[Author: Mitna Gupta, Law Student, Institute of Law, Nirma University, Ahmedabad]
Major League Baseball (MLB) is speeding towards a labour standoff that could lead to the discontinuation of America’s long-established professional sport for the second occurrence in five years. Major League Baseball (MLB), which is a sophisticated professional baseball league in the United States and Canada, has more than 25 franchises, and the Major League Baseball Players’ Association (MLBPA), which is a labour union that aims to exemplify the interests of all players under contract with MLB clubs and have dialogue on behalf of players for wages, working conditions, and other terms of employment. The relationship between these two is governed by a collective bargaining agreement (CBA), which can be concluded as a comprehensive contract recalibrated roughly every five years that includes matters ranging from minimum salaries and free agency rules to player medical protocol and the size of rosters. The last in-work CBA was executed in 2022, after a 99-day lockout, and is all set to end on 1 December 2026. In contemplation of the coming deadline, the MLB and MLBPA began preliminary negotiations in May 2026, and it promptly became evident that the two sides held opposing views on the sport’s economic future. While MLB proposed the introduction of a salary cap system for the first time in the league’s contemporary history; the MLBPA firmly rejected such a structural change, following its pattern established over decades of negotiation. This dispute is quite different from the previous round of bargaining, which was concerned with figures within an agreed structure; this time, the apprehension is about the very architecture of how sports revenue is shared, setting the fire for what may become one of the most momentous labour disputes in the history of sports.
Rules of Engagement: The Legal Architecture Behind Strikes and Lockouts
The legal relationship between MLB and MLBPA is governed by the National Labor Relations Act of 1935 (NLRA), which is a federal legislation that administers collective bargaining between employers and employee unions in the United States. MLBPA is recognized as an exclusive bargaining representative of all the MLB players under section 9(a) of the National Labor Relations Act of 1935, which also implies that individual players can negotiate fundamental economic terms outside the union’s collective framework. Under section 8(a)5 and 8(b)(3) of the Act, both parties are mutually bound by “duty to bargain in good faith”; this standard does not compel either side to agree on any specific term, but only necessitates a bona fide and legitimate proposal rather than refusal to negotiate altogether. When the CBA expires, the parties are not legally bound or obliged to immediately halt the league’s operation; they continue to work under the expired agreement’s terms under the status quo arrangement. The same was followed by the United States Men’s National Soccer Team, which did so for four years between 2018 and 2022.
In case of an actual impasse, which implies the point where further bargaining would be futile, and either party may legally resort to economic self-help, players through strikes and owners through a lockout. It is legally significant which side initiates a work stoppage and when, since a lockout or strike undertaken in retaliation for protected union activity, rather than as a genuine economic tool, can expose a party to unfair labour practice charges before the National Labour Relations Board. Historically, MLB illustrates both the instruments in practice. In 1994-1995, players held a strike that lasted for 232-days and led to the cancellation of that year’s World Series for the very first time since its establishment in 1904. This happened after the parties failed to reach an agreement on revenue-sharing and salary-cap structure identical to one now proposed. However, in 2021-22, a 99-day lockout was imposed by owners, which delayed the start of the season; it was also the sport’s first work stoppage in over a quarter century. Another unique feature of baseball that deserves mention is the benefit it gets from a judicially created antitrust exception. Primarily recognised in Federal Baseball Club of Baltimore v National League (1922), later reaffirmed in Flood v. Kuhn (407 U.S. 258), this mainly safeguards the league’s business from ordinary antitrust scrutiny that would apply to most of America’s industries. However, the Curt Flood Act of 1998 partially narrowed this exemption, limiting it mainly to labour-related matters. This implies that collective bargaining continued to serve as the principal legal constraint on MLB’s economic decisions, rather than antitrust litigation. This legal position is also different from other European football leagues, where competition law plays a more prominent role.
Against this legal and historical background, the salary-cap issue assumes particular significance. MLB remains the only one of the four major North American leagues without any form of salary cap for players. The National Football League (NFL) operates with a hard salary cap with no exceptions, while the National Basketball Association (NBA) employs a soft cap with exceptions, and the National Hockey League (NHL) have hard-cap paired with an escrow system claw back players’ salaries if the league’s wide revenue projections are not fulfilled.
The Trillion-Dollar Question: Why a Salary Cap Could Break Baseball’s Oldest Taboo
At the heart of this negotiation lies a single, unresolved question that defined baseball’s labour relations for over half a century. Should there be a cap on how much a team can spend on a player’s salary? In May 2026, MLB tabled its first formal proposal to this question in three decades, proposing a hard salary cap of USD 245.3 million coupled with a hard salary floor of USD 171.2 million per team. The proposal also includes parity-based distribution of the league’s revenue and centralisation of all local broadcast revenue under league control. If we apply the current payroll structure to the proposed structure, only a handful of clubs, such as the Los Angeles Dodgers, would exceed the cap, while many more teams currently spend less than the proposed floor and would be compelled to raise payroll.
The owners’ position is grounded in the notion of parity. MLB argues that uncapped spending allows large-market franchises to outspend smaller-market competitors many times over. This eventually distorts competitive balance and discourages fans of lower-revenue teams. A league spokesperson contended that, under the proposed system, players collectively would receive more total compensation in the first year than in 2026. He further added that this proposal is not a pay cut but a redistribution mechanism that channels more guaranteed pay to a broader base of players rather than concentrating it among a handful of star players. The union rebuttal challenges both the premise and the arithmetic. On the point of competitive balance, the MLBPA highlights that more MLB teams have reached the postseason over the past decade than in any other North American sport. This argument that undercuts the causal link owners draw between spending caps and parity, showing how correlation is sold as causation. Regarding the figures, the union disputes whether the proposal actually offers an equal allocation of the revenue. As per the union, MLB’s calculation first excludes billions of dollars in ancillary revenue streams, including sponsorship and non-broadcast local revenue, even before the split is calculated. This fight is not new for the union; the MLBPA has rejected a salary cap in almost every negotiation loop for decades, treating it as a fundamental restriction rather than a negotiable term.
A parallel and equally contentious front concerns players’ acquisition rather than player pay directly. MLB has proposed substituting the present system, under which international amateur players sign as free agents, with the formal international draft. The MLBPA strongly opposes this change, stating that it could reduce total player compensation across the international and domestic amateur systems by more than USD 1 billion over the upcoming five years, including a USD 400 million drop between 2026 and 2027 alone. This proposal would also prevent players under twenty from entering the domestic draft and could delay the international draft until as late as March 2028. The issue plays a more prominent role, particularly for the North American players, who make up a significant part of the MLBPA and currently have greater freedom to negotiate their signing bonuses as free agents. As a result, the dispute is not only about how much major-league players are paid, but also about how much bargaining power young players have when first entering professional baseball.
In response, the MLBPA has taken a different approach that focuses on introducing a soft salary floor, reconfiguring how revenue is shared between clubs, and accelerating guaranteed pay for the players in their early years. Various medical and safety concerns include expanding the working roster from twenty-six to twenty-eight players during the first fifteen days of the season, allowing earlier placement on the injured list, limiting the number of times players can be sent to the minor leagues, and giving players access to performance and biomechanical data collected by their clubs. These rival proposals show that the dispute is about more than merely how much players are paid. MLB and MLBPA have fundamentally opposing views on how the sport’s revenue should be shared and how its economic system should operate. This broad disagreement makes the current negotiations particularly prominent and potentially tougher than the MLB labour dispute since the 1994-95 strike.
Different Language, Same Stakes: Why 2026 Could Decide Baseball’s Labour Future
Early MLB labour disputes, including the 2021-22 lockout, were mainly over how money moves within an already settled structure, such as luxury-tax thresholds, arbitration eligibility, and minimum salaries. This cycle is different in kind, but also in degree; the parties are now contesting the structure itself. The MLB has had disputes before, like the 2021-22 lockout. Persuading a union to accept an entirely new compensation architecture it has rejected for more than two generations is a fundamentally harder bargaining exercise than adjusting figures within a shared framework both sides already accept. Legal scholars have pointed out this distinction as the clearest signal that the dispute could run longer and can even leave a deeper cut than 2022. Sportico’s Michael McCann has observed that when parties were negotiating what amounts to different economic language rather than different numbers within the same language, resolution eventually takes considerably more time and much higher risk of missed games. Commissioner Manfred’s own public comments reinforce this reading: by describing an offseason lockout as a legitimate source of leverage rather than a regrettable last resort, he has effectively signalled that a work stoppage is being treated as a calculated tool rather than a failure of negotiation.
What remains actually unpredictable is timing and scope. A lockout beginning 1 December 2026 appears highly likely; what remains unclear is whether it resolves before spring training, as in 2022, or drags into the 2027 regular season itself, something MLB has avoided since 1994-95. The aftermath of this extends beyond missed games. A prolonged dispute would freeze free agency and trade industry-wide, disrupt players’ movement, and team-building for the upcoming season. Another concern is the future of the next generation of Latin American players given the international draft proposal on the table. For a league that has spent thirty years running from the ghost of 1994, the question this winter is no longer whether baseball can afford a lockout; it is whether it can survive one twice.
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PREFERRED CITATION: Mitna Gupta, “Strike Three? Inside MLB’s Billion-Dollar Bargain for the Soul of the Sport”, Sports Law Review India, published on 1 September 2026.
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