By: Aiden Gould | Guest Writer
The MLB is the only North American sports league to continuously refuse adopting a salary cap. As payroll gaps expand, the league and fans have increasingly asked whether the game’s first salary cap should be introduced for the new Collective Bargaining Agreement (CBA) in 2027.
The CBA sets the terms and conditions of employment for all MLB players, including minimum salaries, free agency rules, and roster sizes.
Most team owners have expressed support for a salary cap, which would provide them with more financial control while maximizing potential profits for their team. While owners are hoping the salary cap is introduced, the MLB Players Association (MLPA) is strongly opposed to it.
Introducing a salary cap would limit each player’s earnings potential. As the current CBA nears its expiration, disagreements between the two parties could lead to a lockout before the 2027 season. A lockout would not only hurt players, coaches, and owners but would also negatively impact fans who won’t be able to see their favorite teams or players on the field.
So, how does the MLB avoid this problem?
The MLB should avoid a traditional salary cap and instead implement a salary floor and additional penalties for exceeding the Competitive Balance Tax (CBT).
Teams like the Los Angeles Dodgers, who are the current back-to-back World Series champions, have faced criticism for buying championships with high payroll rosters. However, 73 percent of the team’s annual revenue is reinvested into the players’ salaries. This is the second-highest rate in the league, behind only the New York Mets, who spent 90 percent of their revenue on payroll. The Dodgers’ World Series opponent this year, the Toronto Blue Jays, rank third in the league at 71.5%.
These teams are proof that winning is possible through player investment.
The larger issue with the current MLB model is that 13 teams invest less than half of their annual revenue in their players. Most of these organizations routinely finish at the bottom of their respective division, often showing little to no competitive gameplay throughout the season.
Seven of the worst 10 teams in the league spent less than 45% of their revenue on payroll in 2025. A salary floor of 45% of revenue would double the payroll of the lowest-performing team that reinvests 45%.
However, even with a salary floor, large market teams would still have a significant advantage in spending.
This is where the CBT rework comes into play.
Exceeding the CBT would result in steeper fines, the loss of multiple early-round and compensatory draft picks, and the loss of international signing pool money. These stronger punishments would entice teams to stay near or below the luxury tax limit, preventing absurdly high payroll discrepancies and serving as a pseudo-salary cap.
Despite owners and some fans wanting to see a dramatic change to the current MLB model, other sports leagues suggest a hard salary cap doesn’t solve all problems. Enforcing an agreed-upon salary floor and increasing CBT penalties will allow MLB to address its competitive balance issues directly while preserving the uniqueness of the financial structure.
Appeasing both owners and the MLBPA has proven near impossible in the past. This new system will enable owners to limit overspending on salaries while paying players their fair share of revenue.
As the new 2027 CBA nears, it’s time for the MLB to make a wise investment in its league, finally.
