Why Major League Baseball should have a Salary Cap
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When Shohei Ohtani received a ten-year 700 million dollar contract in December 2023, it raised some eyebrows. How can Ohtani get that much money?
Ohtani is a once-in-a-generation talent who should get with a large contract. As the second most valuable team in baseball, the Los Angeles Dodgers could add to their already large payroll. They now have the second-highest payroll in baseball. Since the lucrative Ohtani deal, some fans have been calling for a salary cap, which makes sense.
Players don't need big contracts
Firstly, Ohtani and other major sports superstars do not need this much money, which isn’t just an MLB issue. This goes for all professional sports. The “American Dream” costs about 3.4 million dollars, according to a 2023 CBS article, which includes a home, a wedding and engagement ring, raising two children to 18 years old, ten car purchases, pets, health insurance, retirement, hospital birth bills, one year of college for two kids, and funeral costs.
These players who make over 50 million dollars in their career make over ten times the “American Dream” even after taxes, attorney, and agent fees. Players should understand how to manage their money so they don’t go broke immediately with extreme purchases. Ohtani doesn’t need 700 million dollars to spend for the rest of his life. He needs 100 million dollars, if.
Other major sports leagues have salary caps
Another factor is that Major League Baseball is the only league out of the four major U.S. sports leagues that doesn’t have a salary cap. They technically have a balance tax, which according to their website, “Those who carry payrolls above that threshold are taxed on each dollar above the threshold, with the tax rate increasing based on the number of consecutive years a club has exceeded the threshold.” The issue is that teams with the highest revenue and greatest value have the resources to pay their players well and pay any penalty for it.
MLB explains that if a team has a payroll above 241 million for the 2025 season, they get taxed 20 percent on all overages for a first-year offense. For second and third-year or more offenses, it goes up to 30 and 50 percent respectively. There is also a surcharge for teams that go 20 million dollars or more above the threshold, with the Dodgers paying 150 million dollars and the Mets paying 72 million in tax for the 2025 season.
Teams like the Yankees and Dodgers, the most valuable clubs with some of the highest annual revenue, can pay star players lucrative contracts. Like the Ohtani contract, the Yankees contract for Aaron Judge in December 2022, a nine-year 360 million dollar contract, was the biggest at its time.
These two teams met in the World Series last year, which shocked no one based on their total payroll. According to USA Today, the Dodgers and Yankees are again two of the three highest payrolls for 2025. The highest payroll is the New York Mets, who made it to the NLCS in 2024. This means there's a high likelihood that these three financial juggernauts could again play a big part in the playoffs, perhaps making the World Series.
MLB commissioner Rob Manfred said he’s gotten emails from fans concerned about the lack of a salary cap.
“This is an issue that we need to be vigilant on,” Manfred said in February following the end of an owners meeting. “We need to pay attention to it and need to determine whether there are things that can be done to allay those kinds of concerns and make sure we have a competitive and healthy game going forward.”
Some MLB owners have begun supporting a salary cap as well. Orioles' new owner David Rubenstein told Yahoo Finance in January that he wishes it would be the case. He hopes for a system like the National Football League and National Basketball Association.
The NFL has one of the strictest salary caps of the three remaining major sports leagues. No team can go over the cap, leading to lots of contract restructures and roster moves. The National Hockey League has a similar system to the NFL where teams cannot go over the set salary cap whatsoever. The NHL has had seven different teams in the Stanley Cup and the NFL six different teams in the Super Bowl in the past five seasons (2024-2020).
The NBA has a soft cap, similar to the MLB where teams can go over the cap but pay a tax. If a team goes over the tax level, they have to pay $1.75 per dollar over the cap if the team is 5 to 9.99 million dollars over, $2.50 per dollar over the cap if 10 to 14.99 million dollars over, $3.25 per dollar over the cap if 15 to 19.99 million dollars over, and $3.75 + $0.50 per extra $5 million if 20 million and up over. The price goes up if a team is a repeat offender and a variety of exemptions, which makes it quite complicated.
In Major League Baseball, four of the past five World Series champion teams (2024-2020) were in the top ten for payroll across the league, the exception being the 2021 Atlanta Braves at 14th. Three out of the five losing World Series teams also were in the top ten for payroll, the others being the Arizona Diamondbacks in 21st and the Tampa Bay Rays at 28th.
Makes it so small market teams have to pay more
The NBA also has a rule that teams must spend 90 percent of the salary cap, something the MLB doesn’t have. Some low-market teams in the MLB spend less on payroll, so they don’t get good players and their performance falters. The Miami Marlins are the least valuable team and spent the lowest on payroll this season. It probably doesn’t surprise anyone that the Marlins finished last in their division with a 62-100 record in 2024. The MLB has seven franchises who have not been to the playoffs in the past five years while the NBA has two.
Besides the MLB making a salary cap, they should take a page out of the NBA’s book and have a minimum amount allowed to spend. Fans don’t want to see owners be cheap and have the team’s performance falter because of it. They want to see their team succeed and have a chance at making the playoffs. With teams spending the same, this would increase game attendance and garner more profit for the team and the league.
Major League Baseball should implement a salary cap to foster fair competition between huge spending teams and teams that don’t spend a lot. It will make teams more competitive and fans will enjoy the increased competitiveness and bring more excitement back to a sport that needs it. Also, do the best MLB players need the pay they're getting recently? Major League Baseball has the two largest sports contracts in the world with Juan Soto’s for the Mets and the aforementioned Ohtani one. Those who wish to do something should email Rob Manfred because he can see the emails. If more fans add pressure to the issue, then discussions will start and we can have a fair game again.
