In every major North American sport, the combined average annual value of your players’ contracts comprises the team payroll for each season. Major League Baseball (MLB) remains the only major North American sport without a salary cap on that payroll, of some kind, in its Collective Bargaining Agreement. Additionally, it is also the only sport not requiring teams to meet a salary floor for their payrolls. In essence, teams can have wildly different total payrolls from each other with few repercussions. There is one important caveat: The Competitive Balance Tax or Luxury Tax. To explain, team payrolls are subject to thresholds. When those thresholds are met or exceeded, the Competitive Balance Tax kicks in, taxes the team exceeding that threshold, and disperses the tax to the rest of the league in the form of things like revenue sharing and player benefits.
Every other major North American sport has a hard cap and a salary floor. Fundamentally, competitive balance is achieved on a monetary scale, at least in a team roster sense. Wealthier teams cannot just buy whoever they want, and cheaper teams cannot just roster the worst thing your eyes have borne witness to. Teams must be competitive at least on a monetary level.
If you understand these rules—from my probably bad explanation—you may notice a problem right away with MLB’s system: How do you ensure it remains fair between wealthier teams that can spend whatever they want with little to no repercussions, and poorer franchises who are privy to spend nothing and roster trash teams? MLB’s answer: Who cares?
Currently, the team with the highest payroll is the New York Mets, at a staggering $317,778,899. The lowest is the Oakland Athletics at $63,407,581. We are talking about a difference of over 5 times the money. How is that possibly fair? Take a look at the playoff teams from last season. They all have one of two things in common: Young players on cheap deals to keep payroll down, or a ridiculously high payroll.
Take a look at the playoff teams from last season. They all have one of two things in common: Young players on cheap deals to keep payroll down, or a ridiculously high payroll. Of the 12 playoff teams in the 2024 season, 7 of them had payrolls in the top half. That is not too bad, until you realize the World Series was between the New York Yankees and the Los Angeles Dodgers, 2nd and 5th in payroll, respectively. The Yankees encountered virtually no difficulty in brushing aside all the low payroll scrubs on their way to the American League Pennant, and the Dodgers encountered difficulties against the Mets and San Diego Padres, who were 1st and 15th in payroll, respectively. Deferred money aside, Shohei Ohtani, the Dodgers’ best player, is being paid $70,000,000 per year. In case you had not noticed, that is more than the Oakland Athletics’ entire roster. In fact, I am being extremely generous in counting my previous number as the Athletics’ payroll, since their active roster has a grand total of just $28,956,713.
Now, the obvious unfairness of the payroll differences is supposed to be solved by the Competitive Balance Tax, but it only makes things worse. Because taxes on wealthy teams are redispersed throughout the league through things like revenue sharing, there is virtually no incentive for the small market teams to care enough to spend more money—at least from a monetary perspective. Why would they, when teams like the Dodgers and Yankees can spend more money, get taxed for it, and the owners of these smaller market teams get to pocket the profits from that tax? They would actually lose more money giving out expensive contracts to players, because whatever extra revenue they would generate from their teams being more successful is offset by the lost money on having to actually pay those players and the tax money they could have collected from the larger market teams, without any extra effort.
So, is it time to introduce a salary cap? Well, there is a valid argument against it. Baseball has proven time and time again that spending more money does not necessarily equate to winning. Take the Dodgers this year. Yes, they were 5th in payroll, but to win their World Series, they had to beat the Mets and the Yankees, 1st and 2nd, respectively. The Houston Astros, 4th in payroll, got knocked out by a wildcard team, the Detroit Tigers, that was 26th. In 2023, the Arizona Diamondbacks managed to get to the World Series with the 21st payroll in baseball, crushing the 5th and 6th payroll teams on their way there, but ultimately losing to the Texas Rangers in the World Series, 4th in payroll. I guess money can only get you so far.
Nevertheless, as valid as it may be, I think the problem with the above argument is that so few teams end up being the Arizona Diamondbacks. Instead, most end up being the Texas Rangers and Los Angeles Dodgers: Top 10 payroll teams just competing with the other elites for World Series titles.
So, what to do? Well, I think a good start is a salary floor. This could at least force the small market teams to not produce a purposely awful product on the field with no reason to ever spend any money. A cap would be helpful too as it would likely create a league with more parity. Baseball is slowly dying for plenty of reasons, one in particular being that fans—frankly the MLB itself—only care about the same 8 to 10 teams. The rest of the teams exist as fodder for those elites to stomp on to their way to victory. This is fine for generating money from those big markets, but it does nothing to grow the game. What do Colorado Rockies or Pittsburgh Pirates fans have to cheer for when their young players just get poached by the bigger market teams and even if by some slim chance they make the playoffs, odds are the same juggernauts will swat them away with their old players? Look no further than the reigning World Series Champions. All three of their best players, Freddie Freeman, Mookie Betts, and Shohei Ohtani, came up with other teams and the Dodgers snatched them away with large price tags their previous teams were not willing to pay.
Digressing for a minute, where does this leave our Toronto Blue Jays? Well, Rogers is one of the richest owners in the sport. Up until recently they were known for being a relatively cheap team, but the Jays have consistently been in the top 10 payrolls for the last few years. Despite how bad they were in 2024, the Jays had the 9th highest payroll in Baseball at $218,402,819. Toronto clearly benefits from the no cap system, so maybe we should not be complaining about it, even if the intra-divisional Yankees are spending over $80,000,000 more than us…
It should be obvious which side of the debate I fall on. Sure, we can pretend that Baseball has parity because we see different World Series winners and all that, but let us be honest, payroll is the biggest determinant of success. I think it is time this old sport followed in the footsteps of some of the younger leagues around them by introducing a salary cap and floor. Do fans really want to see the Dodgers, Yankees and the other handful of similar teams in the World Series every year? I know I do not.