Baseball's offseason has been about as cold as most of the country has been this month. While NBA and NFL fans are overwhelmed with signing news ahead of free agency season, the MLB offseason has progressed at a glacial pace. A month before spring training, 14 teams committed less than $30 million to free agent contracts and five clubs have yet to sign a single MLB free agent. On the other hand, the Dodgers, Yankees and Mets have teamed up to spend $1.5 billion in free agents this offseason.
The huge difference in how different teams approach the offseason is due to a fundamentally broken system where some teams have an incentive to spend money and others don't. Large market teams protect monopolies and duopolies that allow them to generate huge profits by investing in elite talent. Smaller market clubs with less revenue growth potential in their markets receive revenue sharing checks for inaction. It is not surprising that there is such disparity in spending under this system.
The players' union has been vocal in its opposition to the salary cap for years, and for good reason. Free agency was hard-won, and the free market has been very generous to players over the years. The owners' clumsy attempt in 1994 to unilaterally impose a player limit nearly destroyed the game.
But the game evolved. Multi-billionaire owners have learned to make the most of the profits of large markets. Executives have concluded that the cost-benefit analysis of spending on free agents doesn't add up. This has left the market largely inactive, with many important unsigned free agents heading to spring training. While it may seem counterintuitive, a salary cap combined with a salary floor and broader income distribution could be a solution for players.
Salary caps and floors allow players to control expenses.
A common response to the inaction of many teams is that there is nothing stopping those teams from spending money, and that is absolutely correct! These commands must spend money. Besides, I must exercise more, political parties must getting along to solve our problems and movies must start at the specified session time. But until there are structural incentives for those things to happen, they won't (okay, fine, I'll do some squats).
Players have relied on the free market system for decades to push the value of contracts higher and higher. But, as in any free market, there comes a point when consumers decide that prices are too high and change their behavior. This is exactly what many teams in baseball have come to, believing that free agents on the wrong side of the aging curve are not worth spending limited resources on. Worse, many teams have little incentive to improve. Why spend money on players when you get a hefty check from big clubs for inaction? This is why a minimum wage is needed to force small market teams to stop being profit-sharing freeloaders.
NFL players are guaranteed 48 percent of income after deductions, while NBA players receive half of all income. It's difficult to get a full picture of MLB's financial performance, but the numbers show Sportico and Sportrak, players receive about 51 percent of the revenue. Will this continue? Only if the owners open their wallets, which they seem hesitant to do.
But if there was a collectively agreed upon salary cap and salary cap, the players could reach an agreement. exactly how much of the pie they get without relying on the whims of their owners. Will owners try to hide income, for example, by building ancillary facilities near stadiums? Certainly! But they are already doing this – nothing requires them to spend this money. With a salary cap and a salary floor, the union could negotiate what would be included in gross income—NBA players, for example, just received the right to include licensing revenues.
The point is that players can have a say in how much is spent on them, instead of ceding that power to the owners.
The salary cap and floor are necessary to create a free agent market.
In each of the last offseasons, several very good players did not sign before spring training. Last year it was Blake Snell, Jordan Montgomery and J.D. Martinez. This year is over 150 players remain unsigned.
Forcing teams to spend will create a much larger free agent market for players. The current no-capped system is great for elite players: all you need is two or three big market teams to raise the stakes. But it's unclear how good that was for the middle class of free agents. While there are no salary caps, there certainly are roster restrictions. The Dodgers can only pay so many players, and while the player depth is good, they don't need to spend money on two starting first basemen. But if you force all the teams with low salaries to also spend money, suddenly you have a lot of suitors for mid-tier free agents.
Even if a team wants to fuel up for a rebuild, being forced to spend opens markets where they can take bad contracts and get something valuable in return, like prospects. This, in turn, frees up money for rival teams to spend on free agents. Governments often try to increase demand in markets by putting more money into the pockets of consumers. Baseball can do the same thing by forcing teams to spend money.
Limited sports players fare better than MLB players.
The first American athlete to earn a million dollars a year in a team sport was Nolan Ryan. Baseball players earned free agency before other sports and were given an unrestricted market, resulting in extremely high salaries. Even now Juan Soto has the largest contract in North American sportseclipsing even NFL star Patrick Mahomes.
While stars are still getting their money's worth, there is evidence that the supply of less elite free agents is starting to dry up as teams are run by more analytics-oriented executives who don't value free agency. The amount teams spend on players in baseball is not comparable to sports like the NBA and NFL.
In 2024, NFL teams spent $8.8 billion for player salariesmore than doubled The league spent $4.2 billion about players in 2014, according to Spotrac. NBA teams spend $5.2 billion for player salaries this year, more than double $2.2 billion. they held in 2014–15. In 2024, MLB teams spent $5 billion for player salaries, from $3.2 billion. in 2014, which is only 56 percent more than during this time.
Average NBA player makes twice as much as an MLB playerwhich makes sense considering there are far fewer players on the roster. But while the average MLB player salary has dropped from $3.8 million in 2015 to $4.5 million in 2024, an 18 percent increase, the average NBA salary doubled during that time, from $4.9 million to $9.7 million. Meanwhile, NFL salaries rose 40 percent from $2 million in 2015 to $2.8 million in 2024.
And baseball's league minimum doesn't keep up with other leagues. MLB players earned a minimum of $720,000 last year, NFL players earned a minimum of $795,000, and NBA players earned a minimum of $1,157,153. Heck, even the NHL pays players at least $775,000.
It's not because baseball's revenue growth is slow. Revenues increased from $9 billion in 2014 to $11.6 billion in 2023 (an increase of 28 percent), Commissioner Rob Manfred announced. was exceeded in 2024. The owners make more money, but choose not to share it with the players.
Wage caps and floors require greater income sharing
Smaller market teams should definitely spend more, but even for those who try, the game is stacked against them. The Kansas City Royals were one of the most active teams last offseason, spending over $110 million in free agents. They improved by 30 wins, one of the largest improvements in baseball history, and made the playoffs for the first time in nearly a decade.
The team is coming off two home playoff games and hopefully this series will improve their season ticket numbers this year. But the cost-benefit analysis of spending so much money on a small market doesn't really add up (that might have happened if the team had managed to convince voters to approve the downtown measure that failed in April). The fact is that there are many more wallets in New York than in Kansas City.
Travis Savchik of The Score compiled the “Scrooge Index” estimate how much each team was willing to spend on players to win. Steve Cohen's Mets led the league in payroll as a percentage of revenue, spending more than they took in (it helps to have an owner worth about $20 billion, which most smaller markets won't have). The small-market Royals were the fifth-best spending team at 59 percent (and they made the playoffs! I like to mention that as much as I can!) But even if they wanted to be as wasteful as the Mets, and spend all their income on salaries, their payroll would be only 60 percent of what the Mets spent.
The Mets and Yankees would be able to share New York's spoils without any further competition. London supports seven Premier League soccer teams, but New York's baseball market is split in two. The royals could make a LOT more money if they moved to Brooklyn. But MLB prohibits this. I certainly don't want the Royals to move to the Big Apple, but in exchange for the opportunity to share the country's largest market, these two teams should share some of the spoils with the rest of the league.
This is not about competitive parity or giving every team an equal chance. This is about creating 30 healthy franchises so baseball can become a national game that fans in Pittsburgh are as invested in as fans in Los Angeles. Otherwise it will become a niche coastal sport.
This may be the direction the sport will head when the CBA expires after the 2026 season. Writer Marc Normandin has suggested that here's why the Dodgers are spending money now – They expect greater income distribution. Many people think that MLB is trying to take away all the local TV rights. bring them home in one package where income can be distributed equally.
I've been against the salary cap for a long time. Players have unique talent and deserve to be paid well for it – better than rich owners of luxury apartments. But it has become clear to me that the current system is not serving them the way it once was, and it is not good for the long-term health of the sport. Players shouldn't just be handed this trump card – get more compensation for players who signed pre-free agency, more money in retirement, chocolate chip cookies on every charter flight!
But a salary cap, a salary cap and a broader distribution of income can be in the best interests of the players and the good of the game.
