Weekly Column: Seven Truths About Baseball and Competitive Balance

In this week’s column, California Sports Lawyer® CEO and Managing Attorney Jeremy M. Evans analyzes seven truths about baseball and competitive balance, including why spending helps but does not guarantee championships and why responsible investment may serve the game better than a salary cap.

In sports, as in life, people matter. Championships and victories are won by and with people.

You can read the full column below. (Past columns can be found, here).

The trade of ace pitcher Tarik Skubal from the Detroit Tigers to the Los Angeles Dodgers late Saturday night caused a stir among fans, commentators, and baseball executives. At the time of the trade, the Dodgers were tied with the Milwaukee Brewers for the most wins in baseball, with 69, and pursuing a third consecutive World Series championship.

The Skubal trade is a useful case study, but the larger question is not whether one supports or opposes the Dodgers. It is whether limiting successful teams actually produces a healthier and more competitive sport.

Some commentators argued that sending the best starting pitcher available at the Major League Baseball (MLB) trade deadline to the two-time defending World Series champions would increase the likelihood of a work stoppage after this season. Others viewed the move as another example of the Dodgers doing what successful organizations are supposed to do, which is improve their roster whenever an opportunity arises.

Those reactions are noteworthy, but they do not tell the whole story about baseball, the Dodgers, or the ongoing collective bargaining negotiations between MLB and the MLB Players Association (MLBPA). The current collective bargaining agreement (CBA) expires on December 1, 2026, and there was already a significant risk of a work stoppage regardless of what one franchise did or did not do.

The goal of this column is to offer seven truths about life, baseball, and competitive balance. These principles help distinguish between the good, the bad, and the ugly approaches to creating parity. Imagine being in the position of a front-office executive, player, owner, or fan. Perspective is important no matter where one stands.

First, spending money does not win championships, but it helps. If you buy a fast car, it can travel fast if it is healthy, working mechanically, and operated by a capable driver. The car must also follow the rules of the road. Sports work in much the same way. A large payroll provides greater opportunities, but it does not guarantee success. Ask the New York Yankees, San Diego Padres, New York Mets, Philadelphia Phillies, Toronto Blue Jays, or other high-spending teams whether payroll guaranteed them a World Series championship in any particular season. Nothing is guaranteed.

Second, payroll does not determine every outcome, particularly during a short postseason series. Baseball is circumstantial and often a game of inches. The Toronto Blue Jays took the Dodgers to the brink of defeat in the 2025 World Series. But for some late heroics, Canada might have celebrated a World Series victory and flown the flag proudly.

Third, imagine if movie studios and streamers tried to convince SAG-AFTRA and its members that a salary cap was necessary to produce better movies or spread competitive balance among the largest and smallest companies. “That studio is too big and too successful,” they might argue. The proposal would sound ludicrous.

Sports leagues are different because their franchises depend on one another to produce games, seasons, and championships. However, entertainment companies still compete for audiences, awards, talent, distribution, and revenue. Competition should be rewarded when it succeeds, not penalized merely because one participant has performed better than others. Suppressing salaries is rarely good economic policy, particularly when the business continues generating greater revenue and franchise value.

Fourth, regulation is not the answer to every dispute. Sometimes teams need to make better decisions and demonstrate a greater commitment to competing. This is one reason the relegation system in European soccer is effective. It imposes direct consequences on teams that consistently fail to perform on the field.

Teams receiving shared league revenue should be expected to invest those resources and demonstrate a credible effort to compete. Policies discouraging tanking should be implemented aggressively. Teams should not be rewarded for deliberately falling in the standings to improve their position in a draft or obtain another competitive benefit.

Baseball’s Competitive Balance Tax already penalizes the highest-spending teams, with proceeds supporting player benefits and other league purposes. The more difficult question is whether low-spending teams should also face consequences when they repeatedly fail to invest in competitive rosters.

The MLBPA has proposed a “Competitive Integrity Tax” for teams that fail to satisfy minimum payroll benchmarks. The proposal would also require teams to use revenue-sharing funds to improve their competitiveness. That approach focuses on encouraging investment rather than suppressing the salaries paid by successful organizations.

Fifth, a policy worth considering is a minimum payroll requirement for teams that consistently produce losing seasons. A low-spending team that remains competitive should not be punished merely for operating efficiently. The consequences should be directed toward teams that repeatedly combine low spending with poor performance and limited investment in improvement.

MLB has proposed both a salary cap and a salary floor in its current bargaining position. A floor may encourage teams to invest more in players, but it should not be used to justify a cap that restricts what ambitious teams may spend. A salary cap would primarily benefit owners by limiting labor costs and making future expenses more predictable. That cost certainty can improve operating margins and support higher franchise valuations because prospective buyers and investors can forecast expenses and returns with greater confidence. However, winning can also increase franchise value by strengthening attendance, viewership, sponsorships, merchandise sales, and long-term brand loyalty. Limiting investment before teams have fully pursued those opportunities may therefore be premature and unwise.

A more balanced policy would require every franchise to reinvest a reasonable percentage of its revenue in the competitive product. That investment could include major-league player salaries, player development, coaching, training facilities, venue improvements, and the fan experience. High-revenue teams should not be permitted to use a salary cap merely to retain a greater share of their revenue, just as low-revenue or revenue-sharing teams should not be permitted to collect league funds without making a credible effort to compete. Teams might spend less under a salary cap and become more profitable, but many of them would still fail to win.

This approach is not inherently pro-player or pro-owner. Players deserve to participate in the growth they help create, while owners deserve reasonable cost certainty and the opportunity to earn a return on their investments. Baseball benefits when both sides invest in the quality, stability, and future of the game. The better policy is to encourage responsible investment across the league without unnecessarily limiting ambition at the top or tolerating inaction at the bottom.

Relegation will almost certainly never happen in the United States because owners, league commissioners, and other governing bodies would resist it. American sports franchises also maintain enormous valuations partly because owners know which league their teams will compete in for the foreseeable future. A meaningful minimum payroll requirement could create some of the incentives associated with relegation without threatening that structural stability.

Sixth, trades often do not work as expected. Prospects sometimes overperform, as Yordan Alvarez did after being traded by the Dodgers, while others never develop into successful major-league players. Experienced players sometimes improve a team, and sometimes they fail. Every decision involves risk. Teams that consistently fail to act are often left behind wondering what happened.

Seventh, baseball more than any other sport requires a balance of long-term investments in prospects, player development, trades, and major-league payroll. Baseball has the longest regular season among the major American professional sports, the most games, the second-largest active rosters after the National Football League, numerous draft rounds, and the most extensive affiliated developmental system.

When this author took the bar exam, a mentor said, “The bar exam is a fair but difficult test. You must be good at many things at once.” That principle is also true in sports, especially baseball. A front office must be good at many things at once.

When surveying unsuccessful teams, the culprit is rarely that another team spent too much. One team may have spent too little or refused to assume reasonable risks. Another may have failed to draft, trade for, or develop talent. One may have ineffective ownership, while another may be constrained by its venue, market, or lease.

In sports, as in life, people matter. Championships and victories are won by and with people. Sports are meant to be competitive. Increasingly, however, competitive failures are blamed on successful organizations when many of those failures can be addressed through better investment, decision-making, and risk-taking. Access to capital alone does not explain competitive success. Access to talented executives, and the willingness to let them compete, often does.

About Jeremy M. Evans:

Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. An award-winning attorney and industry leader, Evans is based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.