Before the confetti was even cleaned off the artificial turf surface of Toronto’s Rogers Centre following the Dodgers’ second consecutive World Series championship, talks of salary caps were circulating social media platforms, becoming once again salient in the baseball world’s discourse.
At the center of these discussions, fresh off back-to-back World Series wins, are the Los Angeles Dodgers, a squad whose total payroll for the 2025 season exceeded $350 million. While fans are quick to call out the team’s exorbitant spending — debating the power that money has on the outcomes of baseball — an alternative has begun to gain traction, one that focuses less on the big spenders, zeroing in, rather, on the bottom of the salary expenditure totem pole. Arguments for salary floors have reignited the dialogue on wages in the MLB.
While there is no explicit cap on salaries in the MLB, a de facto cap exists in the form of a luxury tax, officially called the Competitive Balance Tax. If a team exceeds the salary threshold determined by the collective bargaining agreement reached between the league and its Players Association, every subsequent dollar is subject to taxation. The tax rate imposed on a club is determined by the number of consecutive years the threshold has been exceeded.
In 2024, the Dodgers’ total salary amount far exceeded the $237 million threshold, automatically subjecting them to the luxury tax, and because they had exceeded the threshold three years in a row, a 50 percent base-tax rate was imposed. For a CBT-threshold repeat offender, big-market teams like the Dodgers, the $103 million slap on the wrist does not have the deterring effect that the league might have hoped.
What salary-cap enthusiasts may be losing sight of is the very motivation behind large payroll expenditures. In the most reductive of conclusions, teams like the Dodgers are spending sky-high sums of money to win championships — to become more competitive. It is true that the MLB has a disproportionate competition problem, but it’s not stemming from luxury tax offenders. It seems that setting a cap on big-market teams to make the league as a whole more competitive is just rearranging the deck chairs on the Titanic, or in this case, rearranging the stadium seating at the Athletics’ former stomping grounds, Oakland-Almeda County Coliseum.
Among the teams consistently near the bottom of player-salary expenditure is the Athletics of West Sacramento, currently a temporary stop in the multi-year transition period that will ultimately end in Las Vegas. While, inherently, arguments are made about small-market teams reducing expenditures in salary to compensate for smaller revenues and facility costs, it can also be argued that the ultimate shortcoming of these clubs is that they are being run like businesses instead of baseball teams. Many of the small-market teams at the bottom of payroll expenditure also rank among the bottom in percentage of revenue going toward player salary totals. In 2024, the Athletics spent 34 percent of their $241 million revenue, 16 points below league average for that year, and were second lowest overall. On the opposite end of that spectrum were the Mets, who spent 102 percent of their $441 million revenue, arguably for the purpose of attracting star talent like Juan Soto.
While some small-market teams are able to find success, as the Athletics famously did in their 2002 “Moneyball” season, teams at the bottom of league-wide salary payroll totals tend to finish far lower in overall standings than the teams exceeding the salary thresholds. Money certainly isn’t the be-all and end-all determinant of success in baseball, but refusing to spend money, or consistently failing to create success by way of unnecessary frugality, has yielded few championships in the past decade.
None of this, however, is to say that a salary cap should not be implemented. A salary cap and a salary floor could work in harmony to create a league that is competitively balanced. Capping salaries without a pay floor would do nothing to discourage the current executive actions of small-market teams; owners could continue to gut franchises to construct new stadiums, in hopes of expanding markets and creating more revenue, instead of repairing historic venues and paying players more. A salary floor without a cap would run the risk of creating an environment in which small-market teams are forced to overpay for talent, while historic big spenders are still able to attract and afford the biggest names.
As the current collective bargaining agreement between the MLB and its Players Association enters its final year, speculation of an imminent lockdown has begun to circulate. The Players Association has made it clear that the salary cap, which many owners now support, is completely off of the table.
“The issues that we see in the system we know can be addressed without a cap,” said Tony Clark, the MLBPA’s executive director in an October press conference.
“There [are] opportunities for all 30 teams to be excellent,” he went on to say in reference to smaller-market teams. “Some are investing in that excellence, some aren’t.”
For Clark and the Players Association, teams that don’t spend money on players are accepting the inherent tradeoff between payroll expenditure and success during the season. A salary cap cannot exist in perpeturity without a salary floor, but as the MLBPA has made it very clear: it might be impossible to attain either one.
What remains unclear is if the proposal of a salary floor would get the payroll cap back on the table at the collective bargaining negotiations in December 2026. As for now, big-market teams continue to attract talent, and consequently, championships; small-market teams continue to finish at the bottom of the standings. If bounds are not put on the payrolls of MLB teams, what will be the catalyst that changes the status quo of salary expenditure?
