Zack Scott is a 4x World Series champion with the Red Sox and the former acting general manager of 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.
Editor’s note: This is the first of a two-part series with a unique proposal to the upcoming collective bargaining negotiations. You can read the first part here.
In part one, I argued that the salary cap the owners proposed is the wrong fight, and that three problems sit underneath it: a local-television gap, low-revenue teams that pocket their checks, and players who capture none of the value created when a franchise sells. The fixes there started with the owners’ own idea, pooling local television, and added a luxury tax that restrains the top without a hard ceiling. Here’s the rest of the deal, the half that breaks new ground.
On the floor itself, the two sides are closer than the headline numbers suggest. The owners’ $171.2MM counts benefits and bonus pools, so it works out to roughly $148MM in actual payroll, and the union didn’t counter with a hard floor at all. It would tax teams that spend under about $150MM, almost the same place. The number is nearly settled. The harder question is what counts toward it.
The floor has to be real, which means the money has to get spent. But a payroll-only floor carries a risk nobody is pricing. Free agency is the oldest corner of the talent pool, the largest concentration of financial downside in the sport. Teams pay free agents close to full value the day they sign, and by the back years of a long deal they’re paying for production that has faded. A large share of the league runs payrolls well under the line, so a payroll-only rule would push many of them from the $80MM range up toward it through free agency alone, where the downside grows faster than the upside and they have less room than big markets to trade or eat a mistake. So define the obligation broadly. Tie revenue-sharing and centralized-media money to major league payroll plus baseball operations infrastructure, defined tightly and league-audited so nothing gets hidden from the players. A club should be able to satisfy the floor by building one of the best development operations in the game instead of handing a 31-year-old the five-year deal nobody else would. That forces owners to invest in being good at baseball, which helps the smallest markets far more than forcing a number onto the payroll line.
Then pay the young players. The system underpays its best bargains for six years. Raise the minimum salary, expand the pre-arbitration bonus pool, and move arbitration up a year. It’s the union’s stated priority and it’s cheap next to the star market. It won’t fix the service-time games, and I won’t pretend it does. Teams hold down good-but-not-elite prospects and sign others to pre-debut extensions, and you can’t legislate that away when nobody can prove a player is big-league ready on a given day. But the case stands on its own. These are the most productive, most cost-effective players in the sport, and they’re paid the least. It does something bigger too. Every dollar committed to young players is a dollar that can’t go to free agency, the highest-downside spending in the game. Pushing payroll toward that talent and away from the oldest, most expensive end of the roster ties pay more to production than tenure, good for the clubs and good for the game.
Leveling the dollars also retires part of the draft. The league currently hands extra competitive-balance picks to its lowest-revenue clubs and ties compensation picks to free agents a team can’t afford to keep, with the signing club forfeiting picks in return. Both were built to prop up teams short on money. Once revenue sharing and a real floor put money in every market, that machinery is solving a problem the dollars already solved, so drop it: no competitive-balance picks, no qualifying-offer compensation, no pick forfeitures for spending. In its place, let teams trade any draft pick. Today only the competitive-balance picks can be moved, so open up the whole board. Compressing payrolls takes away one of the ways a club digs out of a hole, and it needs another, so a freely tradeable draft is where that starts. A team years away should be able to turn a pick into a player or a player into picks and build to its own window. Squeezing the spending closer together can’t mean burying the bottom of the league for a decade, so every club has to keep a road back.
Now the part that makes the whole thing hold together. Be clear about what each side is actually trading here:
The players concede a steeper luxury tax. It drags on the star market harder than the current structure does, and the union needs something new in hand before its members vote yes on it. The owners concede the levy below. Dropping the hard cap doesn’t count, because players already play without one, so withdrawing the demand hands them nothing. The only way owners win a cap is by burning a season, and a lost season costs more than that one year, because attendance and local interest take years to climb back. Nobody gets paid at the table for pulling back a demand the other side was never going to grant.So the owners’ payment has to be real, and it should come from where the real money is, the sale. The biggest return on a baseball team comes when it sells, and annual operating profit is small next to the gain on the franchise itself. Put a 10% levy on the net capital gain at any change of franchise control, with the base set as sale price minus the original purchase price and league-audited improvements. Trigger it on outright sales, partial sales above 5% of equity, recapitalizations that shift control, and any public offering. Close the workarounds with a five-year look-back on related-party transfers like RSN spinouts or real-estate carve-outs, and an independent league valuation any time the buyer is connected to the seller. The Padres’ reported $3.9 billion sale, against the group’s roughly $800 million basis from 2012, is a gain of about $3.1 billion, and a 10% levy comes to roughly $310 million from one transaction. Across the 5 to 10 control changes that happen each decade, the aggregate runs into the billions.
I know how the levy lands the first time you hear it. Nothing like it exists in American sports, and it has been asked for. The NHL collected $2.7 billion in expansion fees over the last decade and told its union the subject was a nonstarter; the WNBA and NBA unions got the same answer. But the parts all exist. The NFL already charges a 10% fee on sales of Raiders ownership stakes through 2037, the same 10% proposed here, and it takes a share of private equity profits when funds sell their stakes, so the league side is fine taxing a franchise sale when the league collects. The Premier League skims 4% off every player transfer into the players’ pension, and FIFA sends 5% of every transfer fee to the clubs that developed the player. Baseball already funds its pre-1980 retiree stipends out of luxury-tax receipts. And outside sports it’s ordinary. When the private equity firm KKR sold CHI Overhead Doors for $3 billion in 2022, roughly 800 employees split about $360MM, the average hourly worker’s check landing near $175,000.
Split the proceeds three ways:
40% into the players’ pension and health benefits funds, the existing vehicle built for multi-decade obligations. 40% into a new active-roster distribution pool that pays out annually to every player on a 40-man roster, pro-rata by service days. On a Padres-scale transaction, that’s roughly $165,000 per active player in the year of the sale, almost exactly what each CHI Overhead Doors worker took home. 20% into a legacy hardship fund for the pre-1980 retirees the union has been trying to make whole for two decades.Current rosters get a visible check, the pension and the long horizon get strengthened, and the union closes a long-standing priority of its own at the same time.
Owners keep their operating flexibility and the ambition that drives valuations up. Players finally share in the upside they help create, in a structure that pays current members, future pensioners, and the league’s oldest debts at once. In a fight that’s otherwise a battle over a fixed pie, that’s new money. It’s also the cheapest check an owner could write, a slice of a future gain collected on the way out the door rather than a payroll cost every season. That payment, more than anything else in this deal, is what lets the union take a steeper tax to its members and win the vote.
Add it up and each side walks away with something real:
Owners get cost restraint at the top without a hard-cap war, the Dodgers’ exemption finally closed (which most of them quietly want anyway), their franchise values protected, and a full season played.
Players keep the line they’ll strike to protect, no hard cap, and gain a funded floor, a raise for their youngest members, and a piece of franchise appreciation that has never been available to them before. Fans get every team obligated to try, one streaming product with no blackouts, a revenue base that’s genuinely compressed, and no games lost to a lockout.
None of this manufactures perfect parity, and it shouldn’t claim to. My own numbers say payroll explains only about a third of winning. The rest is good decisions and some luck. No deal can legislate either one, but leveling the money makes the decisions matter more, and that is the most any agreement can fairly promise. The cap fight was never really about competitive balance. Underneath it sits a simpler question: who shares in the value of a business where the biggest checks are written at the sale. The owners packaged a good idea and a bad one together and dared the players to swallow both. Unbundle them. Keep the shared television, the real floor, and the raise for the young players. Drop the hard cap and put a share of what everyone is building on the table instead. There’s a deal in that for owners, players, and fans alike.
Photo courtesy of Rick Osentoski, Imagn Images
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