Written by: Brooke Williams
On November 1st, 2025, the Los Angeles Dodgers became the first team to win back-to-back World Series titles since the 2000 New York Yankees. Though the Dodgers truly have no shortage of talented players, their staggering $240 Million 2026 payroll may also be a reason for their dominant performance of the past few years (Jackson, 2025). The Dodgers, who have the highest payroll for 2026, are $30 million above the next highest team, The New York Mets, and over $200 million above the lowest paying team, The Miami Marlins. With two World Series titles under their belt in the past two years, the Dodgers have faced criticism from many on whether their wins are truly deserved, or if they just have the most money to throw around of any team in the league. The sport is becoming less fun to watch for many and a key discussion has arisen: should there be a salary cap or floor implemented in Major League Baseball?
A salary cap, a maximum amount a team can spend in a year, and a salary floor, a minimum amount a team can spend in a year, are two means by which sports leagues seek to equalize the field and make the competition between teams more equitable. Major League Baseball (MLB) currently has no such measures in place, and they are the only major U.S. sports league without such a salary limitation (Sherman and Rizzo, 2025). The MLB does require a luxury tax and revenue sharing, but there is no limit to spending even in lieu of these requirements. This could change soon, however, as the MLB’s current Collective Bargaining Agreement (CBA) expires on December 1, 2026 which is opening the league to discussions about altering its economic structure. The public has started arguing to add a salary cap or floor as a result of the high spending of the Dodgers and the Mets, and during the CBA owners may make the largest push since 1994 to implement a salary cap (Passan, 2025). Still, however, questions of the economics of these installations, and if they would even work, arise and an analysis of the economic implications may become important in the decision-making process.
The NBA is a good example that can be considered when debating the use of a salary cap in other major league sports. The NBA uses a “soft” cap, which is essentially a salary cap that can be bypassed with certain contracts and other circumstances, which is opposed to the NFL and NHL that impose “hard” caps and thus hard spending limits (Cushman, 2024). The NBA has actually seen success with this salary cap and since its implementation organizational gaps have declined leading to increased performance by teams (Chatzistamoulou et al., 2022). This remarkably made the playing field more competitive and decreased monopolistic tendencies in the NBA. Monopolies create market inefficiencies, and if a salary cap was able to decrease these practices in the NBA it is worth considering that a soft salary cap could work in the MLB as well and may even help correct these inefficiencies.
Salary floors are another implementation that is being debated for use in the MLB. Higher salary floors in leagues have shown higher competitive balance, but also increases the cost per unit for talent (Dietl et al., 2010). For this reason, salary floors result in lower profits for all clubs involved, but increase the ability for teams to compete on a more equal playing field. While this would get rid of market inefficiencies in professional leagues, it seems unlikely that teams would agree for lower profits just to have a better shot of being a competitive playoff contender. Players, however, would see salary increases and thus they may campaign for the salary floor come December 1, 2026.
Salary caps and salary floors are both plausible options to attempt fixing the competitive issues within the MLB, but are they actually solutions that would work? These salary limitations may have worked in other leagues such as the NFL, NBA, and NHL, but the issue of parity is not necessarily as great in the MLB as it was in these leagues. In the 2000s, twenty-one out of thirty teams won their league’s pennant and market size did not have much correlation with the amount of times a team appeared in the finals (Snyder, 2022). Thus, as it appears to some, there is a fair amount of parity in the MLB making the need for a salary cap irrelevant.
On the other hand, there are teams that are too dominant that bring the discussions of a salary cap to a head. The aforementioned Dodgers have won five National League titles in the last nine years and many owners argue that this is because the Dodgers spend too much money, calling for a salary cap (LaMar, 2025). Players, however, do not want a salary cap as they would like to see their salaries continue to increase. Another interesting point here is the scenario of match fixing. Match fixing, when players, coaches, or referees intentionally create an outcome to a game, becomes more prevalent as salaries decrease (Deutscher et al., 2017). This is because expected payoffs from cheating increase as salaries decrease and with the installation of a salary cap, instances of sports actors accepting bribes may become more prevalent, having the adverse effect of creating less parity in the league. In the wide variety of scenarios in which there is an implementation of a salary cap, floor, or nothing at all there is no doubt that there will be serious levels of debate between the owners and the players.
Salary caps, salary floors, and the installation of both or neither all have their potential benefits on the MLB and their potential consequences. With the Los Angeles Dodgers finally getting their back-to-back World Series title, the limitations of salary will surely come to the forefront of debate, especially as the CBA comes to expire. It will surely be difficult for the players and owners to compromise on a deal, and it may be even more difficult to compromise whether any action is needed at all.
References
Chatzistamoulou, Nikos, Kounetas Kostas, and Antonakis Theodor. “Salary cap, organizational gap, and catch-up in the performance of NBA teams: A two-stage DEA model under heterogeneity.” Journal of Sports Economics 23.2 (2022): 123-155
Cushman, C. (2024). Salary Caps in Sports: Overview | EBSCO. EBSCO Information Services, Inc. | Www.ebsco.com. https://www.ebsco.com/research-starters/sports-and-leisure/salary-caps-sports-overview
Deutscher, C., Dimant, E., & Humphreys, B. R. (2017). Match Fixing and Sports Betting in Football: Empirical Evidence from the German Bundesliga. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2910662
DIETL, H. M., LANG, M., & RATHKE, A. (2010). THE COMBINED EFFECT OF SALARY RESTRICTIONS AND REVENUE SHARING IN SPORTS LEAGUES. Economic Inquiry, 49(2), 447–463. https://doi.org/10.1111/j.1465-7295.2010.00330.x
Glorioso, J. (2024). WASHINGTON, D.C., APRIL 24, 2024— Washington Nationals faced the Los Angeles Dodgers at Nationals Park.
Jackson, S. (2025). MLB Teams With Highest 2026 Payrolls: Dodgers on Top. BetMGM. https://sports.betmgm.com/en/blog/mlb/mlb-teams-highest-payrolls-2023-bm15/
LaMar, M. (2025, October 28). Should MLB adopt a salary cap? It depends on the problem you’re trying to solve. Royals Review. https://www.royalsreview.com/royals-editorial-opinion-reaction/89613/should-mlb-adopt-a-salary-cap-it-depends-on-the-problem-youre-trying-to-solve
Passan, J. (2025, September 18). MLB labor: How fight over salary cap will shape negotiations – ESPN. ESPN.com; ESPN. https://www.espn.com/mlb/story/_/id/46294140/mlb-labor-negotiations-salary-cap-baseball-talks-2027-season-lockout
Sherman, A., & Rizzo, L. (2025, April 10). MLB weighs a salary cap as potential lockout looms in 2026. CNBC. https://www.cnbc.com/2025/04/10/mlb-weighs-salary-cap-potential-lockout-looms.htmlSnyder, M. (2022, February 14). Why Major League Baseball does not need a salary cap for the sake of parity. CBSSports.com. https://www.cbssports.com/mlb/news/why-major-league-baseball-does-not-need-a-salary-cap-for-the-sake-of-parity/