The abrupt resignation of MLBPA chief Tony Clark this week over an embarrassing affair with his sister-in-law, who was hired by the union, brings greater uncertainty to future labor negotiations between the unions and owners as the labor deal expires at the end of the baseball season. Many observers are girding for a divisive standoff that could lead to a prolonged work stoppage, possibly the longest since the one in the 1994-95 season that cost the sport a World Series.
But while much of the attention has been on the division between players and teams, another rift seems to be developing – one between small-market clubs and large-market clubs. Profligate spending by the Dodgers has “enraged” other owners, according to Evan Dreilich of The Athletic, who are determined push for a salary cap “no matter what it takes,” according to one source.
Small market teams have been complaining about the financial inequities in the game for years. In a piece last fall from Jeff Passan at ESPN, he wrote that the gap between spending clubs has increased like never before, with a strong correlation between spending and success on the field.
“How do we compete?” one mid-sized-market team president said. “We try to do everything right. We draft well. We develop well. And then we get the s— kicked out of us by clubs that buy their players. It feels like the game is rigged.”
Commissioner Rob Manfred, while praising the Dodgers for winning a title, says he understands the concerns from fans over a perceived imbalance.
“But I do get concerned. We try to listen to our fans, and we do hear from fans in a lot of markets that, ‘Gee whiz, when we look at the resources they have compared to the resources that are available in our market, we don’t feel like it’s quite a fair shake,’ and that’s an issue we’re going to have to deal with.”
Dreilich recently sketched out what a proposed salary cap-and-floor proposal from owners might look like. The initial plan would be phased in, with a cap of around $240 million and a floor that would require all clubs spend at least $160 million on player personnel.
That would likely stem the increase of player salaries at the top end, like the $60 million annual-value contract signed by Kyle Tucker with the Dodgers. But it would also require small market teams to spend vastly more than they currently do, which is bound to be a major sticking point. As Jeremy Greco pointed out, 15 teams were under that threshold in 2025, which would require nearly $750 million in spending overall for those clubs to reach the floor – including $90 million in additional spending by the Marlins alone. As Dreilich wrote, small-market teams are likely to resist.
“The biggest beneficiaries are going to be the biggest markets, and the biggest losers will be the small markets,” said the management source. “They’ll have to spend money in order to be a part of this. And the big markets will do well because there will be no pressure from fans to go to $300-400 million payrolls and so forth.”
Any push for a salary floor will require greater revenue sharing. MLB’s economic structure differs from the NFL’s so much because clubs rely heavily on local TV deals, while all NFL deals are national. The Royals can generate some revenue from a regional sports TV network, whether it is FanDuel Sports Kansas City or Royals.TV, but it is a pittance to the revenues the Yankees can get from the YES Network with a market size that draws that of the Kansas City metro area. Large market clubs share 48 percent of local TV revenues with MLB to be split equally, but that still leaves a large slice for themselves. The Chiefs, on the other hand, get all their TV revenue from the national deal that the league signs with broadcast partners – NBC, CBS, Fox, Amazon, and Netflix – and revenue is split equally among all teams.
Manfred seems to want to move closer to that model, but he could get resistance from the large market clubs. With the collapse of Main Street Sports, which owned the FanDuel regional sports networks, MLB now owns the local TV rights for 14 clubs – with the Angels broadcasts still to be determined. Manfred would love to collect all local TV rights to package to national sellers, according to a piece this week by Dreilich.
“Ideally,” Manfred said, all 30 teams’ local rights would be available come 2028. “I’d love to get there. … I don’t need to get all the way there to accomplish most of what I’m thinking.”
But some large market clubs have very lucrative local TV deals they may be unwilling to give up. Cubs owner Tom Ricketts called The Marquee Network, which the team launched in 2020, one of the best things the team ever did, saying, “We love the network, and we love our independence.”
Dreilich suggests that Manfred could entice big market owners by increasing the overall pie, even if it is split more equitably.
But money is usually most important. Revenues from national games would be split equally amongst the clubs. Teams have to share some of their local TV money, too, but they keep much more of the proceeds on a percentage basis.
Manfred wants to spread TV money between owners more evenly than today, and his bet is that, if national TV deals can bring in enough new money in aggregate, then big-market teams — which possess the most valuable rights — could be more likely to go along with him. (Landing a salary cap in negotiations with players would help that effort.)
This would also likely mean that while most games would be available on some local source like Royals.TV, many more games will be part of the national inventory to be broadcast on a wide menu of options. While small-market teams may enjoy a more stable source of revenue, fans will continue to be saddled with extra costs to subscribe to different platforms to follow their local club.
Before the owners have anything to negotiate with players, they will need to settle issues among themselves. Under MLB’s constitution, 23 of 30 clubs must approve revenue-sharing changes. That creates a delicate balancing act. Small-market teams may demand stronger revenue guarantees before agreeing to a payroll floor. Large-market clubs may resist surrendering lucrative local media control unless the national package truly expands the pie. The sports could be on the verge of some major changes that could put the sport on a better footing. But there is likely to be a lot of messy negotiations in the meantime, not just with the union, but amongst owners.