Baseball’s “Affordability Crisis”

In 1984, the National Basketball League became the first major professional sports league in the United States to introduce a salary cap. The salary cap limited NBA teams to spending only $3.6 million on players for that given year. The salary cap number then changes every year based on league revenue, and today the NBA salary cap is north of $164 million.

The goal of the salary cap was, and remains, to make the league more competitive and financially stabilize teams in smaller markets - with 8 different NBA champions over the last 8 years, it has successfully done both. The NFL followed suit 10 years later, and today we see financial limitations (salary caps) on spending in almost every major professional sporting league: football’s Premier League (it’s called “anchoring”), cricket’s Indian Premier League, and racing’s Formula 1.

The one notable exception is American baseball, which has long been the United States’ most politically and fiscally conservative sport. But this past Saturday, the Los Angeles Dodgers, Major League Baseball’s (MLB) back-to-back World Series champions, traded for Tarik Skubal. Tarik is a left-handed, two-time Cy Young Award-winning pitcher who is one of the best pitchers in baseball and the best player on his previous team, the Detroit Tigers.

He’s expected to receive a contract extension from the Dodgers that continues the team’s streak of eye-watering deals: 5 years - $182 million; 6 years - $162 million; 12 years - $365 million; 12 years - $325 million; 10 years - $ 700 million.

You get the idea.

The Dodgers have MLB’s richest ownership group, consisting of multiple billionaires and several other individuals who are wealthy enough to own their own sports teams. In a league that allows unlimited spending, the Dodgers’ owners have outspent everyone. By a lot. Last year, the team spent $515 million on payroll (plus taxes). That’s more than twice the league median and more than the combined payroll of the league’s five lowest-spending teams, whose less wealthy owners simply can’t compete.

The Skubal trade is just another indicator of how the Dodgers, the sport’s most dominant team, continues to accumulate talent at a pace and volume that other teams can’t match. The LA Dodgers, baseball’s mega-wealthy, are squeezing out the MLB middle class.

Due to this ever-widening wealth gap, MLB is almost certainly headed for a work stoppage (called a lockout) after the sport’s current collective bargaining agreement expires. This will push things to an interesting space, as team owners will be the ones negotiating for a salary cap - to try and stop the Dodgers.

This means the sport’s wealthiest individuals will be trying to even the playing field. For the majority of these billionaire owners, this will be their first foray into market controls, something that many of them evaded in the private sector as they accumulated their fortunes.

And the workers in this dynamic, the players and their union, will lobby against this. Uncapped spending is undoubtedly ruining the sport’s competitiveness, but because a salary cap would limit how much money the players can make, they’re firmly against it.

And so, baseball finds itself at a crossroads not so dissimilar from the American political ecosystem. Following Zohran Mamdani’s successful campaign and first 200 days as Mayor of New York, affordability and cost-of-living are at the center of every midterm election debate in the United States right now. Can the average American family still “win” (home, car, education) if wealth continues to be consolidated at the top?

Most Americans have come to the same conclusion that baseball is just now realizing. The answer is no.