Baseball’s labour agreement is about to run out, and the two sides are far apart on the biggest question in the sport’s economics: should Major League Baseball have a salary cap? The current collective bargaining agreement (CBA) between MLB and the Major League Baseball Players Association (MLBPA) expires on December 1, 2026. If there is no new deal by then, owners are widely expected to lock the players out, just as they did when the last agreement ended in 2021.
For anyone studying sport management, this is one of the most useful live case studies in the industry. It touches labour relations, revenue sharing, competitive balance, media money and the day-to-day work of every front office. This guide explains what a lockout is, what each side wants, what has been proposed so far and what a work stoppage would mean for the business of baseball.
What is a lockout?
A lockout is a work stoppage started by the employer. When a collective bargaining agreement expires, the owners can refuse to let unionized employees work until a new agreement is reached. A strike is the opposite: the workers decide to stop working. Both are legal pressure tactics in labour negotiations, and both are meant to make the cost of not having a deal felt by the other side.
Owners tend to prefer an off-season lockout because it applies pressure before games are lost. It freezes the player market, which pushes the union to negotiate on the owners’ timeline, while giving both sides a few months before spring training and Opening Day dates are at risk.
When does the current MLB CBA expire?
The current agreement ends on December 1, 2026. It was signed in March 2022 after a 99-day lockout that began on December 2, 2021, delayed spring training and pushed back the start of the 2022 regular season. That deal raised the minimum salary, created a bonus pool for pre-arbitration players, added a draft lottery and expanded the playoffs to 12 teams. It did not settle the question of a cap, which has now moved to the centre of the talks.
What is MLB proposing?
MLB has never had a salary cap. Instead, it uses a competitive balance tax (CBT), often called a luxury tax, which charges teams that spend above a set payroll threshold. Our explainer on salary caps vs luxury taxes compares how each major league handles payroll. Owners now want a hard cap paired with a salary floor, arguing that it would narrow the gap between the highest-spending clubs and everyone else.
In its most recent proposal, delivered in early November 2026, MLB moved the start date of a cap back to 2028 rather than the 2027 season, according to ESPN and the Associated Press. The proposal, as reported, included:
- A hard cap of about $258.2 million per team once the system starts.
- A payroll floor of about $180.2 million, with some flexibility that would let a club fall to roughly 90 per cent of the floor in a given year if its three-year average met the requirement.
- A higher minimum salary, rising from the current $780,000 to $1 million for players with at least two years of service, and $900,000 for other players.
Those figures are part of a negotiation, not a final agreement, and they are likely to change before any deal is signed.
Why do the players oppose a salary cap?
The MLBPA has opposed a cap for decades and has said it will not accept one. Its main argument is that a cap limits what players can earn no matter how much revenue the sport produces. In leagues with caps, player pay is typically tied to a negotiated share of league revenue, and the union has long argued that baseball’s open market has served players better.
Players also point out that baseball already has tools to support smaller-market teams, including revenue sharing between clubs and the luxury tax itself. In their view, the issue is not that rich teams spend too much, but that some teams choose to spend too little. That is why the union has historically focused on ways to reward spending and punish tanking rather than a limit on payroll.
Why do owners want one?
Owners argue that payroll differences between clubs have become too large. In 2025, nine teams paid the competitive balance tax, led by the Los Angeles Dodgers at more than $169 million in tax alone, according to published luxury tax figures. Clubs with smaller local TV deals, especially those affected by the collapse of the regional sports network model, say they cannot keep up with that spending.
A cap paired with a floor would, in theory, make payrolls more predictable, force low-spending teams to spend more and limit the advantage of the biggest markets. The disagreement is less about whether competitive balance matters and more about who should pay to create it.
What happens if there is a lockout?
If the owners lock the players out after December 1, most major-league business involving players stops:
- Free agency freezes. Teams cannot sign or negotiate with players on 40-man rosters, so off-season signings that have not been completed are put on hold.
- Trades involving major-league players stop. Clubs cannot trade players on the 40-man roster.
- Team facilities close to locked-out players. Players cannot use club training facilities or communicate with team staff about baseball matters.
- Spring training and the season are at risk if the dispute runs into February and March.
Some activity continues. Front offices still scout, plan and work on the minor-league side, and business staff keep selling tickets and sponsorships for a season that may or may not start on time.
How does a lockout affect the business side of baseball?
A work stoppage is not only a player issue. It changes the work of almost every department in a club:
- Ticketing and sales teams have to sell season tickets without knowing whether games will be played, and they need refund and credit policies ready.
- Partnerships teams need to manage sponsor contracts that may include make-good clauses if games are lost.
- Communications staff have to speak for the club without negotiating in public, often while the league office controls the message.
- Finance teams have to model scenarios for lost games, delayed media payments and changes to revenue sharing.
- Baseball operations staff plan rosters for a market that could reopen with a rush of signings once a deal is reached.
The longer a stoppage lasts, the more it can damage fan goodwill, which is why the 1994–95 strike, which cancelled the 1994 World Series, is still used as a warning across professional sport.
What should sport management students take from this?
Labour negotiations shape the economics of a league for years. The CBA sets minimum salaries, arbitration rules, the draft, revenue sharing, the luxury tax and countless operational details that front offices deal with every day. If you want to work in a league office, a team’s baseball operations department, an agency or a players’ association, understanding how a CBA works is a core skill.
Following these talks closely is also good practice for interviews. Being able to explain the difference between a cap and a luxury tax, or why owners prefer an off-season lockout, shows that you understand the business of sport rather than only the games. For a broader start on building that kind of industry knowledge, see our guide on how to get a job in sports.
Frequently asked questions
When does the MLB collective bargaining agreement expire?
The current MLB CBA expires on December 1, 2026.
Will there be an MLB lockout in 2026?
A lockout is widely expected if there is no new agreement by the expiration date, but it is not automatic. The owners decide whether to lock out the players, and the two sides can keep negotiating at any time.
Does MLB have a salary cap?
No. MLB uses a competitive balance tax instead. Teams can spend above the threshold, but they pay a tax on the overage and can face draft-pick penalties at higher levels. Owners have proposed adding a hard cap and payroll floor starting in 2028.
What is the difference between a lockout and a strike?
A lockout is started by the employer, which refuses to let employees work. A strike is started by the employees, who refuse to work. Both are pressure tactics during labour talks.
How long did the last MLB lockout last?
The last lockout lasted 99 days, from December 2, 2021, to March 10, 2022.
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