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The Milwaukee Brewers, competing in Major League Baseball's smallest media market with the 19th-highest payroll among 30 teams, clinched the World Series title this week. Their triumph would appear to challenge the notion that baseball requires a major economic restructuring to ensure fairness for smaller-market clubs. Nevertheless, signs strongly indicate that team owners are preparing for a fierce labor battle in the upcoming negotiations, which are set to intensify in about a month and could result in the cancellation of a substantial portion of the next season.
Commissioner Rob Manfred, speaking to reporters just before the World Series began, stated that the matchup between the small-market Tampa Bay Rays (27th-highest payroll) and the Brewers did not alter his stance on the upcoming negotiations. "I think that small markets operate at a disadvantage economically," Manfred said. "They just don't have the resources that our bigger markets do. The best evidence (is) the Brewers have been a well-run franchise forever. It's been 40 years since we're here. Once every 40 years is not enough."
The players' union has unequivocally identified a salary cap as its primary battleground, even though unions in other major North American leagues have accepted such caps. The union views a cap—which would restrict each team's total payroll—as a means to suppress salaries and boost owner profits and team valuations, rather than a genuine effort to promote competitive balance. "The results of these playoffs obviously further undermine their argument for why they (say) they want it," said Bruce Meyer, the union's executive director. "But again, that's not the reason why they want it. The fact that they're doubling down on the cap now in the wake of what's happening with this World Series just illustrates that it's not about competitive balance. It's not about teams not having hope. It's about, again, their desire, which they've had for decades, to have a system that artificially suppresses player salaries."
Key Analysis
The rationale for aiding small-payroll teams has rarely seemed less pressing. The Brewers and Rays eliminated the high-spending Los Angeles Dodgers and New York Yankees, respectively, in earlier playoff rounds. The New York Mets, boasting one of the most expensive rosters in any sport, finished last in their division. The previous two championships were claimed by the Dodgers, a financial powerhouse whose pursuit of a third consecutive title this season led some fans to believe the competitive landscape has become critically unbalanced. MLB has amplified this narrative with commercials advocating for a salary cap.
However, Manfred essentially conceded that the current push is not driven by a worsening competitive balance but by greater unity among owners. "We have an unprecedented level of unanimity among ownership that this is something that we need to do, that we need to get ourselves in a position to operate like all the other major professional sports in North America," he said when asked about the timing of this negotiating priority. "And our fan polling has moved hard in the direction of the fact that we have a problem, and that our fans see a salary cap as the answer to that problem," he added.
Despite the absence of a salary cap, baseball's competitive balance appears on par with, if not better than, other major American sports. The Brewers are the 10th different champion in the last 13 years, though the first from a bottom-half market since the Kansas City Royals in 2015. Over the same period, the NFL, which has a hard cap, produced only seven different Super Bowl winners, and the NBA had nine different Finals champions. Four of baseball's champions in that span, including the Brewers, had never won a title before, and four others had gone at least 25 years since their last championship.
Spending more on talent still matters. "The champions—and the teams with the best records—are more likely to be the team that spends more," said Andrew Zimbalist, a retired economics professor at Smith College and a leading expert on the business of sports. "This year is not extraordinary, but it's anomalous. It doesn't usually happen this way," he said. Zimbalist estimated that payroll accounts for only about 25% of the variance in win-loss records between teams during the season. "That's not enough to be determinative, but it does have an impact," he said. Still, Zimbalist doubts that competitive balance is the owners' true motivation for demanding a cap. "If an owner says to me, 'Andy, I don't care about profits. All I care about is competitive balance,' I'm going to say, 'Sorry, dude, I don't believe you,'" he said. "I think it's obvious that the owners are looking to have more stable profits."
A lockout looms large. The near-universal expectation is that owners will lock out the players on December 1, when the collective bargaining agreement expires. A lockout is essentially a strike initiated by management rather than by unionized workers. An immediate lockout could increase the chances of reaching an agreement before the season starts in late March, avoiding the loss of broadcast rights fees and ticket sales. That scenario unfolded in 2021-2022 when owners locked out players early, and the dispute dragged on through the winter and what should have been the start of spring training. Only when Opening Day was threatened did the parties reach a deal that delayed the season's start by about a week, but the full schedule was ultimately played.
Manfred expressed confidence that a deal can be reached early enough to avoid disrupting next season. He also acknowledged the risk of losing fans, who attended games in near-record numbers this year, if games are lost. The last work stoppage to cost games occurred in 1994 and 1995 and was the most severe in baseball history. It led to the cancellation of the postseason, including the World Series. It clearly angered fans: average per-game attendance did not return to pre-strike levels for 12 years. That was also the last time the league formally proposed a hard cap. Before that work stoppage, every labor negotiation dating back to 1972 resulted in some games being lost.
Early-season games typically have lower attendance and lower television ratings, reducing the cost to owners if games are lost at the start of the year. That's why Zimbalist and other experts expect the lockout to last into the spring and perhaps early summer, wiping out a third of the season or more. Perhaps a lot more. Zimbalist said some owners have told him privately that they're willing to lose an entire season to get the players to agree to a salary cap, which is what happened in the National Hockey League when it lost the entire 2004-2005 season to a lockout. One possible deadline that could stop the lockout from going that far relates to the league's broadcast contracts. If too many games are lost, networks would gain an extra year on their existing agreements, which baseball would not want to happen.
"Most work stoppages happen when one side or both underestimate what the other side is willing to absorb to get their demands," said Victor Matheson, professor of economics at Holy Cross who specializes in sports business. "The two sides' negotiation positions feel like that's the case this year," he said, pointing to a potentially long and costly work stoppage, right as the popularity of the sport is on the rise. "I just didn't think that they would—either side—would be willing to kill the goose that's laying the golden egg right now," he said. "But I am deeply pessimistic."
Originally reported by kesq.