Wednesday’s game between the Boston Red Sox and the Athletics ended with a win for Boston. However, that wasn’t the biggest baseball story of the day. Actually, Red Sox’s Andrew Monasterio delivered the decisive blow with a two-run homer after his squad had stranded six runners over the previous three innings, finally breaking through when it mattered most. 

But while Boston found the timely hit it needed, Major League Baseball (MLB) is searching for something much bigger over the next few months: a way to avoid a potentially historic labor battle. Let’s check how:

A few notes on the present situation of the MLB system

The mentioned historic labor battle exists because of two big factors in the current MLB system: the league and the MLB Players Association. Reportedly, these two are heading toward one of the most important Collective Bargaining Agreement (CBA) negotiations. The final deadline is December 1, 2026. And this time, the debate goes far beyond the usual topics like arbitration, playoff expansion, or designated hitter rules. Specifically, the biggest issue on the table is a salary cap. 

MLB owners have pushed for one solution regarding the salary cap, while the players’ union has remained firmly opposed. Thus, it has turned out to be one of the most contentious issues in the negotiations. If neither side is willing to compromise before the start of the 2027 season, the consequences could be massive.

So, the question is how huge will it be? 

Some estimates suggest that a lost MLB season would carry an economic impact of more than $11 billion. To put that into perspective, the entire baseball industry generated around $9.7 billion in revenue in 2019, before the pandemic and the recent boom in media rights deals. In other words, one canceled season today could cost the sport even more than an entire pre-pandemic year of revenue.

That’s why the next few months could shape the future of baseball just as much as anything that happens on the field. Let’s see how. 

How MLB stands different from NFL, NBA, and NHL

So, why is the salary cap suddenly such a big talking point? The answer is quite simple, though. 

Unlike every other major North American sports league, MLB has never had a salary cap.

Yes. The NFL, NBA, and NHL all operate with some form of salary cap. Baseball, on the other hand, relies on the Competitive Balance Tax, or the luxury tax. 

This tax system doesn’t limit payroll. Instead, it allows teams to spend as much as they want but charges them extra once they cross a certain threshold. And for the 2026 season, that threshold is set at $244 million.

Therefore, expectedly, once a team goes over that number, the penalties start piling up. For first-time offenders, the number is a 20% tax on the excess payroll, and this keeps increasing. It rises to 30% in a second straight year and 50% in a third. On top of that, there are additional surcharge levels at $264 million, $284 million, and $304 million. And there’s more.

If a team exceeds the base threshold by more than $40 million, it also drops 10 spots in the next MLB Draft. For repeat offenders spending well into the highest tax tier, the effective tax rate on some payroll can approach 110%. Around baseball, that top bracket has even earned a nickname, the “Cohen tax”, because New York Mets owner Steve Cohen’s aggressive spending helped lead to its creation. So has it impacted the owners? Let’s check one example. 

In 2024, nine teams finished above the luxury-tax threshold. As a result, the MLB collected an all-time high $311 million in tax penalties. Among those, the Los Angeles Dodgers alone paid more than $103 million. The Mets weren’t far behind. They paid roughly $97 million.

Those numbers tell the story. For some of baseball’s wealthiest franchises, the luxury tax has become less of a punishment and more of another business expense. And that’s exactly why owners are now pushing for something much stricter, a true salary cap instead of simply increasing the tax bill. But as they say, there’s more to the story: a few contracts, basically.

Shohei Ohtani’s contract enters the discussion

Some historic contracts have come under the scanner as contributing factors to the salary cap debate. First came Shohei Ohtani’s historic 10-year, $700 million deal with the Dodgers. 

According to the reports, with about 97% of the money deferred, Ohtani’s luxury-tax hit comes in at roughly $46.1 million per year instead of the full $70 million. Then, just a year later, Juan Soto raised the bar again.

The Mets signed Soto to a staggering 15-year, $765 million contract with no deferred money. The deal carries a record $51 million average annual value. It also includes provisions that could eventually push its total value to $805 million.

And here comes the problematic part. Those two contracts bring nearly $1.4 billion in guaranteed money handed to just two players. And that’s exactly where the divide begins.

Owners see deals like Ohtani’s and Soto’s as evidence that the current system heavily favors baseball’s richest franchises. Meanwhile, players argue the opposite. 

To them, those contracts are proof that the free market is working exactly as it should. It keeps rewarding the sport’s biggest stars with what teams are willing to pay. That’s also why a hard salary cap would change the landscape dramatically.

If such a hard salary cap comes into existence, the historic deals worth $700 million or more would become much harder to pull off. And it wouldn’t just affect superstars. 

Mid-tier veterans (players earning between $15 million and $25 million per season) could also see their market shrink as teams lean more heavily on younger, cost-controlled talent to stay under a fixed payroll limit.

Now, if everything mentioned above sounds like an impossible case, then hold on. Baseball has already experienced a taste of it.

The experience of facing a lost season

The 99-day lockout before the 2022 season showed just how expensive labor disputes can become, without losing a single regular-season game.

In 2022, as Opening Day kept getting pushed back, players were reportedly losing a combined $20.5 million every day the season was delayed. By late February, before a new agreement was finally reached, independent estimates had already pegged the economic damage at more than $500 million. And interestingly, the regular season didn’t feel any heat.

Now imagine stretching that disruption across an entire year.

Ticket sales may disappear. National and local TV revenue may dry up. Sponsorships, merchandise, concessions, and the businesses surrounding ballparks may take a massive hit. Ultimately, the ripple effects may extend far beyond the teams and players.

Not only that, even spring training carries a huge economic impact. How? 

Before the pandemic, Arizona’s Cactus League alone generated more than $640 million for the local economy in a single year. And when COVID-19 cut the 2020 spring short, that figure dropped to around $363 million.

Now, scale losses like that across all 30 MLB markets. You can also add a full regular season and the postseason to it. Then it will be easier to believe a canceled 2027 campaign could cost more than $11 billion.

That’s why the upcoming CBA negotiations are about much more than baseball. If the two sides can’t find common ground, the financial fallout would be felt not just by owners and players, but by various camps.

What camps will be affected by it? 

First and foremost, the impact wouldn’t stop with the players and team owners. It will grip other characters as well.

Regional sports networks would suddenly lose months of live programming and the advertising revenue that comes with it. On the other hand, National TV partners would be left paying for broadcast windows with no games to air. Furthermore, sportsbooks would miss out on one of the busiest betting calendars in the country. Not to mention, ‌merchandise retailers would lose an entire season’s worth of sales.

In a nutshell, the ripple effects would be just as severe for local businesses.

MLB fans may already know that hotels, restaurants, bars, and airlines in MLB cities all benefit from the 81 home games every season. And, expectedly, without baseball, those businesses lose a major source of income overnight.

That’s what makes these labor talks so significant. However, it’s not just MLB owners and the players’ union with something at stake. A long list of businesses, from broadcasters to small restaurants near stadiums, depends on the game continuing as scheduled, even though they don’t have a voice at the negotiating table.

The present position of the leverage

Generally speaking, team owners are better equipped to survive a long labor dispute.

After all, franchise values have continued to rise through lockouts and strikes alike. 

For example, the New York Mets were sold for $2.42 billion in 2020. The price that would have seemed almost impossible just a couple of decades earlier.

However, for players, it’s a different story.

The moment games stop, so do paychecks. Unlike owners, they can’t sit back and wait for the value of an asset to increase over time. Every missed game has a direct impact on their earnings.

But that doesn’t mean owners can afford to shrug off a work stoppage. 

A canceled season would create problems on several fronts. Broadcasters would be left with empty programming slots despite paying huge media-rights fees. Sponsors would have little reason to invest in a product that isn’t on the field. And then there’s the biggest concern of all, fans.

Baseball has already seen how difficult it can be to win them back.

Back in 1994, when the strike wiped out the World Series, many fans simply walked away. Attendance didn’t recover overnight. And it took years for the sport to rebuild the connection it had lost.

That’s what makes these negotiations so important.

Players and owners may be arguing over different priorities, but neither side can afford to treat a work stoppage like just another negotiating tactic. If the talks fall apart, the damage won’t be limited to the bargaining table; it could leave lasting scars on the game itself. So, the eyes will be on the upcoming days: what could actually be expected? 

What to actually watch this offseason

As the negotiations continue, the biggest clues probably won’t come from press conferences or carefully crafted statements. They’ll come from the numbers.

The current $244 million luxury-tax threshold, and whatever figure replaces it in the next CBA, will say a lot about which direction the talks are heading in. Another key issue is whether contract structures like Shohei Ohtani’s heavily deferred deal remain an option or face tighter restrictions. Beyond that, national TV rights negotiations, attendance numbers, and economic reports from smaller MLB markets will all offer a better sense of where both sides stand.

In many ways, those figures will tell the real story long before anyone at a podium does.

One thing, though, already seems certain.

Whatever deal is reached before the current CBA expires in December 2026 will have an impact far beyond this round of negotiations.