MLB proposes limiting most free agent contracts to 5 years and 15% of a team’s salary cap

MLB’s latest bargaining push

Major League Baseball has proposed limiting most free-agent contracts to five years and 15% of a team’s salary cap, a major shift that would sharply narrow the market for top players if it were ever adopted.

The league also proposed eliminating deferred compensation, a feature that has helped teams structure some of the sport’s largest deals. The proposal came during bargaining on Thursday, June 25, 2026, as MLB and the players’ union continue negotiating a new collective bargaining agreement.

MLB said the framework would affect only a small slice of the market. The league has said 98% of free-agent contracts would not have been impacted under its plan.

The offer is part of a broader package, not just a standalone contract-length limit. It is tied to a hard payroll structure, a salary floor, changes to minimum pay and revisions to free agency rules.

What the proposal includes

Under MLB’s plan, payroll would be capped at $245.3 million and held to a floor of $171.2 million. The league also proposed raising the minimum salary from $780,000 to $1 million for players with at least two years of service.

MLB said it would increase the pre-arbitration bonus pool as part of the same proposal. It also said it would eliminate the qualifying-offer system if the union accepted the cap framework.

The five-year limit would apply to players signing with new teams. MLB also described a separate retention mechanism for players re-signing with their own clubs, which it called a “Cornerstone Player” provision.

The league said it would allow earlier free agency for players age 30 with five years of service. That makes the proposal broader than a simple cap on contract length, because it would also change who reaches the market and when.

Why the deal matters

A five-year limit would be a major change in how teams pursue elite free agents. The biggest contracts in baseball often rely on long-term guarantees, opt-outs and deferred money to bridge the gap between what players want and what clubs are willing to pay.

AP reported that the proposal would make Juan Soto’s 15-year, $765 million Mets deal the kind of contract MLB is trying to prevent. That example shows how directly the new framework would constrain the top end of the market.

The proposed ban on deferred compensation would further reduce the flexibility teams have used to spread out the cost of megadeals. Together, the five-year cap and the deferred-money ban would reshape how big contracts are built.

MLB spokesperson Glen Caplin said the cap-and-floor proposal is intended to address payroll disparity and level the playing field. That argument sits at the center of the current labor dispute: MLB wants a more tightly controlled system, while the union sees the framework as a salary cap by another name.

Union response and labor stakes

MLB Players Association interim executive director Bruce Meyer said the sides remain very far apart and criticized the proposals as harmful to players. The union’s objections are not limited to contract length; they also extend to payroll rules, salary distribution, minimum compensation and the structure of free agency itself.

Earlier bargaining rounds had already centered on many of the same issues, including salary cap and floor proposals, expanded free agency, salary arbitration rights and changes to revenue distribution. Thursday’s proposal suggests the gap has not narrowed.

The current collective bargaining agreement expires on December 1, 2026, keeping lockout risk in view if the sides do not move closer before then. The labor deadline gives the proposal weight beyond its immediate details.

The timing also matters because this came in the middle of active negotiations, not after a final breakdown. It is part of a live exchange of positions as both sides try to define the next CBA.

What comes next

The next question is whether MLB and the MLBPA respond with counterproposals, soften any part of the five-year limit or harden their positions further.

It will also be important to watch whether the league revises the salary-cap language, the deferred-compensation ban or the separate retention mechanism for incumbent teams.

Another marker will be whether the sides schedule another meeting before the All-Star break or issue more formal public statements on the cap-and-floor structure.

For now, the proposal has sharpened the central labor question in baseball: whether the next CBA preserves the current free-agent market or moves the sport much closer to a capped system.