While MLB has implemented significant changes to its on-field product over the past few years, there have also been events behind the scenes on the business side of the sport that could have ramifications when the current collective bargaining agreement (CBA) expires at the end of 2026.
For disgruntled owners, the issue at hand is twofold; the opportunity to execute a new long-term media rights plan and a growing divide between the haves and the have nots when it comes to generating revenue. Both issues play into each other as team’s local T.V. rights deals account for a large share of their yearly revenue.
Steve Cohen’s spending spree since purchasing the New York Mets in 2020 has also caused a stir amongst some of the owners.
Various financial factors are the responsibility of a committee of owners according to Evan Drellich of the Athletic:
Shortly after the last CBA negotiations, Manfred created an “economic reform committee,” a group of six owners dedicated to reviewing two issues: the future of local television, and club revenue disparities.
Los Angeles Dodgers owner Mark Walter headed the group when it was initially formed, but that has since shifted to Terry McGuirk of the Atlanta Braves:
Mark Attanasio of the Milwaukee Brewers, John Henry of the Boston Red Sox, Chris Ilitch of the Detroit Tigers, Terry McGuirk of the Atlanta Braves, Dick Monfort of the Colorado Rockies and Mark Walter of the Dodgers make up the economic reform committee, a person briefed on its proceedings said. McGuirk is the chair, having succeeded Walter.
Despite the expiration of the CBA being two seasons away, the formation of the committee was necessary due to the likelihood of another round of tense negotiations and likely lockout.
The Dodgers’ 25-year, $8.35 billion contract with Time Warner Cable in 2013 was the kickstart for their tremendous financial growth over the years.
MLB’s desire to shakeup the status quo of local television rights stems in part from the economic failure of their partnership with Diamond Sports Group. The broadcasting company was in charge of the telecast for 12 different teams at the time it filed for bankruptcy in 2023.
MLB salary cap?
The Mets’ spending has only grown in 2024 with their 15-year, $765 million contract with Juan Soto becoming the largest in MLB history. The Dodgers have been right along side them with their moves in just the past two offseason periods alone, committing more than $1 billion in 2023 and continuing to add payroll so far this offseason.
At this point a salary cap proposal from the owners seems inevitable when new CBA negotiations begin. But Walter’s continued presence on the economic reform committee could provide an opportunity to find some common ground between owners who want to aggressively spend and those who don’t.
Although the Players Association is likely to agree to such a drastic change, an MLB salary cap also would come with a floor, and that could prove problematic for some teams.
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