Major League Baseball is in the midst of its offseason swing with another headline signing taking over as the richest in the sport’s history.
Juan Soto signed on with the New York Mets earlier this month, inking a 15-year, $765 million contract with no deferred money. Soto’s deal trumps that of Los Angeles Dodgers superstar Shohei Ohtani and the 10-year, $700 million deal he signed just a year ago.
The caveat to those deals is the present day value attached, and how it impacts the luxury tax year-to-year. Ohtani’s contract has the majority paid out over an extra 10 years, providing the Dodgers with financial flexibility to add other high-priced deals.
The Dodgers, like other big market teams, can spend without the worry of financial constraints. This is beginning to sprout up as an area of the game the league might address, per Evan Drellich of The Athletic:
Owners are indeed considering a cap proposal, according to people briefed on their conversations who were not authorized to speak publicly.
The current Competitive Balance Tax (CBT) for the 2024 season is $237 million, including player salaries and bonuses paid.
The threshold is not a deterrent for those big market teams, rather just a soft guideline. For each year that a team is over the CBT, harsher penalties are imposed.
The flip side of the argument is that owners who refuse to spend money, like the Athletics owner John Fisher, are rewarded by watching teams more inclined to pay free agents be forced to stay under a rumored salary cap.
MLB commissioner Rob Manfred won’t have an easy time with an issue that was a sub-focus of a work stoppage 30 years ago. The owners are likely to be in favor of a cap while the players will be against it.
Major League Baseball Players Association lobbied against salary cap
During the 1994-1995 MLB strike that lasted over 230 days, the players’ issues with having a salary cap were at the forefront.
The MLBPA and MLB agreed to share profits, which get distributed around the league to all 30 teams. Having no hard salary cap like in the NBA, NHL or NFL protects the players and makes sure they get market value for what their relatively earnings should be.
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