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As the expiration of the labor agreement between Major League Baseball and the MLB Players Association looms on December 1, the league unveiled a fresh proposal on Tuesday. The plan would postpone the introduction of a salary cap and floor until 2028, affording lower-payroll clubs a longer window to adapt to the proposed salary floor.
The transition plan, presented to the union, sets a projected cap of $180.2 million and a floor of $150 million for 2028. The league also proposed raising minimum salaries, curbing roster turnover, scrapping draft-pick compensation, and broadening free-agent access. According to the league, the package seeks to balance competitive balance, player benefits, and market stability. The cap and floor figures encompass player salaries and benefits, while signing bonuses for amateur players are not included.
Luxury Tax Status Quo
Under the latest proposal, the existing Competitive Balance Tax (CBT), commonly known as the luxury tax, would be extended by one year without changes to thresholds or penalties. The base threshold for 2026 stood at $244 million, and the base tax rates and surcharges from the final year of the current CBA would remain in place. That provision alone is likely to draw opposition from the MLBPA, which has proposed raising the upper threshold to $300 million in the next labor deal.
In a fact sheet, the league addressed the proceeds from extending the CBT for an additional year. MLB would allocate the players' share of 2026 CBT proceeds—normally used to fund 401(k) contributions in future seasons—to players as a bonus based on service accrued in 2026. Players with a full year of service would receive $285,000, those with three-quarters of a year $213,400, half a year $142,300, and a quarter year $71,100.
Minimum Salary and Bonus Pool Increases
The league also proposed raising the minimum salary from $780,000 in 2026 to $1,000,000 in 2027 for players with at least two years of service, and to $900,000 for those with less than two years. Players with fewer than two years would also earn at least $100,000 through the Pre-Arbitration Bonus Program, bringing their total compensation to at least $1,000,000 if they earn a full year of service and spend less than half the season on the injured list. According to the league, the jump to $1,000,000 would be the largest year-over-year increase in baseball history, about $100,000 more than the previous largest raise. In subsequent years, the minimum salary would grow in tandem with the cap and floor.
Additionally, the Pre-Arbitration Bonus Pool would rise by 30% from $50 million in 2026 to $65 million in 2027, and then to $75 million over the term of the CBA. The league would also add Prospect Promotion Incentive (PPI) selections in the International Draft, allowing eligible prospects to earn their club up to two selections in their career—one domestic and one international—to encourage clubs to place top prospects on Opening Day rosters. MLB would accept the union's proposal to exclude foreign professionals when determining whether an eligible prospect receives a full year of service for finishing first or second in Rookie of the Year voting, provided the prospect otherwise finishes in the top three.
Roster Churn and Promotion Changes
To reduce roster churn, the league proposed cutting the number of times a player can be optioned in a season from five to four, eliminating the fourth option, prohibiting clubs from optioning or outrighting players during the playing week through weekly rosters, and restricting clubs' ability to cycle players on and off the 40-man and active rosters for strategic reasons. To speed promotions to the 40-man roster, clubs would be required to add players a year earlier to avoid Rule 5 Draft eligibility, and the claiming club in the Rule 5 Draft would be allowed to option the player to the minors.
MLB spokesman Glen Caplin explained the rationale for the delay: "We recognize that clubs will need a full offseason to prepare to operate within the cap and floor system. Therefore, with this offseason already underway, we proposed today to begin the cap and floor system in 2028." He added that the proposal would allow a smoother transition without delaying key player benefits such as earlier free agency, a $1 million minimum salary, a 30% increase to the pre-arbitration bonus pool, and transactional reforms to reduce roster churn.
The league has also offered revenue sharing of all local media rights to boost economic parity, but only in conjunction with a salary cap. With Tuesday's proposal, MLB signaled that negotiating a phase-in timeline and procedures for the cap and floor is open for discussion. However, the MLBPA swiftly rejected the offer. "Coming off another incredible season of baseball, MLB owners continue proposing blowing up the current system and replacing it with one designed to line their pockets and increase their franchise values," the union said in a statement.
While 2026 CBT payrolls have not been released, MLB's proposal highlights how the cap system would affect two-thirds of the league's CBT payrolls. Based on 2026 CBT payrolls, 12 clubs would need to increase payrolls (including benefits) to reach the proposed $180.2 million floor, with total increases of $636 million. Those clubs are the Miami Marlins, Cleveland Guardians, St. Louis Cardinals, Tampa Bay Rays, Washington Nationals, Chicago White Sox, Minnesota Twins, Colorado Rockies, Pittsburgh Pirates, Athletics, Cincinnati Reds, and Milwaukee Brewers. Four of those 12 reached the 2026 postseason, including the World Series champion Brewers and the ALCS-winning Rays. Conversely, eight clubs would need to reduce CBT payrolls by a combined $528 million: the Los Angeles Dodgers, New York Mets, New York Yankees, Philadelphia Phillies, Toronto Blue Jays, San Diego Padres, and Boston Red Sox. Four of those eight made the postseason, with the Dodgers reaching the NLCS before being swept by the Brewers.
Even if the economics of the current luxury tax system were extended another year, other proposed changes would take effect. Many of the proposals incorporate elements from the union's May 27 offer, but only on the condition that the players accept a cap system—a condition the MLBPA views as a poison pill.
Earlier Free Agency and Draft Compensation
MLB would accept the MLBPA's May 27 proposal to reduce the reserve period to five years for players aged 30, subject to the club's right to sign the player to a one-year contract worth the average salary of the 125 highest-paid players. This would mark the first time the reserve period falls below six years since it was introduced in 1976. Under this provision, 48% of players with five years of service would have reached free agency a year earlier during the past CBA. The league would also accept the union's proposal to eliminate the Qualifying Offer system, meaning teams would no longer forfeit draft picks to sign free agents.
The league noted that all other elements of its original economic proposals, including the Cornerstone Player rules, would go into effect immediately. The current CBA expires at 11:59 p.m. ET on December 1. A lockout is expected at midnight, which would freeze free agency, trades, and communication with players and agents. Spring Training for 2027 is scheduled to begin on Friday, February 19, 2027, and Opening Night of the 2027 regular season is set for March 24, 2027.
Originally reported by yahoo.