MLB proposes limiting most free agent contracts to 5 years and 15% of a team's salary cap

Commissioner of Major League Baseball Rob Manfred answers questions during a news conference at the MLB winter meetings, Dec. 8, 2025, in Orlando, Fla. (AP Photo/John Raoux, file)

Major League Baseball proposed limiting most free agent contracts to five years and 15 per cent of a team’s salary cap and to eliminate deferred compensation, fleshing out details of a salary cap plan likely to spark a confrontation with the players’ association.

During a bargaining session Thursday at the union’s office, MLB said it would accept the union’s proposal granting free agency a year early for players who have reached age 30 if the union accepted the league’s salary cap system. MLB also proposed boosting the minimum salary from US$780,000 to US$1 million for those with two years of big league service.

MLB also proposed increasing the pre-arbitration bonus pool from US$50 million to US$65 million next year and US$75 million by 2032, the sixth season of MLB’s proposed seven-year deal.

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“These misleading offers are designed to look like ‘improvements’ but are of little or no value, given they are expressly conditioned on agreement to the league’s cap system which eliminates the free market, and ensures gains for one player only come at the expense of another,” union head Bruce Meyer said in a statement. “While MLB claims to be acting in the interest of fans, their proposals thus far are entirely consistent with owners’ long-held goals: suppressing player salaries and maximizing club profits.”

MLB also said it would agree to eliminate the qualifying offer for free agents that since its inception in 2012 has restricted the market for some players.

Bargaining started May 13 for a contract to replace the five-year deal that expires Dec. 1, and owners proposed a salary cap for the first time since the union fought off the system during a 7 1/2-month strike in 1994-95. MLB is expected to impose a lockout in December, halting free agent signings and trades.

“Owners’ attempts to pit players against players are nothing new,” Meyer said. ”But they’ve failed in the past and will fail again now, because PA members remain unified.”

After the prior agreement expired in December 2021, intensive bargaining did not start until late February as the threat approached of losing regular-season games — along with revenue and salary. The sides reached an agreement on March 10, the 99th day of the lockout, preserving the 162-game schedule.

In the league’s cornerstone proposal, made last month, team spending would be capped next year at US$245.3 million, using figures for luxury tax payrolls that include US$20.1 million for benefits and the pre-arbitration bonus pool. It also would establish a payroll floor of US$171.2 million, forcing several teams to spend more. The two-time World Series champion Los Angeles Dodgers, baseball’s biggest spenders, had a US$415.2 million payroll on opening day this year — around US$170 million over the proposed cap.

“The biggest issue baseball fans want solved to strengthen the game is fixing the payroll disparity that leaves too many fans without hope of their team competing for a World Series title,” MLB spokesman Glen Caplin said in a statement. “Every other major U.S. sport has tackled this problem, and every year more small market teams in those leagues have a chance to win. The salary cap and floor proposal levels the playing field.”

As part of the plan, MLB would establish a “cornerstone player” similar to the NBA’s Bird rule, which would allow a team to re-sign a player at 16 per cent of the cap. A free agent switching clubs would be limited to a US$36.8 million salary next year and a re-signing player to US$39.2 million.

Salaries for free agents in additional seasons of a multiyear contract would be limited to 5 per cent increases, as would salaries for younger players in multiyear deals that cover potential free-agent seasons.

Contracts would be capped by service time: at US$500 million and 12 years for those yet to make major league debuts, US$461 million and 11 seasons for those with 0-1 years of service, US$421 million and 10 years for 1-2, US$382 million and nine seasons for 2-3, US$343 million and eight years for 3-4, US$304 million and seven years for 4-5, and US$265 million and six years for free-agent eligible players.

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Banning deferred compensation would eliminate a business practice used most prominently by the Dodgers, who owe just under US$1.1 billion to 10 players from 2028-47. In addition, MLB would restrict bonus provisions in player contracts and mandate a standard award bonus package.

MLB said it would accept the union’s proposal to drop free-agent eligibility to five seasons of service from six for those turning 30 by the Nov. 1 of the offseason. MLB said 354 players on big league rosters as of Thursday would reach free agency a year earlier. MLB would start the change in the 2027-28 offseason.

As part of the minimum salary proposal, MLB said players with less than two years of service would have a US$900,000 minimum and if earning a full year of service would get an additional US$100,000 from the pre-arbitration bonus pool.

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Ronald Blum, The Associated Press