MLB centralised broadcast bundle faces structural hurdles without salary cap
Evan Drellich argues that without a salary cap to offset revenue losses, teams like the Los Angeles Dodgers and New York Yankees have no incentive to join the proposed league-wide package.
Major League Baseball’s proposal to pool local broadcast rights from all 30 teams into a centralised bundle is unlikely to succeed without the implementation of a salary cap, according to reporting by Evan Drellich. The league’s initial framework for the next Collective Bargaining Agreement involves sharing local media revenue equally across all clubs, with the broader aim of selling a unified package to a streamer. However, this structure is inextricably linked to the owners’ desire to institute a salary cap and floor.
Drellich, speaking on The Varsity podcast with Puck’s John Ourand, described the 30-team centralised hub as “pie in the sky” for a number of years if a salary cap is not instituted in the next agreement. The plan relies on large-market clubs, such as the Los Angeles Dodgers and New York Yankees, sacrificing lucrative individual media deals to join the league-wide package. Without a salary cap to offset the loss of revenue, there is no incentive for these teams to participate.
The financial disparity between markets creates a significant barrier to the proposal. The Dodgers earn approximately $334 million per year from their deal with SportsNet LA, which is more than double the local media revenue of any other club. This deal runs through 2038, meaning the team is better off sticking with it until it expires rather than joining a centralised hub that would dilute their earnings.
Owners are keen on a salary cap to limit payroll liabilities and increase franchise valuations in the long term. MLB wants large-market teams to join the centralised hub to create a more valuable package for streamers and to increase competitive balance through revenue sharing. However, without the cap, large-market owners have no reason to exit their existing lucrative deals, as they would lose a major competitive advantage over small-market teams.
If the salary cap is not agreed upon, MLB risks going to market with a smaller, less attractive package featuring around 20 teams, excluding major draws like the Dodgers or Yankees. This dynamic explains why the league is expected to remain dug in on a salary cap during upcoming labor negotiations, as the future of its media business depends on securing a package that includes the league’s most valuable franchises.
