MLB Labor Update: League Proposes Strict Limits on Free Agent Length and Value

Major League Baseball proposed limiting most free agent contracts to five years and 15% of a team’s salary cap and to eliminate deferred compensation, fleshing out details of a salary cap plan likely to spark a confrontation with the players’ association. MLB’s plan would eliminate deals such as Juan Soto’s $765 million, 15-year contract with the New York Mets. The league said just seven players this year exceed the proposed maximum and 98% of free agent contracts would not have been impacted. “There’s no question that we’re very far apart,” union head Bruce Meyer said during an online news conference. During a bargaining session Thursday at the union’s office, MLB said it would accept the union’s proposal granting free agency a year early for players who have reached age 30 if the union accepted the league’s salary cap system. MLB also proposed boosting the minimum salary from $780,000 to $1 million for those with two years of big league service. MLB also proposed increasing the pre-arbitration bonus pool from $50 million to $65 million next year and $75 million by 2032, the sixth season of MLB’s proposed seven-year deal. Meyer said “the debate got a little more vigorous today.” “The league has done us a favor because their proposals are in fact so obviously and extremely bad for players at all levels that it’s actually been a benefit for our unity,” Meyer said. “Anybody’s who’s banking on Major League Baseball players cracking, it’s never happened. It’s not going to happen. That’s why we’re the only ones who don’t have a salary cap.” MLB also said it would agree to eliminate the qualifying offer for free agents that since its inception in 2012 has restricted the market for some players. Bargaining started May 13 for a contract to replace the five-year deal that expires Dec. 1, and owners proposed a salary cap for the first time since the union fought off the system during a 7 1/2-month strike in 1994-95. MLB is expected to impose a lockout in December, halting free agent signings and trades. After the prior agreement expired in December 2021, intensive bargaining did not start until late February as the threat approached of losing regular-season games — along with revenue and salary. The sides reached an agreement on March 10, the 99th day of the lockout, preserving the 162-game schedule. In the league’s cornerstone proposal, made last month, team spending would be capped next year at $245.3 million, using figures for luxury tax payrolls that include $20.1 million for benefits and the pre-arbitration bonus pool. It also would establish a payroll floor of $171.2 million, forcing several teams to spend more. The two-time World Series champion Los Angeles Dodgers, baseball’s biggest spenders, had a $415.2 million payroll on opening day this year — around $170 million over the proposed cap. “The biggest issue baseball fans want solved to strengthen the game is fixing the payroll disparity that leaves too many fans without hope of their team competing for a World Series title,” MLB spokesman Glen Caplin said in a statement. “Every other major U.S. sport has tackled this problem, and every year more small market teams in those leagues have a chance to win. The salary cap and floor proposal levels the playing field.” Meyer took issue with that. “It’s appalling that the stewards of the game, the people whose job it is to grow the game primarily and promote the game have for whatever period of time now in the last couple of years been saying nothing but the game’s broken,” he said. As part of the plan, MLB would establish a “cornerstone player” similar to the NBA’s Bird rule, which would allow a team to re-sign a player at 16% of the cap. A free agent switching clubs would be limited to a $36.8 million salary next year and a re-signing player to $39.2 million. Salaries for free agents in additional seasons of a multiyear contract would be limited to 5% increases, as would salaries for younger players in multiyear deals that cover potential free-agent seasons. Contracts would be capped by service time: at $500 million and 12 years for those yet to make major league debuts, $461 million and 11 seasons for those with 0-1 years of service, $421 million and 10 years for 1-2, $382 million and nine seasons for 2-3, $343 million and eight years for 3-4, $304 million and seven years for 4-5, and $265 million and six years for free-agent eligible players. Banning deferred compensation would eliminate a business practice used most prominently by the Dodgers, who owe just under $1.1 billion to 10 players from 2028-47. In addition, MLB would restrict bonus provisions in player contracts and mandate a standard award bonus package. MLB said it would accept the union’s proposal to drop free-agent eligibility to five seasons of service from six for those turning 30 by the Nov. 1 of the offseason. MLB said 354 players on big league rosters as of Thursday would reach free agency a year earlier. MLB would start the change in the 2027-28 offseason. As part of the minimum salary proposal, MLB said players with less than two years of service would have a $900,000 minimum and if earning a full year of service would get an additional $100,000 from the pre-arbitration bonus pool. Minor league minimums for players with major league contracts would increase from $63,600 to $73,400 for initial big league deals and $127,100 to $146,700 for additional contracts. Players made proposals on allowances and gambling. Reporting by the Associated Press.