Remember when baseball was considered a kid’s game enjoyed by adults? Somewhere it changed to big business with greed at its roots. And baseball is the most affordable of the four major sports for a family to attend — if you can believe that.
The Los Angeles Dodgers are a well-run baseball team that uses every loophole and rule to build rosters to win World Series. They are trying to be the first team to win back-to-back World Series since the New York Yankees won three in a row from 1998–2000.
The Dodgers built a starting rotation that cost over $150 million which was more than the Milwaukee Brewers spent on their entire team payroll. Was it any surprise that the Dodgers just swept the Brewers in the NLCS?
The current collective bargaining agreement (CBA) between Major League Baseball and the MLB Player’s Union (MLBPA) expires after the 2026 season. The rumors of a strike and a lockout could ruin a good thing for the game that is seeing new fans and a new excitement around the globe. A strike could ruin the goodwill built up.
Is baseball financially healthy? Yes and no is the real answer. Many teams are robbing Peter to pay Paul for many competing teams, and some other teams are taking revenue sharing and pocketing the cash and not fielding competitive teams. Then you have teams that have been crushed by the sharp decrease in income from regional sports networks (RSN) that teams in MLB used to finance much of their payroll.
But if you look at the financials, the news isn’t good for baseball. The Braves are publicly traded. The numbers are real, and they didn’t make money bottom line. In fact they lost $31.268 million in 2024 after losing $125.294 million in 2023. We will see how the 2025 numbers look. The Braves didn’t even make the playoffs this year. They did have the All-Star game in 2025 that might have given them a windfall. But it is very possible that they might have a post-All-Star hangover. We are months away from the Braves posting their 2025 financials.
MLB owners have been using debt financing to absorb losses much like a home equity loan that Americans use when they are cash strapped. If you look at valuations of sports franchises, the NFL is worth the most. But MLB is no longer second fiddle to football. The NBA is now worth more. The average NBA team is worth $5.5 billion as of October 2025, according to a recent Sportico analysis. This valuation is driven by record-high revenue, with the Golden State Warriors holding the top spot at $11.33 billion and the New York Knicks and Los Angeles Lakers ranking second and third. The average NHL team is worth $2.1 billion as of October 2025, according to Sportico.
The average Major League Baseball (MLB) team is worth $2.62 billion, according to CNBC’s official 2025 valuations. This average reflects the high value of franchises, with individual team valuations varying widely, such as the New York Yankees at $8.2 billion and the Los Angeles Dodgers at $6.8 billion.
Averages certainly pumped up the valuations of baseball teams. The Tampa Bay Rays just sold for $1.7 billion. And guess what, their RSN is under an old contract and pays more than what the Washington Nationals get. The Nats, considered a large market team, based on population has the Nats valued at $2.05 billion. That is less than the average hockey team! The Nats annual revenues are in the $300 millions while the Dodgers are nearly 3x that number.
But let’s look at the numbers of games and venue size. Both the NBA and NHL play about half the games as MLB in venues about half the size. You would think that is a 4:1 revenue advantage that MLB has. The math isn’t that easy since the average NBA and NHL tickets cost more than baseball. And operating and payroll costs are less for the NBA and NHL. Per CNBC, those sports make real money. Their ROI is higher making it more attractive to investors, hence the team valuations.
According to Forbes, the Washington Capitals hockey team made $81 million in operating income. Per Forbes, the Washington Nationals made $0.3 million in operating income. Yes, that is $300,000. The Nats made less than what Riley Adams earned last year for his -0.6 WAR. Now for the big surprise — the Washington Wizards had an operating income of $135 million. Cha-ching! Also, they make more in revenue, per Forbes, than the Washington Nationals. The NBA is a cash cow. Plus the Wizards only have a debt load of 4 percent. The Nats debt is at 26 percent per Forbes. This is why NBA teams are worth more than MLB teams, on average.
Remember, those aforementioned numbers are operating income. Once you adjust for interest expense on the debt, the Nats are losing lots of money per Forbes, CNBC, and sources we talked to for this article. Finally, the Nats are now working towards increasing revenues while holding season ticket prices steady for the fourth year in a row going into 2026. The Nats sold their jersey patch sponsorship to AARP mid-season this year, and are trying to finalize a sponsorship for the stadium naming rights. On top of that, the team for the first time ever will be negotiating a third-party RSN deal.
“The issues that we see in the system we know can be addressed without a cap.”
— MLBPA executive director Tony Clark said, per USA Today’s Bob Nightengale.
The NFL has a hard salary cap. The NBA has a hard cap with exceptions and loopholes, mostly to allow NBA teams to retain their star players where they can pay their own players more money. That builds fan loyalty in the process. But the NBA still can’t force free agents to stay with their current teams as we saw with LeBron James and “The Decision” in a 2010 ESPN special where he announced he was leaving the Cleveland Cavaliers to join the Miami Heat.
Clark has publicly and vehemently opposed a potential salary cap multiple times, including when he called it “institutionalized collusion” when speaking to reporters in July. Clark has made it clear that he won’t agree to a salary cap. The current cap system isn’t working nor is revenue sharing when teams like the Pittsburgh Pirates made $47 million per Forbes. Baseball needs a new system. The current CBA is not the answer.
Per Nightengale, the revenue sharing question was asked of Clark, “if it were possible that the small-market teams are actually making more money than the large-market teams with revenue sharing.”
“All 30 teams have the wherewithal to put a very good team on the field. We are provided information that is confidential information. We are not allowed to share that information.”
— Clark replied to the small-market team profit advantage
Of course Clark knows, and yet you would think he would work with MLB to come up with a better system. If Clark draws a line in the sand that the MLBPA will never agree to a hard cap, the only other choice is to increase penalties beyond where they are today and change the revenue sharing model. Truthfully, that is long overdue.
Also, why are teams so resistant to opening their books? The Braves numbers are public. Sure, the Pirates don’t want to show their numbers because if Forbes is right, they are using MLB’s revenue sharing as a corporate welfare to line their pockets with millions in profit. That is not what revenue sharing was intended to do.
Each year, MLB teams that exceed a predetermined payroll threshold are subject to a Competitive Balance Tax — which is commonly referred to as a “luxury tax.” Those who carry payrolls above that CBT threshold are taxed on each dollar above the threshold, with the tax rate increasing based on the number of consecutive years a team has exceeded the threshold.
A team’s Competitive Balance Tax figure is determined using the average annual value of each player’s contract on the 40-man roster, plus any additional player benefits. Every team’s final CBT figure is calculated at the end of each season.
Here are the thresholds in the current CBA:
2025: $241 million
2026: $244 million
A team that exceeds the Competitive Balance Tax threshold is subject to an increasing tax rate depending on how many consecutive years it has done so.
First year: 20 percent tax on all overages
Second consecutive year: 30 percent
Third consecutive year or more: 50 percent
If a team goes below the luxury tax threshold for a season, the penalty level is reset. There’s also a surcharge threshold for clubs that exceed the base threshold by $20 million or more.
$20 million to $40 million: 12 percent surcharge
$40 million to $60 million: 42.5 percent surcharge for first year; 45 percent for each consecutive year after that
$60 million or more: 60 percent surcharge
Clearly none of these penalties are discouraging the New York Mets and Los Angeles Dodgers from spending. Per Forbes, the Mets are losing over $100 million in operating income. Forbes calls the Mets the “world’s most unprofitable sports team.”
Teams that are $40 million or more above the CBT threshold are penalized with their highest draft selection in the next MLB Draft moved back 10 places unless the draft pick was in the top six. In that case, the team would have its second-highest selection moved back 10 places instead.
The next CBA at the very least should have much deeper penalties that cut off the player pipelines of teams that exceed the CBT by $10 million. My suggestion would start with taking away their top draft picks one by one if they exceed the CBT by $10 million to lose their first round draft pick. Exceed it by $20 million should cost them their first and second round draft picks, and so on. Also take away their international free agency money. You have to discourage them enough that they will think twice about it. Mets owner Steve Cohen gave two s###s about spending $765 million for Juan Soto. It was like Monopoly money for him.
MLB Commissioner Rob Manfred wants a national TV deal to roll all RSNs into one pool. That might fix the vast revenue imbalance and might solve the revenue sharing model. But how do you force teams like the Pirates to spend more? You need a CBT floor with penalties if they go under it. That is only fair so the MLBPA sees that MLB doesn’t want payroll spending to go down.
Also, can MLB and the MLBPA come up with a star retention program like the NBA has? At least give the current team a chance to match a deal to retain their players? There has to be a better system so the fans get what they want. Fans get attached to their star players. And it isn’t just the Nats who have have lost star players. Remember when Freddie Freeman left the Braves to go the Dodgers, and Shohei Ohtani left the Angels to go to the Dodgers, and Juan Soto left the New York Yankees to go to the Mets.
If Clark can’t see the issues in MLB team valuations and the growing debt versus the other sports, he shouldn’t be in the position he is in. The NFL, NBA, and NHL all came up with deals where team owners can make money and their leagues are thriving. Baseball isn’t on a good path. The fans interests should be put in front of the greed.
The NL champs have set multiple payroll records in constructing a back-to-back World Series contending teams. The Dodgers are projected to pay $168 million in luxury taxes, which is more than the entire payroll of 16 other teams, per Mike Mazzeo of the Sports Business Journal. Building their roster also involved deferring more than $1 billion in payments per ESPN. Yes, when the Dodgers do deferrals — that’s good. Let’s digress on that point: When the Nationals did deferrals, that’s bad per the narrative set in the D.C. media. Just another observation that shows the irony of how the Dodgers are doing it — and their fans are loving it — and their local media has no issue with it. The Dodgers get no pushback. It’s to the point that their manager, Dave Roberts, could get cocky.
“Before this season started, they said the Dodgers are ruining baseball. Let’s get four more wins and really ruin baseball!”
— Roberts said after sweeping the Brewers in the NLCS
Winning is great. The Dodgers are playing within the rules. Roberts responded to his quote above and said, “I don’t feel like I’m the villain. I was just poking fun at some people that said that the Dodgers were ruining baseball. Clearly, I don’t believe that. I think that baseball is in a great place right now.” His quote though wasn’t funny to teams that feel like they have no chance. That’s the problem. Why should an owner risk a huge loss of income by trying to spend to compete when they see how it will end. Remember, the Blue Jays have the fifth largest payroll in baseball. The Brewers going up against the Dodgers looked like the Varsity beating up on the JV team in a 4-game scrimmage.
Some would point out that the NFL has a hard cap and still has dynasty teams like the Kansas City Chiefs and the New England Patriots before them. Now the Philadelphia Eagles are emerging as possibly a dynasty team. It just goes to show you that a small-market team like Kansas City can create a dynasty. That hasn’t been seen in baseball in over 50 years where a small market team could make it to three consecutive World Series.
Manfred and Clark have to figure this out where baseball can get back to a healthy spot and the fans love the game even more — and yes, baseball salaries can increase with inflation. For once, put the fans first. Try that as a starting and ending point. Do something for the fans, first and foremost.
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