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Baseball Commissioner Rob Manfred fears 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 has concluded that the luxury tax system in place since 2003 no longer works.
Last week, owners made their first cap proposal since 1994, when a 7 1/2-month strike caused the World Series to be canceled for the first time in 90 years. Manfred was a junior attorney on the owners’ negotiating team during these negotiations.
The players are committed to fighting the cap for as long as necessary. Asked if he feared a repeat of the events of 1994-95, Manfred replied: “Of course I do.”
“We are open to all people’s ideas, but we need a realistic framework that addresses fans’ concerns about competitive balance and you cannot ignore that financial sanctions have not achieved that,” he said in a press conference at 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 while adding surcharges.
“We have tried very hard, over several rounds of negotiations, to use a competitive balance tax to address competition concerns and sometimes we have to admit that we have failed,” Manfred said.
More teams have been willing to exceed tax thresholds in recent years, with a record nine teams paying the penalty in 2024 and 2025, when the Dodgers were hit with a $169.4 million bill. The 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 of CBT as a revenue-generating tool,” Manfred said. “And when we see more and more taxes paid, we realize that this is not the kind of speed bump that would help on the issue of competitive balance.”
Baseball’s five-year collective bargaining agreement, reached in March 2022 after a 99-day lockout, expires December 1. Management should impose a lockout, which would put a stop to free agent signings and trades.
Manfred wouldn’t say publicly whether management thought a shutdown was worth it to get cap space.
“I’m not going to speculate on work stoppages,” he said. “I believe the proposal we have made provides an area for constructive dialogue and discussion with the MLBPA on how we can address our fans’ number one concern, which is the lack of competitive balance in the game.”
MLB would limit its spending in 2027 to $245.3 million, using luxury tax payroll numbers that include $20.1 million for benefits and the pre-arbitration bonus pool. It would also establish a minimum payroll of $171.2 million, forcing some teams to spend more. The Dodgers had an Opening Day payroll of $415.2 million this year, while the lowest payroll was Miami at $81.8 million.
“Players are smart people,” Manfred said. “I think they understand that wage bill is a significant advantage for some clubs and that high wage bill clubs earn more than low wage bill clubs.”
No small-market team has won the World Series since the Kansas City Royals in 2015.
“Teams that experience particularly long periods of non-competitiveness not only have lower revenues, but they take longer to recover once they become competitive,” Manfred said.
MLB proposed a 50-50 split with players having set incomes and an escrow system in which a portion of salaries would be withheld to be returned to the league in the event that players’ share in any year was greater than 50%.
“If their proposal had been implemented in 2026 with current amateur registration numbers, players would have lost more than half a billion dollars,” union president Bruce Meyer said in a statement.
Manfred said MLB has not yet made a proposal on players signing initial professional contracts.
Players have called for expanded free agency and salary arbitration rights, an increase in luxury tax thresholds, a nearly doubling of the major league minimum and increased revenue sharing.
Baseball has seen nine work stoppages since 1972, the last being a 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 CBA. Among those expressing interest were groups from Charlotte, North Carolina; Montreal; Nashville, Tenn.; 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 topic,” Manfred said.
Olympic Games
Manfred hopes the union will agree to a decision on whether major league players will participate in the 2028 Los Angeles Olympics before reaching a labor agreement.
“I feel like they’re looking at a different path,” he said. “I hope that’s the case because we can’t wait until we have a collective agreement to make a commitment on this.”
Union head Bruce Meyer said a work stoppage that cancels regular-season games could disrupt Olympic plans.
Local audiovisual media
MLB’s proposal would consolidate and fairly distribute local broadcast revenue, tied to a salary cap agreement. MLB plans to negotiate new national broadcast contracts for the 2029 season.
“There will definitely be more national games. That’s our number one priority in terms of reach going forward,” Manfred said. “How the inventory will be monetized after these national games will depend on the market.”
With the decline of regional sports networks, MLB produces and distributes local broadcasts of 14 teams this season. Local media revenues are “down significantly,” according to Manfred.
“The form of revenue sharing in the proposal has certainly been influenced by the evolution of the media market and how we think we need to be in order to extract the maximum revenue from the media environment as it exists today,” Manfred said. “We need more control over rights.”
Padres sale
Owners have yet to approve the Seidler family’s proposed sale of the San Diego Padres 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.
“I’m not ready for a vote today,” Manfred said. “That will probably be the case this summer.”
Approximate stage of rays
Manfred is pleased with the Rays’ efforts to gain government approval for a new ballpark in Tampa, near the New York Yankees’ spring training stadium.
“They need to get final documents. My understanding is they’re about mid-July on that,” he said. “We hope they overcome the next hurdle.”
Associated Press reporting.
