A salary cap proposal has become one of the major stories emerging from Major League Baseball’s labor negotiations, and the issue will likely remain at the center of negotiations. But the more interesting story may not be the salary cap at all. The league’s proposal to centralize and share local media revenue across all 30 clubs may prove even more consequential.

The regional sports network era is ending

For decades, MLB’s economics were built around local television rights. Teams negotiated their own media agreements, allowing franchises in Los Angeles and New York to generate revenue that clubs in smaller markets could never match. Supported by the stable economics of regional sports networks, the model produced steadily increasing rights values and few incentives for change.

Today, cord-cutting and the decline of the RSN business are eroding those assumptions. The local television........

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