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Luxury Tax Newsbeat

Sunday, June 05, 2022

Los Angeles Dodgers open with $310 million payroll, set to pay record $47 million tax bill

The Los Angeles Dodgers opened the season with an all-time-high $310.6 million payroll for purposes of the luxury tax and are on track to pay a record tax of nearly $47 million, according to figures compiled by Major League Baseball and obtained by The Associated Press on Friday.

Five teams exceeded the $230 million threshold as of Opening Day, which if unchanged by the season’s end would be one shy of the most, in 2016.

After adding Freddie Freeman and reaching a big one-year deal with Trea Turner, Los Angeles was the only team to exceed the new fourth threshold, the so-called Cohen Tax named after New York Mets owner Steven Cohen. But the Dodgers’ payroll would drop by about $28.1 million if the domestic violence suspension of pitcher Trevor Bauer is upheld by an arbitrator. The Dodgers’ payroll included $34 million for Bauer, the average of his $102 million, three-year contract.

The Mets, in their second season since Cohen bought the team, were second at $289.3 million—$667,278 below the Cohen Tax. That left them on track for a tax payment of just under $22.5 million after adding pitcher Max Scherzer, center fielder Starling Marte, outfielder Mark Canha and All-Star infielder Eduardo Escobar.


RoyalsRetro (AG#1F) Posted: June 05, 2022 at 11:48 PM | 4 comment(s)
  Beats: dodgers, luxury tax

Thursday, February 24, 2022

What a deal would look like if the owners and players met in the middle

One of the MLBPA’s demands has been to expand eligibility for salary arbitration. The union began these talks asking for the threshold to be lowered to two years for all players. It dropped the demand to 80% in a previous offer and decreased it again this week to 75%.

The middle point here is 48.5%.

This would move 49 additional players into their arbitration years this offseason. According to an analysis of MLB Trade Rumors’s arbitration database, the average Super Two player since 2018 has earned $2.12 million in their first year of salary arbitration. Those 49 players would cost owners at least $76 million if you subtract the current base wage from the Super Two average.

There’s also a compounding effect of Super Two players having four years of arbitration eligibility instead of three. Super Two players who advance through arbitration generally earn more than the average arbitration comparable salary - in part because they’re often better players and because they have the additional year outside the minimum-wage levels.

RoyalsRetro (AG#1F) Posted: February 24, 2022 at 11:28 AM | 1 comment(s)
  Beats: arbitration, labor issues, luxury tax

Wednesday, February 23, 2022

How can the MLB lockout end? Baseball insiders weigh in on potential compromises

What insiders say: These issues are where many believe that the players won’t make as much progress as they’d like. They’ve asked for flexibility on how service time is calculated, particularly for players who get accolades or awards in early season. But that’ll be hard to get through the owners—some executives believe the union should accept the league’s proposal, which gives out extra draft-pick incentives for keeping top prospects on the big league clubs.

With everything else on the line, there’s simply not enough energy to fix the tanking issue in one negotiation—though a payroll-floor CBT-style tax wouldn’t be a bad idea (so far, the league has offered only one along with a significantly-lower CBT ceiling). Small-market teams would never vote for it, though.

The draft lottery is an attempt to disincentivize tanking, but a four-team system isn’t enough according to sources on the players’ side. The union would like to see an eight-team lottery to prevent a race to the bottom of the standings each season.

There isn’t a great, doable avenue to completely avert the tanking cycles without payroll floors and caps. It’s why many believe the players need built-in ways to make money, like the pre-arb pool.

RoyalsRetro (AG#1F) Posted: February 23, 2022 at 01:30 PM | 56 comment(s)
  Beats: labor issues, luxury tax, service time

Wednesday, February 16, 2022

MLB’s luxury-tax proposal is trying to squeeze a cap on salaries

The MLBPA’s concern is that, since its inception, the base tax level has grown at a far lower rate than MLB revenues. That gap has only grown in recent years, and the divide would be exacerbated under the proposal MLB presented to players Saturday.

The union, though, as one industry source notes, has always refused to directly tie the players’ share of earnings to MLB revenues.

From 2003 to 2019, the last full season before the COVID-19 pandemic, league revenues grew 167%, from $3.88 billion to $10.37 billion, according to data published at Statista. The base tax threshold rose 76% in that period, from $117 million to $206 million.

The discrepancy increased most steeply in recent years. From 2011 to 2019, the tax threshold grew by just 15.7%, including four years of no increases and three with 1% increases. Meanwhile, MLB revenues grew 63%.

RoyalsRetro (AG#1F) Posted: February 16, 2022 at 12:35 PM | 25 comment(s)
  Beats: luxury tax, salary cap



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