Baseball Commissioner Rob Manfred worries 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 needed because management concluded that the luxury tax system in place since 2003 no longer is working.
Owners last week made their first cap proposal since 1994, when a 7 1/2-month strike caused the cancellation of the World Series for the first time in 90 years. Manfred was a junior lawyer on the owners’ bargaining team in those negotiations.
Players have vowed to fight a cap as long as it takes. Asked whether he is concerned the events of 1994-95 will be repeated, Manfred responded: “Of course I do.”
“We’re open to whatever ideas people have, but we need a realistic framework that addresses the fans’ concerns about competitive balance and you just can’t ignore that financial penalties have not gotten it done for us,” he said Wednesday at a news conference during an owners’ meeting.
Baseball owners and players started the current luxury tax system for the 2003 season and in subsequent agreements have increased tax rates while adding surcharges.
“We have tried mightily over several rounds of bargaining to use a competitive balance tax to address competitive concerns and sometimes you got to admit you failed,” Manfred said.
More teams have been willing to exceed tax thresholds in recent years, with a record nine teams paying the penalty in both 2024 and 2025, when the Dodgers were hit with a $169.4 million bill. Total tax rose 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 about the CBT as a revenue-generating device,” Manfred said. “And when you see more and more tax getting paid, you realize that it is not the kind of speed bump that would help on the issue of competitive balance.”
Baseball’s five-year collective bargaining agreement, agreed to in March 2022 after a 99-day lockout, expires on Dec. 1. Management is expected to impose a lockout, which would bring free-agent signings and trades to a halt.
Manfred wouldn’t publicly say whether management thought a stoppage would be worth the cost to obtain a cap.
“I’m not going to speculate about work stoppages,” he said. “I think that the proposal we’ve made is grounds for constructive dialogue and back and forth with the MLBPA about how we can address the number one concern of our fans and that is a lack of competitive balance in the game.”
MLB would limit spending in 2027 to $245.3 million, using figures for luxury tax payrolls that include $20.1 million for benefits and the pre-arbitration bonus pool. It also would establish a payroll floor of $171.2 million, forcing some teams to spend more. The Dodgers had a $415.2 million payroll 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 high-payroll clubs win more than low-payroll clubs.”
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 are slower to recover once they become competitive,” Manfred said.
MLB proposed a 50-50 split with players of defined revenue and an escrow system in which portions of salaries would be withheld for payback to the league in the event the players’ share in a year is above 50%.
“If their proposal would have been in place in 2026 with current amateur entry figures, players would have lost more than half a billion dollars,” union head Bruce Meyer said in a statement.
Manfred said MLB has not made a proposal yet on players signing initial professional contracts.
Players asked for expanded free agency and salary arbitration rights, increasing luxury tax thresholds and almost doubling the major league minimum and increasing revenue sharing.
Baseball has had nine work stoppages since 1972, the last 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 won’t consider the possible addition of two teams until there is a new CBA. Among those expressing interest have been groups from Charlotte, North Carolina; Montreal; Nashville, Tennessee; Portland, Oregon; Sacramento, California; and Salt Lake City.
“We’ve made clear to all of the cities that have expressed an interest to say a post-labor topic,” Manfred said.
Olympics
Manfred hopes the union will agree to a decision on whether major leaguers will go to the 2028 Los Angeles Olympics earlier than reaching a labor deal.
“It is my impression that they’re thinking about on a separate track,” he said. “I hope that’s the case because we can’t wait until we have a collective bargaining agreement to make a commitment on that one.”
Union head Bruce Meyer says a work stoppage that cancels regular-season games could disrupt Olympic plans.
Local broadcast media
MLB’s proposal would pool and evenly distribute local broadcast revenue, tied to agreement to a salary cap. MLB plans to negotiate new national broadcast contracts for the 2029 season.
“Certainly there are going to be more national games. It’s our number one priority in terms of reach going forward,” Manfred said. “How the inventory after those national games is monetized is going to depend on the market.”
With the decline of regional sports networks, MLB is producing and distributing local broadcasts of 14 teams this season. Local media revenue is “down significantly,” according to Manfred.
“Certainly the form of revenue sharing in the proposal was influenced by developments in the media market and where we think we need to be in order to extract the maximum revenue from the media environment as it exists today,” Manfred said. “You need more control over rights.”
Padres sale
Owners have yet to approve the proposed sale of the San Diego Padres from the Seidler family to an investor group led by Kwanza Jones and José E. Feliciano. The deal was announced on May 2. The sale has an enterprise value of a baseball-record $3.9 billion, with some investors remaining in the ownership group.
“Not ready for a vote today,” Manfred said. “It will probably be at some point this summer.”
Rays ballpark
Manfred is pleased with the Rays’ efforts to gain government approvals for a new ballpark in Tampa, near the spring training stadium of the New York Yankees.
“They need to get to definitive documents. My understanding is they’re on a mid-July-ish timeline on that,” he said. “We’re hopeful they get over the next hurdle.”
Reporting by the Associated Press.
