Major League Baseball's ongoing battle over a salary cap dates back nearly 150 years, with owners repeatedly seeking to control payrolls while players resist. The current collective bargaining agreement expires on December 1, 2026, raising concerns about potential labor disruptions similar to past strikes. Recent Dodgers success highlights spending disparities that fuel the debate.
The tension between MLB owners and players over salary caps has persisted since the late 19th century. In 1889, National League owners imposed a classification plan limiting player salaries to tiers, with no one earning over $3,000, sparking the formation of the Brotherhood of Professional Base Ball Players by John Montgomery Ward. This led to the Players' League in 1890, which outdrew the NL in cities like Boston, Chicago, New York, and Philadelphia, attracting stars such as King Kelly, Old Hoss Radbourn, and Dan Brouthers. The league folded after one season due to financial pressures, but it pressured the NL to adjust.
The American League emerged in 1900 as another rival, eventually partnering with the NL to create the World Series. Fast-forward to 1985, MLB owners proposed a cap patterned after the NBA's 1984 model, targeting an average payroll of $10 million and restricting free agency for over-spending teams. Players, led by Donald Fehr, rejected it, citing hidden profits revealed in a union-sponsored report that showed $25 million in earnings masked by accounting tricks.
The 1994-95 strike, the longest in MLB history, canceled the World Series and stemmed from owners' demands for a cap, elimination of salary arbitration, and restricted free agency. Unilateral owner changes in 1995, including a cap and replacement players, were overturned by a federal injunction from Sonia Sotomayor, reinstating the prior CBA. Labor peace followed, with the 1997 agreement introducing a luxury tax instead of a hard cap, penalizing high spenders to promote competitive balance.
Today, the luxury tax functions as a soft cap, with teams like the Dodgers paying over $100 million in penalties last year. MLBPA executive director Tony Clark continues to oppose a salary cap, echoing Marvin Miller's view that no union could accept one. As 2026 approaches, historical patterns suggest renewed fights over spending, revenue sharing, and parity.