Major League Baseball has long struggled with financial disparities among teams. While larger market franchises like the New York Yankees, New York Mets, and Los Angeles Dodgers routinely outspend competitors, smaller-market teams such as the Pittsburgh Pirates, Oakland Athletics, and Kansas City Royals often struggle to retain top talent due to financial limitations. This imbalance creates a competitive disadvantage, where small-market teams are frequently overshadowed by wealthier clubs.

One potential solution to address this issue is the adoption of an NBA-style salary cap, which enforces maximum team payroll limits while maintaining structured spending regulations. That system has helped two small market teams – the Indiana Pacers and Oklahoma City Thunder – reach the NBA Finals. Those two cities are small enough that they are home to Triple-A teams rather than an MLB team, but yet the NBA thrives in both locations. Granted, NBA games draw about a quarter of the fans of MLB games, at least in cities where the teams are perpetually bad and fans have lost interest. Implementing such a system in MLB would help small-market teams compete more fairly, promote financial stability, and create a more exciting, competitive league.

The Financial Disparity in MLB

Currently, MLB operates under a luxury tax system, which imposes financial penalties on teams exceeding a certain payroll threshold. However, this approach does not prevent wealthier franchises from dramatically outspending lower-revenue clubs. The difference in team payrolls is often staggering – top-spending teams allocate hundreds of millions of dollars to player salaries, whereas small-market teams struggle to afford elite talent.

For example, in 2023, the New York Mets had a payroll exceeding $300 million, while the Oakland Athletics spent less than $60 million – a disparity that affects roster quality, competitiveness, and long-term team stability. Without a salary cap, small-market teams consistently find themselves losing star players in free agency, as they cannot match lucrative contracts offered by large-market clubs.

This system leads to a cycle of imbalance: large-market teams maintain dominance, while smaller-market franchises must rebuild constantly with limited financial flexibility. An NBA-style salary cap would interrupt this cycle and offer a path toward fairness.

The NBA Salary Cap Model and Its Effectiveness

The NBA’s salary cap system is designed to promote competitive balance while allowing teams to retain their star players. The league employs a soft cap, meaning teams can exceed the limit under certain conditions, such as using Bird Rights to retain key players or employing mid-level exceptions for roster improvements.

Despite allowing spending flexibility, the NBA salary cap ensures teams cannot grossly outspend competitors. This prevents high-revenue franchises from signing every available star, allowing smaller-market teams like the Milwaukee Bucks and Denver Nuggets to build championship-contending rosters despite financial constraints.

By contrast, MLB lacks comparable safeguards – teams with deep financial pockets continue dominating free-agent acquisitions, leaving smaller-market teams reliant on homegrown talent and undervalued signings. If MLB were to adopt an NBA-style salary cap, small-market teams could retain talent, compete more effectively, and develop sustained success rather than undergoing perpetual rebuilding cycles.

Benefits of Implementing a Salary Cap in MLB

1. Increased Competitive Balance

One of the greatest advantages of an NBA-style salary cap would be greater parity across the league. Baseball’s current system enables wealthy franchises to sign superstars at will, leading to competitive disparities. With a salary cap, every team would operate under financial constraints, ensuring all franchises—regardless of market size—have an equal opportunity to compete.

When parity improves, fan engagement increases because more teams remain in playoff contention rather than watching wealthier clubs dominate. The NFL’s strict salary cap has proven effective in creating league-wide parity, where teams from various markets regularly compete for championships. MLB could experience a similar benefit through the adoption of a salary cap.

2. Preventing Player Hoarding by Large-Market Teams

Without a salary cap, the richest teams can stockpile talent, preventing competitive opportunities for smaller franchises. An NBA-style cap would limit excessive spending, ensuring that star players are more evenly distributed among teams.

For example, under a capped system, the Los Angeles Dodgers could not freely acquire every available superstar without financial consequences. This restriction would force large-market teams to make strategic decisions, rather than simply outbidding smaller-market rivals.

3. Improved Player Retention for Small-Market Teams

A salary cap would not only benefit teams but also help players secure long-term stability. In MLB, small-market teams frequently lose homegrown talent because they cannot match lucrative free-agent deals offered by wealthier clubs.

For example, players like Francisco Lindor (formerly with the Cleveland Guardians) and Bryce Harper (formerly with the Washington Nationals) left their respective teams primarily due to financial limitations. With an NBA-style salary cap, small-market clubs could afford to retain their stars, leading to more consistent rosters and stronger fan loyalty.

4. Encouraging Smarter Spending and Team Development

An NBA-style salary cap would promote financial discipline across MLB, requiring teams to prioritize efficient roster construction rather than relying solely on cash power. Large-market teams would be forced to build through player development, while small-market franchises could invest in scouting and analytics to identify valuable talent.

Additionally, salary cap regulations such as mid-level exceptions and veteran minimum contracts could provide opportunities for affordable acquisitions, allowing small-market teams to remain competitive without exceeding payroll limitations.

5. Enhancing Fan Interest and League-Wide Excitement

A more competitive MLB means greater fan engagement, as more teams would remain relevant in playoff races. The current lack of parity often results in predictable postseason outcomes, with the same dominant franchises competing year after year.

By leveling the playing field, a salary cap would increase excitement, encouraging fans of small-market teams to stay invested throughout the season. This increased engagement could lead to higher ticket sales, improved television ratings, and a stronger overall MLB brand.

Challenges to Implementing a Salary Cap

Despite its advantages, an MLB salary cap faces opposition from certain stakeholders, particularly from players and large-market owners. Players often prefer a free-market system, allowing them to maximize earnings without financial restrictions. Additionally, owners of wealthy teams may resist payroll limits, fearing reduced revenue from large-market spending.

To implement a salary cap, MLB’s collective bargaining agreement would require significant modifications, including restructuring financial incentives for players and owners. One possible compromise is a hybrid cap system, where teams maintain flexibility but face stricter spending regulations—similar to the NBA’s luxury tax penalties and contract exceptions.

Conclusion

An NBA-style salary cap could transform Major League Baseball, promoting competitive balance, financial stability, and increased fan excitement. By limiting excessive payroll disparities, MLB would create a more engaging league, where small-market teams thrive alongside wealthier franchises.

While implementing such a system presents challenges, the long-term benefits far outweigh the drawbacks. If MLB truly values fair competition, adopting an NBA-style salary cap could be the key to sustained league-wide success, ensuring that all teams—regardless of market size—have a legitimate chance to win a championship.