Does baseball have a salary cap?

Why is the MLB not introducing a salary cap?

Owners would have a wage cap in a New York minute if they got the chance. The players would not agree to this, however, and because MLB is so financially successful without one and also has one of the most powerful players' unions, the owners do not have the power to impose it on them. It's not hard to find articles on how the MLB owners want a salary cap and the MLBPA is opposed to it. see this, this,

Why this? Because a salary cap shouldn't create parity The main function of a salary cap is to lower players' salaries, or at least keep them from escalating too quickly. Salary caps reduce the maximum a player can earn - either directly (NBA style) or indirectly (NFL style) by simply reducing the total amount a team can spend on salaries.

The problem with MLB's non-cap (especially the recent luxury tax rules) was that player contracts simply escalated as new owners came in and decided to spend a lot. This escalation was not necessarily related to the league's total income. The NFL and NHL and, to a lesser extent, the NBA (which is a softer cap closer to MLB's current system) have direct links between revenue and player salaries - meaning player salaries cannot escalate dramatically unless total revenue for the league is very high.

Take a look at the following table of strike income after 1994 versus player salaries:

While the two lines tend to coincide over the long term, there are some regions that are very different - especially 2001-2004 and 2008-2012, where player salaries were well above the trend line compared to MLB earnings. Some of the major CBA changes were directly due to these differences. Note that the latest CBA finally seems to have had enough sway that the line of players is below the line of the MLB for the first time since 1998.

A full salary cap would guarantee that it would stay below or on the trend line. That's why the owners - almost all business people who want to run a successful business, apart from Jerry Reinsdorf - want a full salary cap. Conversely, the MLBPA would prefer not to have one, so salaries can be higher thanks to the free market bids.


A note on the NBA: Because of the very ... weird ... NBA salary cap, it's actually less fair. This is because Lebron type players are severely underpaid due to the player salary limit. NFL and NHL style salary caps are much fairer in terms of competition. But they also reward good front offices - which is why they probably have fewer “new winners” compared to the MLB. They also have less trading than the MLB for future talent, which means teams like the Rays, the Royals, the A's, etc. can grow on relatively low salaries by trading their good players for future prospects who will be much cheaper . MLB also has a far more constrained pay structure for newer players - most players play three full seasons for next to nothing and three more at very low rates before becoming free agents, unlike the NFL (rookie salaries are capped but far less than MLB) or NBA.

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But the league will pretend that a salary cap is about parity.