Zack Scott is a 4x World Series Champion with the Red Sox and former acting general manager with the Mets. Today he’s the founder of Four Rings, where he builds senior leaders in and out of sports their own AI system to make better calls on the high-stakes decisions they can’t take back. He’s also an associate partner at PBI Sports, representing more than 20 coaches and executives across MLB. Connect with him on LinkedIn.
Editors note: This is the first of a two-part series with a unique proposal to the upcoming collective bargaining negotiations.
The owners’ opening proposal for the next labor deal contains the best idea anyone has put forward for fixing baseball’s competitive imbalance, bundled with the one idea the players will never sign. The good idea is pooling local television money and sharing it equally across all 30 teams. The dealbreaker is the hard salary cap attached to it. Pull those apart, add one move nobody is talking about, and there’s an agreement here that owners, players, and fans could all call a win. This is part one of two: why the cap is the wrong fight, and what real restraint looks like.
Their offer is a hard cap at $245.3MM, a hard floor at $171.2MM, a 50/50 revenue split, and all local TV money pooled and shared. The pooled television is worth keeping. The hard cap fixes the least.
Start with why the cap is the wrong fight. Money matters in baseball, and I want that clear up front, because people take numbers like these and conclude spending doesn’t buy wins. It does. I came in skeptical of the owners’ pitch, so I ran the numbers first. I took five full seasons of every team’s tax payroll and set it against winning percentage, 2022 through today, the life of the current deal.
The correlation is 0.57, an R-squared of 0.32. Payroll explains about a third of why teams win and lose, and a third is a lot. But the league’s only argument is that a cap and floor cure competitive balance, and that’s the claim the numbers won’t carry. The other two-thirds is acquisition, development, health, who’s in the decision room, and luck. The Brewers have run a bottom-third payroll for five straight years and stayed near the top in wins the whole time. A cap changes who’s allowed to spend. It doesn’t change the two-thirds.
The NFL comparison doesn’t help either, and it’s everywhere. But football’s cap sits on contracts that mostly aren’t guaranteed. A team that signs a bad deal cuts the player, eats a charge it can absorb over a year or two, and the cap room recycles. Baseball contracts are guaranteed to the last dollar, so the money never vanishes the way it does in football. The best a team can do with a $200MM mistake is trade the player and eat cash, which shrinks the hit but never clears it and needs another club willing to take him. Under a cap that leftover money still counts against a ceiling, so the mistake locks the team out of fixing its roster for years.
I spent two decades inside front offices helping decide how much to spend on what, including a year running baseball operations for the Mets. I’ve negotiated contracts and watched the competitive-balance tax shape real decisions. From that seat, the cap is aimed at the wrong target. Take it off the table and three real problems come into focus, and a payroll ceiling solves none of them.
- The revenue gap is mostly a local-television gap, and the Dodgers are the extreme case. They pull in about $334MM a year, more than double the next club, and thanks to a settlement from the McCourt bankruptcy the league treats that money as worth just $84MM for revenue-sharing. They shield roughly a quarter-billion a year from the pool.
- The integrity problem was rarely the teams that spend too much. It’s the teams that take their revenue-sharing checks and pocket them. The union has filed grievances over exactly that.
- The real money in baseball is made at the sale. A team can run paper losses for years and still hand its owners an enormous return when it changes hands. The Padres have drawn some of the best home crowds in the sport while losing money on paper, and they’re reportedly selling for around $3.9 billion. Players create a large share of that value and capture none of it.
Here’s a deal built around those three problems.
Start with the media, because the owners already proposed the fix. Pooling all local TV and sharing it equally folds the Dodgers’ money into the pool like everyone else’s, finally ending their exemption, and it ends the local blackouts fans have lived with for years. It’s already half forced. The regional sports network model collapsed, Diamond Sports stopped paying its fees and airing games, and the league stepped in through MLB Local Media to keep most teams on the air. The owners are right to formalize it. Using it as ransom for a cap is the mistake. Big-market owners are treating that television money as a bargaining chip for the cap, but the sharing is worth doing on its own. The books still have to balance, and I’ll get to how.
On the cap itself, give the owners restraint without a ceiling. Players won’t accept a hard cap, and the labor history says they’ll sit out a season first. The luxury tax is already supposed to create that restraint, and it hasn’t worked. Even the commissioner admits it. Rob Manfred, at the June owners meetings: “We have tried mightily over several rounds of bargaining to use a competitive balance tax to address competitive concerns. And sometimes you’ve got to admit you failed.”
It failed in two ways. The threshold grew about 1.5% a year while salaries grew nearly 6% and revenue around 8%, so the line stood still while the sport ran past it. And the penalties were priced for a different era. The Dodgers paid $169MM in tax on a $417MM payroll in 2025, close to dollar for dollar above the line, and won a second straight World Series doing it. When a team pays an effective rate near 100% and calls it money well spent, the tax has become a cover charge.
So fix both pieces, the line and the penalties. Set the first threshold at $250MM. That’s essentially the owners’ own cap number, but here it works as a tax line a team can still spend past by paying the escalating rates below. It mirrors the floor, leaning on the top of the league the same way the floor lifts the bottom. Here’s the structure:
- The threshold starts at $250MM and indexes to the median club’s revenue growth. Indexing to the median rather than the leaguewide average tracks the typical franchise instead of the handful at the top, so the line keeps pace with the sport instead of falling behind the way the current one did.
- The floor indexes the same way, starting at the owners’ $171.2MM, so it never quietly falls behind in real terms either. What counts toward it comes in part two.
- Penalties are money only, no draft picks or international pool money. Stripping a big-market roster of young talent on top of taxing it punishes fans for an owner’s choices; an owner determined to overspend should pay in dollars, only in dollars. Taking away picks and pool money would also push him toward the one channel left untouched, free agency, the steepest downside in the game.
- The dollars climb fast: 50% on the first $25MM over the line, 100% on the next $25MM, 200% beyond that. Each consecutive year a team stays over the line, the whole schedule climbs another half-step, from 1.5 times in year two to 3 times by year five.
- The proceeds go into a floor-enforcement escrow, not back to other owners. The money releases to a low-revenue club only once it hits its required spend, turning the tax on the biggest spenders into a subsidy that helps the smallest afford the floor. Because it pays out only against real spending, none of it can be pocketed the way revenue-sharing is today.
And calibrate those rates for the world this deal creates rather than the one it replaces. The Dodgers financed their $587MM season while holding a $334MM-a-year television deal, most of it shielded from the sharing pool. Centralized television takes that engine away, so taxing the payroll as if the subsidy still existed would punish them twice, and the same caution applies to every club whose local money moves into the pool. Set against that lighter base, the rates still leave room for one big year.
A team can buy a single run at a title out of its owner’s pocket. What the escalator raises is the price of doing it every year. Hold that same $417MM payroll five years running and the tax climbs from about $272MM in year one to nearly $491MM by year five as the multiplier compounds, close to $910MM all-in, on a smaller revenue base than they have today. That’s the test of a tax that works like a cap without being one.
There’s a reason to leave that door open. The sport runs on its marquee franchises. Teams like the Dodgers and Yankees drive national ratings, rivalries, and the fan interest that lifts everyone’s revenue, so a tax built to add restraint shouldn’t flatten them. The point is to make spending big every year a real choice with a real cost, while keeping the biggest brands swinging.
That covers restraint at the top: shared television, and a tax that bites without becoming a ceiling. But a deal has to balance. The harder half, and the more original one, is a floor that actually forces teams to try, a long-overdue raise for the youngest players, and the one move nobody is talking about, a way for players to share in the value they spend their careers building. That’s part two.
