MLB’s lowest-spending teams face a new financial penalty under the MLBPA’s opening CBA proposal. On Wednesday, the players’ union formally proposed raising the luxury tax threshold to $300 million and penalizing any team that spends less than $150 million on player payroll.

Right now, several MLB teams spend well below that $150 million mark. Under the new proposal, all of them would face a new tax. With the current Collective Bargaining Agreement expiring on December 1, the union made the first move.

“The MLBPA made its first proposal to MLB today in collective bargaining. Among the topline issues: – A “competitive-integrity tax” for any team that does not spend $150M – Increase minimum salary from $780,000 to $1.5M – Increase in base CBT threshold from $244M to $300M,” wrote Jeff Passan on X.

Right now, the 2026 luxury tax threshold is set at $244 million. This means heavy spenders like the Dodgers, Mets, and Yankees have to pay a penalty for going over. Back during the 2022 lockout, the two sides agreed to bump the threshold to $230 million, and it has slowly climbed to the $244 million mark today.

The $150 million floor makes perfect sense. With the average MLB payroll sitting around $181 million, the union thinks $150 million is a fair minimum for a team that actually wants to compete. Right now, teams like the A’s, Rays, and Marlins spend well under $100 million.

This new plan would punish them for keeping that cash instead of spending it to improve their rosters. However, the exact tax rate and penalty structure remain unspecified in the proposal.

Introducing a competitive integrity tax alongside hiking the luxury tax threshold is the MLBPA’s attempt to reduce financial disparity among teams without a hard salary cap or floor.

The league didn’t wait long to shoot the proposal down. MLB spokesman Glen Caplin argued the plan would actually make the league less balanced.

“We understand their proposals are designed to benefit players. Unfortunately, they do not address and, in fact, exacerbate the competitive balance problem our fans are telling us we must address,” Caplin stated. “The MLBPA’s proposal would reduce the amount transferred to lower-revenue Clubs, weaken the Competitive Balance Tax, and lead to even more payroll disparity than exists today. For example, under the Union’s proposal, the Dodgers would pay less in luxury tax payments, giving them an additional $70 million to spend on payroll.”

Moreover, the players’ association has proposed to increase the league minimum salary from $780,000 to $1.5 million. They have also suggested that players above 30 years old would automatically become a free agent after 5 years of service time.

Now it’s up to the MLB owners to assess these proposals and submit their own.

MLB is the only major North American sports league without a salary cap. Owners desperately want a hard cap to stop giant-market teams from outspending everyone else. The players’ union is completely against the idea. Considering the MLBPA’s vehement opposition to a salary cap, a potential lockout in the 2027 season remains high.

The current CBA was agreed upon in March 2022 after a 99-day lockout that nearly led to game cancellations. The last time owners pushed for a hard salary cap, it led to a 282-day lockout in 1994 and 1995. The lockout also cancelled the 1994 World Series. For the sake of baseball and the fans, a lockout will be the most unwanted outcome.

After they submitted their first proposal, the interim manager of the MLBPA, Bruce Meyers, addressed the issue.

Statement from the MLBPA

After submitting the first proposal, interim union head Bruce Meyer said the plan protects the players. He also noted the new revenue system will force teams to focus on winning instead of just pocketing profits.

“Our goal is to preserve and improve baseball’s market system, rewarding competition on and off the field,” Meyers reportedly stated. “Additionally, the players’ proposals provide increased revenue sharing, initially guaranteeing every small market Club a minimum of $240m in revenue every season. This enhanced revenue sharing includes added protections to ensure clubs prioritize winning over profiteering. Ultimately, our proposals are designed to build upon the incredible momentum and popularity of our sport worldwide.”

Union executive Chris Bassitt said the proposal will help the sport keep growing.

Bassitt said in a statement, “We all see the momentum in our game. Amazing players and incredible fans. Attendance, viewership, interest – by any measure you want to use, our game is moving in a positive direction. We’ve put forward proposals designed to continue that trend.

The MLB will make the first round of proposals to counter the one from the MLBPA on Thursday.