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It\u2019s May 29, roughly two full months into the regular season, which means, given the year, that it\u2019s time for everyone\u2019s favorite pastime: parsing competing proposals for a new collective bargaining agreement. Wednesday, the MLBPA released<\/a> its first<\/a> proposal<\/a> for a new agreement. Thursday, MLB followed suit with a proposal<\/a> of its own<\/a>. Both are best thought of as opening offers, likely to be heavily modified as the negotiations heat up ahead of the existing agreement\u2019s December 1 expiration. But that doesn\u2019t mean that they\u2019re 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\u2019s peruse both proposals and try to tease out what each side is trying to accomplish.<\/p>\n The MLBPA\u2019s Proposal The central piece of the MLBPA revenue sharing proposal is a redistribution of TV money<\/a>. 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\u2019s local TV contract, and two-thirds of the amount above $50 million, would be pooled centrally, along with all national TV revenue.<\/p>\n Without comprehensive TV rights details, the exact redistributive nature of this proposal isn\u2019t precisely measurable, but it\u2019ll 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\u2019s proposal would increase that pool to roughly $2 billion. That\u2019s a rough match for the league\u2019s current national TV revenues.<\/p>\n 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\u2019d 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\u2019d get $67 million under the union\u2019s proposal.<\/p>\n This TV money goes towards one of the union\u2019s 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.<\/p>\n
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A number of ancillary proposals further this attempt. Teams that receive revenue sharing money \u2013 \u201cpayees\u201d \u2013 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 \u201ccompetitive integrity tax\u201d set at half the CBT threshold would withhold revenue sharing from teams that don\u2019t 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\u2019s proposal would increase revenue sharing, and it would focus on TV revenue to do so.<\/p>\n On the player compensation side, the proposal contains a laundry list of changes. There\u2019s 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 \u2013 a de facto minimum salary for arb-eligible players. Finally, past arbitration awards would be adjusted higher for the purposes of future comps \u2013 by 20%, up to a maximum of $2 million.<\/p>\n 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.<\/p>\n 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.<\/p>\n The MLBPA proposal also contains a number of points that I think we\u2019re 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\u2019t take concrete numbers exchanged this early in a negotiation process seriously. Finally, a number of small changes \u2013 tweaks to the draft lottery, guaranteeing arbitration awards, ending the qualifying offer \u2013 will no doubt be negotiated further, but don\u2019t seem to be a part of the key points being debated here.<\/p>\n At its core, the union\u2019s 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\u2019t 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\u2019s 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\u2019t feel comfortable estimating the magnitude of that effect. At the end of the day, though, this proposal mostly leaves baseball\u2019s revenue sharing intact, with its main effect being that it bulks up the existing system\u2019s ability to redistribute TV money.<\/p>\n The increase in salary for early-career players is something I\u2019m strongly in favor of, and I think that the union\u2019s 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\u2019d prefer designing a different system, but there\u2019s strong institutional inertia that isn\u2019t worth counteracting. Making changes to the league minimum and adding to the pre-arb bonus pool are both huge, obvious wins for the players.<\/p>\n MLB\u2019s Proposal The cap numbers look arbitrary, but they seem based around keeping the total payroll outlay in the league unchanged. If you apply MLB\u2019s 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.<\/p>\n I don\u2019t think you should focus too much on the specific numbers in the league\u2019s proposal, though. \u201cNo increase in player payroll\u201d 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\u2019s payrolls. Leagues with a salary cap don\u2019t have hard, negotiated limits; the cap fluctuates based on revenue. Thus, the devil here is in the details.<\/p>\n A cap and floor system depends on several things. First, it isn\u2019t workable without a strong revenue-sharing mechanism. Second, it isn\u2019t credible without a contractually guaranteed split of revenues, with a fixed percentage earmarked for players. The league\u2019s proposal addresses these two aspects, but only in generalities; specific information is likely to emerge at a later date.<\/p>\n The league goes slightly further than the union proposal in reallocating TV revenues. MLB\u2019s 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\u2019s a good sign that some version of expanded local TV revenue sharing will end up in any eventual agreement.<\/p>\n The rest of the team revenue sharing changes are broadly unaddressed. The league\u2019s 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\u2019s 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. <\/p>\n It\u2019s 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\u2019s likely that any mechanisms will be heavily focused on one thing: increasing franchise values<\/a>. 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\u2019s proposal is how it defines the amount of money going to the players.<\/p>\n
The players\u2019 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\u2019s clear that there\u2019s public interest in leveling the playing field. Collectively bargained labor agreements don\u2019t 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\u2019s recent growth.<\/p>\n
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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 \u201cbaseball revenue,\u201d 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\u2019s proposal. Everything else appears to be left either vague or simply unaddressed so that more attention can be focused on the cap\/floor system.<\/p>\n