’s recent growth.
The central piece of the MLBPA revenue sharing proposal is a redistribution of TV money. Currently, teams share a flat 48% of all local revenue, TV included. The MLBPA proposal would change that significantly. In their framework, the first $50 million from each team’s local TV contract, and two-thirds of the amount above $50 million, would be pooled centrally, along with all national TV revenue.
Without comprehensive TV rights details, the exact redistributive nature of this proposal isn’t precisely measurable, but it’ll be a lot. Based on the last public set of local TV revenues I was able to source, local TV revenue sharing under the current CBA amounts to roughly $1.1 billion in pooled and redistributed money. The union’s proposal would increase that pool to roughly $2 billion. That’s a rough match for the league’s current national TV revenues.
The new method for pooling TV money would be redistributive, particularly for teams at the top end. The Dodgers and Yankees each have deals that reportedly pay them well into nine figures. A team that makes $200 million in local TV revenue today keeps about $140 million of that money after accounting for what they pay into the revenue sharing pool plus their share of the pooled local TV money. Under the new system, they’d only keep around $116 million. Conversely, a team with a $35 million local deal takes home $55 million in total local TV money under the current system; they’d get $67 million under the union’s proposal.
This TV money goes towards one of the union’s headline points: Each team will receive $240 million in revenue sharing from the league (subject to increases over time). To handle the fact that TV revenue is uncertain but $240 million is a fixed number, revenue from local income streams aside from TV would be redistributed at a flexible rate determined by the minimum amount necessary to fill the pool enough to distribute $240 million to each club. The numbers are inherently subject to change, but given the current amount of central revenue and national TV deal money already being divided, this would result in a meaningful decrease in local revenue sharing, partially offsetting the increase in TV-based sharing. In other words, teams would pocket a greater amount of their in-stadium revenues, but share the wealth on broadcast deals, resulting in a net increase in redistribution.
A number of ancillary proposals further this attempt. Teams that receive revenue sharing money – “payees” – would be eligible for a variety of incentives, from extra revenue sharing for posting a winning record or making the playoffs, to bonus draft picks for signing top free agents. A “competitive integrity tax” set at half the CBT threshold would withhold revenue sharing from teams that don’t meet a minimum payroll. Proposed changes to the allowable structure of transfer payments between RSNs and teams would make it tougher for teams to hide revenues behind co-ownership deals with local networks. Broadly speaking, the union’s proposal would increase revenue sharing, and it would focus on TV revenue to do so.
On the player compensation side, the proposal contains a laundry list of changes. There’s one clear throughline, though: increasing compensation for players who have not yet reached free agency. First, the minimum salary would rise to $1.5 million in 2027 and continue increasing from there. Similarly, the minimum arbitration tender would become $3 million – a de facto minimum salary for arb-eligible players. Finally, past arbitration awards would be adjusted higher for the purposes of future comps – by 20%, up to a maximum of $2 million.
The first two changes are self-explanatory. The last one is more complex, but it would increase arbitration awards, with the greatest percentage increase going to players who earn arbitration salaries in the high single-digit millions. As a ballpark figure, I estimate that these early-career salary reforms would add $450 million to $550 million to annual player salaries, meaningfully narrowing the gap between the salaries paid to free agents and those paid to the rank-and-file players who populate the league.
A number of additional changes are designed to further these goals. The pre-arbitration bonus pool would more than double, and it would no longer pay incentives to players who have signed long-term extensions. Draft pick rewards for early promotions would be expanded. Super-Two eligibility would be expanded. Certain older players would reach free agency a year earlier, though their team could guarantee them a salary similar to the current qualifying offer to retain that extra year of team control.
The MLBPA proposal also contains a number of points that I think we’re too early in the process to have much clarity on. The proposal includes an increase in the CBT threshold, naturally. The exact number ($300 million) and the new thresholds, bands, penalties, and so on are all subject to change. I don’t take concrete numbers exchanged this early in a negotiation process seriously. Finally, a number of small changes – tweaks to the draft lottery, guaranteeing arbitration awards, ending the qualifying offer – will no doubt be negotiated further, but don’t seem to be a part of the key points being debated here.
At its core, the union’s proposal is about overhauling revenue sharing and increasing the salary paid to early-career players. I think their revenue sharing changes are good, but they don’t radically alter the existing landscape. The increased redistribution of TV money makes good sense to me. The amount that revenue sharing would change by comes out to just around 15-25%, per my back-of-the-envelope math. What’s more, the total change in revenue sharing payments would likely be lower because of the proposed higher CBT thresholds. But given that those higher thresholds are likely to change, and given that teams change their behavior based on those thresholds, I didn’t feel comfortable estimating the magnitude of that effect. At the end of the day, though, this proposal mostly leaves baseball’s revenue sharing intact, with its main effect being that it bulks up the existing system’s ability to redistribute TV money.
The increase in salary for early-career players is something I’m strongly in favor of, and I think that the union’s proposals are steps in the right direction across the board. I also think that leaving the existing arbitration system mostly intact makes sense; if we were starting from scratch, I’d prefer designing a different system, but there’s strong institutional inertia that isn’t worth counteracting. Making changes to the league minimum and adding to the pre-arb bonus pool are both huge, obvious wins for the players.
MLB’s Proposal
As expected, the league proposed a hard salary cap and floor, the first time MLB has proposed such a system since 1994, with an initial $171.2 million minimum and a $245.3 million maximum. Players would receive 50% of “baseball revenue,” left mostly undefined by the league but used for the remainder of this article as a term of art. Teams would share all TV revenue, both local and national, equally. Those are the key parts to the league’s proposal. Everything else appears to be left either vague or simply unaddressed so that more attention can be focused on the cap/floor system.
The cap numbers look arbitrary, but they seem based around keeping the total payroll outlay in the league unchanged. If you apply MLB’s cap and floor numbers to our estimated 2026 payroll numbers, bumping the 12 teams below the floor up to $171.2 million and moving the eight teams above the cap below $245.3 million, league-wide projected CBT payroll moves from $6.185 billion to $6.189 billion. In other words, this initial offer seems based specifically on stabilizing the amount that teams are paying to players at the current amount, with levels chosen with that goal in mind.
I don’t think you should focus too much on the specific numbers in the league’s proposal, though. “No increase in player payroll” on its own would be an aggressive stance to take into a contract negotiation. Offering that while also agitating for a salary cap, the single biggest line for the union, suggests to me that these numbers are either a public negotiating stance or simply an illustration of what the cap might look like if applied to this year’s payrolls. Leagues with a salary cap don’t have hard, negotiated limits; the cap fluctuates based on revenue. Thus, the devil here is in the details.
A cap and floor system depends on several things. First, it isn’t workable without a strong revenue-sharing mechanism. Second, it isn’t credible without a contractually guaranteed split of revenues, with a fixed percentage earmarked for players. The league’s proposal addresses these two aspects, but only in generalities; specific information is likely to emerge at a later date.
The league goes slightly further than the union proposal in reallocating TV revenues. MLB’s proposal would pool all local TV revenue, period, while the union proposal is more like 90% of all revenues after applying their sliding scale. For the most part, though, the two sides seem to agree on this point. That’s a good sign that some version of expanded local TV revenue sharing will end up in any eventual agreement.
The rest of the team revenue sharing changes are broadly unaddressed. The league’s proposal is heavy on broad, un-fleshed-out ideas. I approximated the change in revenue sharing in the MLBPA proposal, but an estimate based on the league’s proposal is impossible without more details than we currently have. I think a reasonable assumption is that transfer payments would be largely unchanged under this proposed system, because the increased TV money would be offset by the roughly $400 million in tax payments that the nine teams that exceeded the 2025 CBT threshold made last year vanishing. About half of that was transferred directly to revenue sharing receivers. No luxury tax, no luxury tax transfer payments.
It’s likely that there are some unreported mechanisms for further revenue sharing, but I was unable to confirm any specific details. A fuller discussion of the particulars will no doubt happen over the coming months. But it’s likely that any mechanisms will be heavily focused on one thing: increasing franchise values. The league has been clear and open about this. Any change in revenue sharing, and indeed the push for a salary cap, will be built around finding a way to make teams worth more money. Thus, the more important part of the league’s proposal is how it defines the amount of money going to the players.
In keeping with the rest of the publicly available details of the league’s proposal, we don’t know much about how MLB would define “baseball revenue.” It’s clear that this is a difficult needle to thread. Rob Manfred himself has said that players received less than 50% of baseball revenue in 2024, the most recent time he spoke on the split, which makes the league’s position somewhat confusing. The league seems to have picked its cap levels to keep payroll constant, and it also declared that there would be a 50/50 revenue split, but it appears to believe that players currently receive less than 50% of baseball revenue. Something doesn’t add up, which only furthers my conviction that this plan is aspirational, not specific.
Total revenue for a sports league is hard to define, and it’s particularly hard to define in baseball, where TV rights are sold locally, partial team ownership of regional sports networks is common, and more than a few teams own real estate ventures around their stadiums. A robust proposal for a salary cap would include an exhaustive accounting of how revenue is calculated. The incentives to hide or miscategorize revenue are meaningfully larger when payrolls vary as a function of revenues. We’re probably too early in the negotiations for that, and neither side is likely to trust the other to define it correctly, but it’s worth keeping an eye on as negotiations continue.
The exact details on what “baseball revenue” entails would be important if this offer from the league were a serious negotiating stance, but I think it’s fairly clear that it’s just posturing. This proposal contained no details about minimum salaries, arbitration, player salaries, service time, pre-arbitration bonus pools, carve-outs to the cap, implementation methodology, or even a discussion of how a salary cap might come into being in 2027 while the Dodgers are more than $100 million over the proposed upper bound in committed salaries. It’s clear that nothing about this deal is supposed to be binding or a final offer.
The league’s complete lack of interest in details makes sense if you believe that it’s committed to gaining a cap and completely agnostic about how the players divide up whatever money is allotted to them. If you add a salary cap, player compensation becomes a zero-sum game. Free agency details? What does the league care? It’s set a contractual level of payroll. Increased minimum salaries? That money wouldn’t be coming out of ownership’s pocket.
The cap and floor numbers are also quite wide for a salary-capped league. The NFL floors team salaries at 89% of the cap, on a four-year average basis. The NBA floors team salaries at 90% of a soft cap, but “cap” isn’t well-defined in basketball thanks to an escalating structure of over-the-first-cap rules that approximates the current MLB competitive balance tax. The NHL floor is around 75% of their cap, though at much lower levels than the other leagues. The proposed MLB structure would set the floor at 70% of the cap, the widest by a fair margin and much wider than the sports that MLB is most directly akin to – the NHL is just a far smaller outfit overall.
That leads to further questions about the structure that would also need to be fleshed out. With a contractual salary split, a team moving from the bottom of the band to the top of the band could mechanically push other minimum-salary teams below the minimum, thanks to the way escrow and clawback mechanisms work. Likewise, a team reducing its spending in one year could push other high-spending teams above the cap as equalization payments went out to players. Tighter bands between ceiling and floor would make this less of an issue, but I’m fairly certain that MLB pushed the floor as high as they could given the contingent of small-market owners who have consistently resisted any increase in spending. The resulting system seems very difficult to balance, at least until we get further details that change my understanding of this agreement.
I’ve seen a fair bit of handwringing that the distance between these proposals, and the language in them, signals that we’re sure to lose games next year. That may well happen, but here I’ll just note that negotiations involve antagonistic bargaining. No negotiator worth their salt would say that the other side’s initial offer was good. For that matter, no negotiator worth their salt would propose something the other side might accept as an initial offer. Brinksmanship means that an agreement is unlikely until we face real deadlines, and hyperbolically portraying your opponent’s position in public is a time-honored negotiation strategy in labor disputes. Why do you think both sides are talking about competitive balance so much in a negotiation about franchise values and revenue splits?
In any case, my takeaway from these two competing proposals is that they had very different goals, and thus were very different, to the point of being in different languages. The MLBPA proposal is incremental; it goes into great detail about a few specific changes – TV revenue sharing and early-career salary – and largely leaves the broad structure of baseball economics alone. MLB’s proposal is the opposite. It’s so alien to the existing system that they didn’t really bother with details. It’s a think piece, essentially – imagine the league if it were very different, then try to fill in the details at a later date. Neither of them has a remote chance of being accepted without major modifications.
It’s easy to understand why the league’s proposal is unlikely to be accepted. The MLBPA has drawn a bright line around a capped system, and the league isn’t even offering a single enticement to try to change players’ minds. That’s not a real offer. The players’ offer doesn’t touch a third rail in the same way, but it purposefully asks for more than the owners will accept. They want to increase early-career pay – great! They also want to raise the CBT by a ton, and let guys reach free agency sooner, and rebuild arb, and make more players eligible for Super Two, and plenty more. There aren’t a lot of concessions in this proposal, not much to entice the owners. It’s an initial position, so that’s kind of the point, but neither of these is a realistic picture of what baseball will look like next year.
There’s a lot of room between the two initial proposals, but I think that it’s fairly clear that TV revenues are going to get shared more evenly at the end of this process. That’s one of Manfred’s long-term goals, which makes it an owner priority, and it’s also a clear way to increase competitive balance without directly constraining player salaries, which means the union is on board. What else will come out of this? I’m not sure. But so far, the opposing sides aren’t speaking the same language. Baseball is in full swing, and there’s little pressure to bring this negotiation to the foreground while fans are focused on actual on-field delight instead of dry arguments about money. Come November, the urgency will pick up. But at the moment, my only takeaway is that next year, TV revenues aren’t going to be shared the same way that they are now, and we have a long way to go before we get there.