Spring training is here for Major League Baseball. Cue the lawyers and accountants.
Major league pitchers and catchers reported for spring training this week. Lawyers might not be far behind.
Baseball is America’s oldest major team sport, has been on the cutting edge of major sports changes for over a century and is historically very litigious. The game’s stubborn owners fought free agency, resisted the unions and even wrangled an obtuse antitrust exemption from the Supreme Court in 1922. And they get sued a lot.
Baseball’s uniqueness ranges from trivial to cumbrous. It is the only major sport where the defense controls the ball, there is no game clock, and it only recently adopted official replays. It still has no salary cap.
The lack of a salary cap is a bonanza for players, agents and lawyers, but it now threatens the business of baseball with a spate of unprecedented player deals.
The game’s first $100 million player contract came in 1998 when the Dodgers signed Kevin Brown. At the end of 2023, when Shohei Ohtani inked a backloaded $700 million contract, there were 14 player deals worth over $300 million each. On December 8, 2024, free agent Juan Soto signed a record $765 million agreement with the Mets. But most teams cannot keep up with limitless spending. What happens if the bubble bursts?
Salaries have been expanding since at least 1900 when Nap Lajoie, a superstar second baseman, made the max deal of $2,400 annually from the National League Philadelphia Phillies (plus an alleged $200 or so under the table from the team owner).
In 1901, he jumped to the new American League Athletics to escape the cap, then batted .421 (some sources say up to .426), drove in 125 runs and hit 14 home runs, leading the league in all three categories. Then he made still more history when he left to play for the American League Cleveland Blues in 1902. In 1905 his team became the Cleveland Naps in his honor. It later became the Indians (now Guardians), but the Naps moniker speaks to Lajoie’s importance as a player and baseball pioneer.
A new competing Federal League threatened the majors in 1914 when it lured away 59 big league players. The owners doubled down on a harsh reserve clause that restricted player movement.
In 1915 the new Federal League sued them for antitrust violations. U.S. District Judge Kenesaw Mountain Landis, who served in the Northern District of Illinois in Chicago, was assigned the case and eventually arm-twisted a partial settlement. (In 1921 he became the MLB Commissioner.)
The Federal League withdrew, but the Baltimore team refiled in Washington, D.C. and kept going. The Supreme Court eventually insulated baseball from antitrust by finding that the major leagues were not a business in interstate commerce — a legal boondoggle that lives on.
Free agency thrives
In 1975 two pitchers, Andy Messersmith and Dave McNally, attacked that very same reserve clause in arbitration and won. Baseball players learned to use federal labor laws to grow stronger and stand up to the owners. In the mid-1980s, Commissioner Peter Ueberroth and the owners colluded to suppress player salaries. They were sued, they lost, free agency thrived and salaries ballooned upward. Now players are signing multi-year deals approaching $1 billion.
The Cubs recently signed slugger Kyle Tucker from the Astros, then moved their star Cody Bellinger to the Yankees, which now has an annual team payroll of $265 million. Juan Soto left the Yankees for the Mets, where the 2024 team payroll had ballooned to well over $300 million, depending on luxury tax penalties, player benefits, and other factors, and not counting Soto’s approximate $51 million a year starting in 2025.
The Athletics 2024 payroll was the smallest at $60.5 million, next lowest were the Pirates at $87.5 million. Five teams were under $100 million, 20 out of 30 were under $200 million. The Cubs were ninth highest at $213 million, the White Sox 15th at $143 million.
Today, there is a luxury tax for team payrolls that exceed $237 million (as of 2024). There are surcharges when a team goes over the threshold, starting at 20% of the excess, adjusted for how far over and for how long. But this is not a hard cap limit, since the problem can be solved with more and more money.
Sooner or later, something must give. Billion-dollar payrolls and even billion-dollar players are championed by lawyers and agents, but such levels may not be supported by ticket sales, sponsors and television deals.
If baseball does not intervene with a real cap, small-market teams like the Twins, Reds, Guardians and others may falter. Meanwhile, the lawyers will be inundated with work, not just litigating, but performing lucrative financial and estate planning magic. After all, someone has to help manage Soto’s signing bonus of $75 million, not to mention close to $700 million more after that.
Eldon Ham is a faculty member at IIT/Chicago-Kent College of Law, teaching sports, law and justice. He is the author of five books on the role of sports history in America.
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