Baseball’s Wealth Gap Has Become a Chasm—and Is Stretching the Sport to Its Breaking Point

Major League Baseball has never been anyone’s idea of a socialist utopia.

Unbound by a salary cap like America’s other professional leagues, this sport has long been split into haves and have-nots, with the richest franchises able to attract top talent by offering enormous contracts that their smaller-market counterparts can’t easily afford.

But as the 2025 season begins, that enduring wealth gap has become a gaping chasm, creating an even more stratified landscape that is stretching an already-fragile economic system to its breaking point. 

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The widening financial disparity among teams has threatened MLB’s competitive integrity, alienated fans in some cities and stoked widespread fears throughout the sport that a labor dispute is looming—with potentially devastating consequences.  

Buoyed by an unrivaled local television deal, the Los Angeles Dodgers will outlay nearly a half-billion dollars on player salaries and luxury tax penalties this year, a record amount. Thanks to hedge-fund billionaire Steve Cohen’s largess, the New York Mets aren’t far behind, shelling out upward of $400 million. Meanwhile, the Miami Marlins have a payroll of just $70 million, while three other teams—the Tampa Bay Rays, Chicago White Sox and Athletics—all come in under $90 million.

The simmering discrepancy is now threatening to boil over. Based on a widely used measure of economic inequality known as the Gini coefficient, overall team spending on payroll and luxury tax this season projects to be the most unequal since at least 1985, the earliest reliable data on record. 

All of this has left MLB facing an existential question: Can a sport thrive when one team spends 600% more to build its roster than another?

“If I’m going to be critical of something, it’s not going to be the Dodgers,” MLB commissioner Rob Manfred said. “It’s going to be the system.”

It’s a system the MLB Players Association has defended ferociously for the union’s entire existence. The NFL, NBA and NHL all have salary caps. Only baseball players have held out, a victory they consider among their greatest accomplishments. The players are so opposed to the concept of a pay ceiling that the last time owners seriously attempted to introduce a cap in 1994, the World Series was canceled because they all went on strike. 

The union’s position is that a salary cap is anti-free market and would serve no other purpose but to suppress player compensation. Without one, coveted free agents in baseball now command massive contracts that extend for a decade or more, with every penny guaranteed.

Nonetheless, management appears set to try once again to negotiate a cap when the current labor deal expires after the 2026 campaign. The union has already made clear that it will not agree, setting the stage for a prolonged work stoppage that at this moment seems all but inevitable.

“I’m not saying that the system is perfect,” MLBPA executive director Tony Clark said. “I am saying that there are opportunities to improve it.” 

History has shown that owners and players can resolve their issues without a cap. Baseball saw similar inequality in the late 1990s and early 2000s, when the New York Yankees were cementing themselves as the “Evil Empire.”

In response, the 2003 labor deal formalized the luxury tax and established the framework for the modern version of revenue sharing, mechanisms that act as subsidies to the less wealthy clubs. Disparity decreased over the next 15 years—before skyrocketing again in the 2020s. Over the past three offseasons, the Mets, Dodgers and Yankees have spent more on free agents than the teams that ranked ninth through 30th combined.

Under the ownership of Guggenheim Partners chief executive Mark Walter, the Dodgers have become a juggernaut, generating more revenue than anybody in baseball. They signed a 25-year, $8.35 billion deal with Time Warner Cable in 2013, ensuring them gigantic paydays every year at a time when local TV businesses in many other places are collapsing. 

The Dodgers committed more than $1 billion to add Shohei Ohtani and Yoshinobu Yamamoto before the 2024 campaign, which ended with a championship. They spent another $400 million this winter to build what looks like the best team in recent memory. 

“We’re the Dodgers—all caps,” team president Stan Kasten said. 

The Mets are a different situation. Their revenues rank in the middle of the pack, people familiar with matter say. That financial reality just hasn’t mattered to Cohen, MLB’s richest owner. 

Since buying the Mets in 2020, Cohen has spent lavishly on players even while the team has lost hundreds of millions of dollars. In December, he gave superstar outfielder Juan Soto a $765 million contract, the largest in sports history. 

Cohen’s ability and willingness to run his team in the red, coupled with the Dodgers’ overwhelming business success, has driven calls for reform, even among some big-market rivals. Yankees owner Hal Steinbrenner, in an interview with the YES Network this winter, said of the Dodgers that, “It’s difficult for most of us owners to be able to do the kind of things that they’re doing.”That’s a notion the union refutes, arguing that the issue isn’t the Dodgers and Mets spending—but the other billionaire owners who are prioritizing their wallets over putting a competitive product on the field. 

“There are a lot of teams doing very well,” Clark said, “and some of the teams that are doing very well may not seem like the teams that would be doing very well.” 

The economics of baseball franchises are notoriously opaque, but teams are required to submit an audited financial statement every year. It doesn’t factor in every potential revenue stream, like team-owned entertainment districts around their stadiums. Nor does it account for increases in franchise valuations, which continue to climb. But the document provides a window into how teams are faring on a year-in, year-out basis. 

In 2023, the most recent data that has been shared with teams, franchises were divided into three groups, people familiar with the matter said. About one third of teams reported earnings of around $20 to $55 million before interest, taxes, depreciation and amortization, around half of which were small-market teams benefiting from revenue sharing checks. 

Around another third took losses of $20 million or more. The remainder roughly broke even. Those figures don’t include teams’ capital expenditures, such as stadium improvements, or debt service. 

MLB franchise valuations have lagged behind other sports. The most recent baseball team sale saw the Baltimore Orioles go for $1.73 billion last year. At the same time, NFL and NBA teams have been selling for double or even triple that amount.

“If we can have as competitive an environment as possible, that I think is a good thing,” Carlyle Group co-founder and new Orioles owner David Rubenstein said. “Obviously that’s what basketball and football figured out.”

Granted, it’s possible to achieve some success in baseball on a limited budget. The A’s and Rays have proven as much over the past quarter-century. But the numbers show that there is no replacement for money. 

Since MLB expanded to 30 franchises in 1998, teams ranked in the top five in payroll have averaged 89 wins a season. The next five teams averaged about 86 victories, with that figure plummeting to just 74 for those in the bottom five. 

There is one way in which MLB has achieved a measure of parity. Sixteen different organizations have won the World Series since 1998, the most of any major American sport. There hasn’t been a repeat champion in baseball since the Yankees claimed three straight from 1998 to 2000.

Yet even that doesn’t tell the whole story. MLB’s postseason is notoriously fickle, making dynasties all but impossible. 

What’s clear, however, is that while you can’t spend your way to a title, you can certainly buy your way into contention: The Dodgers have won their division in 11 of the last 12 seasons, a stretch of dominance that coincides with Walter’s ownership. The Yankees haven’t had a losing record since 1992. 

Since 1998, there has only been one champion that had a bottom-10 payroll: the 2003 Marlins. They haven’t been past the division series since.

“I would like the regular-season opportunities to win the division to be more broadly based than they are,” Arizona Diamondbacks owner Ken Kendrick said. “But we have the system we have.”

Write to Jared Diamond at jared.diamond@wsj.com