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Eight Teams Combine For Record $209.8MM In Luxury Tax Bills

Eight Teams Combine For Record $209.8MM In Luxury Tax Bills

Major League Baseball has finalized the luxury tax calculations for the 2023 season, and the eight teams over the Competitive Balance Tax threshold will combine for a total bill of $209.8MM, Ronald Blum of the Associated Press reports.  Both the total number of tax-paying teams and the total sum are new records, surpassing the previous highs of six teams (in 2016 and 2022) and $78.5MM (in 2022).

Here is what each of the eight teams owes for surpassing at least the $233MM base CBT threshold….

  • Mets: $100,781,932
  • Padres: $39.7MM
  • Yankees: $32.4MM
  • Dodgers: $19.4MM
  • Phillies: $6.98MM
  • Blue Jays: $5.5MM
  • Braves: $3.2MM
  • Rangers: $1.8MM

As a reminder of how the luxury tax operates, the CBT figures are determined by the average annual value of salaries for players on the 40-man roster.  A player earning $20MM over two seasons, for example, has a CBT number of $10MM, even if the player might earn $8MM in the first year of the contract and $12MM in the second year.  Deferred money in a contract can reduce a luxury tax number to some extent — most famously, Shohei Ohtani’s $700MM deal with the Dodgers contains $680MM in deferred money, so his CBT hit will be roughly $46MM per season instead of $70MM.

A team is considered a “first-time payor” if they haven’t spent above the CBT threshold in the previous season.  A first-time payor would owe a 20% surcharge on any dollar spent between $233MM and $253MM, 32% of anything between $253MM and $273MM, 62.5% on anything between $273MM and $293MM, and then 80% of overages for anything beyond $293MM.  These percentages rise if a team is a tax payor for two consecutive seasons, and then even further if a team exceeds the CBT line in three or more consecutive seasons.  This year’s CBT class featured three first-time payors (Texas, Atlanta, Toronto), three two-time payors (Philadelphia, both New York teams) and two three-time payors (San Diego, Los Angeles).

The $293MM threshold was instituted in the last Collective Bargaining Agreement as a fourth penalty tier, and it is unofficially known as the “Steve Cohen Tax” in a reference to the Mets owner’s penchant for big spending.  Even though New York has only topped the CBT whatsoever in 2022 and 2023, it isn’t surprising that Cohen’s team set new standards for tax payouts.  The Mets’ tax payroll of $374.7MM and approximate $100.78MM tax bill far exceeded the 2015 Dodgers’ previous records of $291.1MM and $43.6MM, respectively.

This bill…

Click Here to Read the Full Original Article at Texas Rangers – MLB Trade Rumors…