Major League Baseball has a big problem that is becoming unavoidable and by 2026, there might not be any baseball.
The NLCS matchup between the Brewers and the Dodgers was more than just a high stakes postseason game. It was a matchup of one of the most valuable teams in baseball, the Dodgers, versus one of the least valuable MLB teams, the Brewers. The Dodgers dominated, sweeping the Brewers and showing why MLB could have a salary cap in the coming years.
The Problem
Baseball is a sport where any team can win, that’s what makes it so unique. That is why the season has 162 games and why the playoffs are in seven game series. This is how baseball separates itself from other sports, any team can win if constructed correctly. The Dodgers have broken this aspect, as they have destroyed everyone, no one has been able to keep up with them, and it seems as if they have figured out the formula for success and longevity.
The salary cap has been a debate in baseball for a while, with fans and smaller market teams like the Brewers fighting for some sort of restriction on the money spent by the big market teams like the Dodgers and Yankees. The big market teams earn most of their money off lucrative TV deals because of their big cities like Los Angeles or New York City. The smaller market teams struggle to earn money, not having as much interest in cities like Milwaukee or Pittsburgh.
Television deals are also a huge problem for small market teams. The Dodgers and Yankees have TV deals worth hundreds of millions of dollars. The Brewers and Rays, for example, don’t have as much value for their TV rights, leading to less income for them.
Right now, the MLB has in place the Competitive Balance Tax, their version of the salary cap. How it works is that if a team spends over a certain amount of money, the luxury tax will kick in, and the team will be charged extra money.
The problem with this is that these big market teams just don’t care. They are willing to spend the extra money to have all the best players in the league and dominate the free agent market.
Another problem with the Competitive Balance Tax is that there are loopholes that teams like the Dodgers take advantage of. With the luxury tax implicated, the Dodgers payroll is around $549 million.
This number should be way more though. The Dodgers have started deferring the payments when they sign big name players to long term deals. Deferring the payments means that the Dodgers give a portion of the player’s yearly salary now and move the rest of the money to be paid in installments at later dates, maybe even years after players are done playing with them. This allows them to be able to avoid being further punished by the luxury tax, shaving off $46 million in expenses.
The first instance of the Dodgers using this deferred payment system was with All-Star Outfielder Mookie Betts, who received a 12-year, $365 million contract signed in 2020. His contract includes $120 million in deferred payments until the year 2044. This is a ridiculous loophole that the MLB needs to fix among other things to make the free agent market fair again. Betts will be paid by the Dodgers almost a decade after he is done playing for them.
The most recent and worst case of this would be with the Dodgers signing of Dodgers two-way, Japanese Superstar Shohei Ohtani. Ohtani signed a 10-year, $700 million contract in 2023 that broke records, but also included $680 million in deferred payments.
This is ridiculous, as the Dodgers only have to pay Ohtani $2 million a year over his 10-year contract, less than a bench player on MLB teams. Since 2020, the Dodgers have also included deferred payments on their contracts with players Will Smith, Freddie Freeman, Blake Snell, Teoscar Hernández, and Tommy Edman. In total, this adds up to about 1 billion dollars in deferred payments owed.
Most of these contracts were for All-Star caliber players and some of baseball’s finest at their respective positions, and the Dodgers have managed to retain them all with no problems whatsoever. This is the main reason why they won back-to-back World Series in 2024 and 2025.
It It shouldn’t be this easy for a team to build a championship caliber roster, they don’t have many homegrown players they have developed themselves, instead finding success in being the highest bidder, paying their way to success, which is not how baseball should be strategized.
No Simple Solution
Commissioner Rob Manfred and the MLB have wanted a salary cap for awhile and so have small market teams and their fans. Even teams like the Yankees, one of MLB’s most valuable franchises, have voiced concerns over spending on teams like the Dodgers. MLB has also suggested an end to the practice of deferring payments. The problem is the players’ association.
The MLB Players Association, or the MLBPA, is basically a labor union but for MLB players where they negotiate new deals with the MLB every four years or so.
This is the problem with a salary cap, teams and fans want it, but the players don’t. This is because a salary cap would mean that players would not receive as much money as they do now, because every team would have a set spending limit. Another reason is the owners want a salary cap so that they don’t have to spend as much, making the franchise more profitable, which isn’t fair to the players. A lot of factors play into solving the problem of the salary cap, and it might take years to figure it out.
This agreement between the MLB and MLBPA is set to expire on December 1, 2026, and many people aren’t certain that a deal will be reached right away with this huge argument that has presented itself in the past few years.
If a deal cannot be reached by the beginning of the 2027 season, there will be a lockout and no baseball played until all problems are resolved and a deal is reached.
The last time a lockout happened in the MLB was in 2021. A lockout is when an agreement cannot be reached, so in the MLB’s case, teams and their players cannot have any contact or negotiations with each other until a new deal is reached. The last time the salary cap was truly pushed by MLB owners was in the 1994-1995 MLB season, when a 232-day strike happened with the players and the World Series that year was cancelled.
History could very well repeat itself again as owners and the MLB are determined to get a salary cap, and MLB players could hold out. The 2027 season, or at least part of it, might have to be sacrificed to resolve the problem of a salary cap.
Possible Solutions
MLB is trying to find a solution for the salary cap by fixing the TV revenue. Manfred already expressed his desire to combine a TV deal for all 30 teams. This would solve the unfair advantage the Dodgers and other teams have as they wouldn’t have their own, better deals. The only problem with this is that teams like the Dodgers will not want to lose their advantage by not being able to pay as many players, as well as their profits. It might be hard to rally all 30 teams under one single deal as they all must be willing.
Another solution could be with a salary floor. Instead of making the Dodgers spend less money, teams who avoid spending money should have a salary floor, so they are forced to be competitive to somewhat compete with the Dodgers. This could also make some of the smaller market teams have to sign some of the big free agents which would prevent the Dodgers from getting so many high-profile free agents.
Realistically, MLB will be locked out for most of the 2027 season, if not all of it, as the MLB and MLBPA aren’t close to a compromise or deal. This 2027 lockdown could plunge ratings for 2028, and baseball would be in real trouble, just as it was in 1994. This lockout is inevitable at this point, and MLB teams will have to choose whether they are going to save their sport or keep risking the future of baseball.
