While it looks like more of the same this year in Major League Baseball (“MLB”), as the Los Angeles Dodgers acquired two-time Cy Young winner Tarik Skubal to load up for a run at a third straight World Series Championship, there could be major change son the horizon as the collective bargaining agreement between the MLB and the Major League Baseball Players Association (“MLBPA”) will expire on December 1, 2026.
MLB owners have formally floated the idea of a hard salary cap and a spending floor. This is the first time that owners have pushed for a salary cap since the 1994-1995 lockout that resulted in a cancelled World Series. (Which the Cleveland Indians would have won, according to the author of this article, who is from Akron, Ohio and a lifelong Cleveland sports fan.) In the league’s view, this would correct spending disparities between big-market and small-market teams that are not sufficiently addressed by the luxury tax system. Historically, the MLBPA has viewed a salary cap as a non-starter, arguing that it depresses player earnings. The union’s proposal is expected to include higher minimum salaries and taxes on low-spending teams, but no hard caps. Under federal labor law, neither the MLB nor the MLBPA is compelled to accept concessions on this issue or any other mandatory subject of bargaining, so the potential of not reaching an agreement before the expiration of the CBA is a real possibility.
Owners are expected to impose a lockout if no agreement is reached before December 1, 2026, which is a statutory measure of economic self-help. Under Section 8 of the National Labor Relations Act, both management and unions have the right to exert economic pressure in support of a legitimate bargaining position. Owners have the legal right to lock out players, and players have the legal right to strike. A lockout would freeze roster transactions, restrict player access to team facilities, suspend benefits like health insurance, and impact promotional and marketing activities. It is a preemptive strategy to avoid starting the league season under an expired CBA, which would give the MLBPA immense leverage to strike before Opening Day or the post-season. A prolonged lockout could impact spring training and regular-season games, but the contract dispute would be resolved when play resumes.
The MLB has a long history of work stoppages. The last lockout lasted three months from December 2, 2021 through March 10, 2022; it was resolved by raising the luxury tax threshold, expanding the postseason, and permanently extending the Designated Hitter rule to the National League. The 1994-1995 strike wiped out much of the regular season and the entire postseason in response to the owners’ push for a hard salary cap. The strike ended when federal judge and now Justice Sonya Sotomayor issued a preliminary injunction against owners for failing to bargain in good faith.
With the real risk of a work stoppage looming large, the good news is that the MLB will crown a new World Series Champion this year. The bad news is that it might be the Dodgers again.
Marc Sugerman is an attorney in the Orlando office of FordHarrison whose practice focuses on traditional labor and employment law. He represents employers in labor arbitrations, collective bargaining negotiations, unfair labor practice matters, and related proceedings, and also litigates employment disputes while advising employers on workplace compliance and labor relations issues.