Major League Baseball finalized its luxury tax calculations for 2024. ESPN’s Jesse Rogers was first to report the list of payors, while Ronald Blum of the Associated Press reports the details. A record nine teams surpassed the $237MM competitive balance tax threshold. In a separate post, The Associated Press lists the finalized CBT numbers for all 30 teams.
The payments are as follows:
- Dodgers: $103MM
- Mets: $97.1MM
- Yankees: $62.5MM
- Phillies: $14.4MM
- Braves: $14MM
- Rangers: $10.8MM
- Astros: $6.5MM
- Giants: $2.4MM
- Cubs: $570K
Teams pay escalating penalties for exceeding the threshold in consecutive seasons. The Dodgers, Mets, Yankees, and Phillies have all paid the tax in at least three straight years — subjecting them to the highest escalator fees. Texas and Atlanta are second-time payors. Houston, San Francisco, and the Cubs did not exceed the threshold in 2023 and are marked as first-time payors.
The Dodgers ($353MM), Mets ($348MM), and Yankees ($316MM) all had CBT numbers above $277MM, which marked the third tax bracket. All three teams will see their first-round pick in the 2025 draft dropped by 10 spots. Considering they each advanced at least as far as the LCS and the Dodgers won the World Series, those clubs won’t have any regrets about that penalty. Atlanta narrowly stayed below the $277MM threshold to avoid any impact on their draft.
Teams that paid the CBT are entitled to the lowest level of compensation for losing free agents who declined a qualifying offer. They receive a draft choice after the fourth round for each qualified free agent who walks. They’re charged the heaviest penalty — their second- and fifth-highest picks in 2025 and $1MM from their ’26 international bonus pool — for signing a qualified free agent from another team.
The Mets (Juan Soto), Yankees (Max Fried), Giants (Willy Adames), and Astros (Christian Walker) have already signed or agreed to terms with qualified free agents. The Mets (Luis Severino), Yankees (Soto), and Braves (Fried) have lost qualified free agents. Houston is likely to see Alex Bregman walk. The Mets (Pete Alonso, Sean Manaea) and Dodgers (Teoscar Hernández) still have unsigned qualified free agents of their own.
The top eight luxury payors were all clearly above the base threshold, while the three biggest spenders blew beyond every surcharge marker. The only source of CBT intrigue late in the season concerned the Cubs and Blue Jays, both of whom were hovering right around the tax line.
When it became clear that neither team would make the playoffs, they each attempted to dip below $237MM by shedding money via waivers. The Cubs were unsuccessful and landed around $239.9MM; Toronto dropped just below $234MM. The tax impact for the Cubs is negligible — a $570K bill is less than the cost of one player on a league minimum salary — but it places a higher penalty for signing qualified free agents and could incentivize them to stay under the threshold in 2025 to reset their status. Six of the nine payors made the postseason. Texas, San Francisco, and Chicago were the exceptions.
Last year, a then-record eight teams surpassed the CBT threshold. The Padres are the only team that was above the line in 2023 and got below it this year. San Diego finished with an approximate $228MM mark that ranked 11th in the majors — behind the nine payors and the Blue Jays. The Red Sox, Diamondbacks, Cardinals, and Angels were the other teams above the median in payroll. On the other side of the equation, the five bottom spenders were as follows: Athletics ($84MM), Rays ($107MM), Tigers ($110MM), Marlins ($122MM), and Pirates ($123MM).
The teams that exceeded the threshold have until January 21 to pay MLB. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams. Next year’s base threshold climbs to $241MM.
They feel shame.
More shame than Canseco after having a fly ball bounce off his head for a HR
He might not have felt it…
Castellini and Nutting must have Woody’s right about now. Fisher too.
From a soccer perspective, that header was amazing.
This is all kinda stupid when a third of the league pays the so called luxury tax and lower budget teams are entirely propped up by revenue sharing.
Yes.
This is why I laugh when fools cry about “small market teams” not having a chance. Their owners don’t care. They’re glad to receive the revenue sharing from the big spenders. Most teams operate with the goal of just being able to make the postseason every couple of years to convince their fans they’re actually trying
There’s no question the competitive imbalance. Those higher revenue teams have greater revenue streams. How can the $107 mil Rays compete with the $316 mil Yankees? The high revenue teams can compete nearly every year while small and mid have to retool or rebuild with shorter competitive windows.
How much of that 107MM is been paid with the revenue sharing ?
How many players from Rays are been paid by Yankees ?
I’m not denying that certain teams have a financial advantage. However, the low spending teams are capable of increasing payroll every now and then. They just choose not to. It’s hard to feel sorry for teams that refuse to pay their players fair value or supplement their rosters in free agency while benefiting from having a bunch of pre-arb players
One of the ways the game has been balanced is by increasing the number of teams in playoffs to the level that a 500 mediocre team can sneak in, and who knows?
There are many examples that small market teams gets hot an eliminated the best seed.
As much as I like playoffs, the competition does not reward excellence.
It’s more profitable to just put a competitive team on the field. If you can go 500 or so, and compete for playoffs, enough people will show to stadium to increase profits more so. That’s why many teams never go for it or trade their prospects bc they are just trying to stay competitive
Force the revenue teams to spend the money they get and make the penalties for going over three times very harsh. Loss of drafting, loss of signing int’l players, then we’ll get a more even playing field.
The CBA already calls for teams to spend 150% of the money they receive in revenue sharing on MLB payroll. Penalties need to be added, and it needs to be enforced. The A’s were threatened with the loss of their revenue sharing funds if they did not go over that 150% this season.
With revenue increasing every year, the threshold needs to be set much higher with harsher penalties for going over. 1st tier at $271 million with a 50% penalty, 3rd tier at $331 million with 150% penalty and loss of 1st round pick.
Encourage teams to spend more but penalize the few that can spend a huge amount over that level more severely. Last season the Braves, Rangers, Astros, Giants, Cubs, and several other teams could afford to spend more, but chose to not spend up to the tier because they did not want to pay the additional penalties.
I agree 100%. Yet here we are. Rotf smh
Kinda like the federal government. 10% of households pay 72% of federal income taxes. The bottom 43% pay zero.
The teams who don’t spend love this.
2024 MLB total payroll expenditures is $5.924B.
2023 MLB total revenue is $11.6B and likely higher in 2024.
thats actually a higher split (50%) than the NFL (48%)
YBC, not sure where you got those numbers, but that doesn’t gibe with what Cots has in payroll numbers.
It also doesn’t gibe with what Manfred said during the CBA negotiations. In the 2021-2022 offseason Manfred said the average revenue was over $400 million per team and no team had less than $250 million in revenue with only 2 being at that $250 million level. They were in negotiations over what to pay the players, so he had every reason to put out lowball numbers. That level of revenue per team would indicate that MLB revenue exceeded $12 billion in 2021. It has gone up since then.
@web It’s not scientific and only a Forbes estimate of MLB revenue. They were spot on with the O’s valuation when it was sold to Rubenstein. I wouldn’t completely trust what Manfred says because he represents at least 33% of owners who cry poor.
The threshold needs to be higher if 9 teams are over.
Baseball needs a cap and a floor. I fully understand the team I root for is part of the problem.
@Von Of those 9 one the Cubs made a huge mistake ending in luxury tax especially by that small of an amount. Rangers are on there still paying cost of what helped them win World Series. Then there’s the Giants, they ve had to overpay to lure talent and unfortunately for them have to try and keep up with Dodgers and Padres if they want to be relevant right now.
There are a million good reasons for a floor and zero good reasons for a cap.
There are plenty of good reasons for a cap. You must be a Dodgers, Mets or Yankees fan.
You would rather the Billionaires pocket more money?
I’d rather create an even playing field financially.
Not all ownership groups are as rich as one another despite what fans may think.
Not all owners have the financial resources as each other.
Dodgers “owner” is worth 12 billion but the Guggenheim group has over 270 billion net worth in all assets
You look at the rays who’s “owner” only worth 800 million as a stock investor and highly doubt his business ventures come anywhere close to the Guggenheim group. Thats a stark difference in resources each “owner” is capable of putting towards building a competitive team financially.
floor increases teams talent by forcing them to spend money on talent. For example, do you think the A’s would have signed severino if they wouldnt lose revenue sharing?
A cap limits players earning potential as mentioned below for the nba and there is basically an inherent cap as to how much revenue a team brings in.
Baseball has never been fair. Life has never been fair. Wanting a socialism system never works and just brings the quality of the product down. It’s not like most of the large long term contracts dont ultimately backfire on teams. The Rays are competitive every year because they aren’t hamstrung by long term contracts and make smart moves.
Works just fine in the NFL and NHL. NHL has a spending floor and cap.
You can have a floor and a ceiling
Both should exist
Revenue sharing teams should be expected to spend whatever they receive in revenue sharing ie if you get 90 mill you must match it at 90 mill for a payroll of 180 mill.
By that same token. Teams shouldn’t be able to spend double someone’s actual spending ability without consequences for doing so.
You want small market teams to keep their home grown star players you need to create a system that makes it easier for teams to do so
The easiest solutions is salary cap to prevent big market teams from buying up all the small market teams talent like we’ve since baseballs free agency inception.
Bingo
@rare Technically there is a floor. 26 × league minimum= floor. That floor obviously is woefully inadequate of putting together a MLB roster that is competitive let alone any real possibility of contending.
Having a cap though I’m absolutely against. The NBA has gotten to a point where teams are trading from their pics as far out as allowed. They also trade more salaries then actual players . These trade contracts ultimately end up in players who are just released as they were included just to facilitate the actual trade within those deals.
Instead of cap floor, how bout you don’t get revenue sharing once you go 5 seasons without making the post season !? See how long the cheap owners stay around then !?
I thought our 10 million was bad. Then I saw the Dodgers.
The Dodgers PENALTY is basically the same as the entire Rays payroll!
Baseball is still fun for me to watch and follow. Baseball is an imperfect monopoly. There are more billionaires who want to buy a team than spots open in the elite ownership club. The biggest cities have an advantage so the playing field is not completely fair. But it mostly works and is very entertaining. I am glad that the players’ threat of litigation has resulted in the Sacramento A’s spending a little bit more on payroll.
Again, so many teams willing to pay the luxury tax proves it is not a disincentive at all. What a joke.
Imagine if there was no luxury tax. If the Dodgers spent that 103 million on payroll instead of taxes they would have twice as many starting pitchers. And the gap between highest and lowest payroll would be much wider.
The Reds benefit.
How would you fix it ?
Kinda surprised Twins and Guardians weren’t among the bottom spenders.
I’m surprised the cubs and Red Sox aren’t as much as their fans complain they don’t spend lol
Teams are claiming that they are losing money yet values of teams are rising. Yes there is a problem with top teams spending too much but until teams like the Marlins, etc. lose their revenue sharing income when not spending enough nothing is going to change. Both owners and players need to agree and it makes too much sense not to have it….so again nothing will happen. Ten years from now we will still be having this conversation I predict.
“top teams spending too much”
Let the owners figure out how to balance things out with additional revenue sharing.
But how many teams have shown interest in exceeding the luxury tax?
Sounds like we need a higher threshold. Players are being too greedy.
k = thousand
M = million
MM = 2 thousand in using Roman numerals
You’ve got to be on this list if you wanna win a ring
Skenes is kidding himself thinking the Pirates will win but another way from the big revenue teams. Their window is now open and aren’t spending. There’s only 1 way to be competitive nearly every year. For the same reason he’ll be gone in 5 years.
He’ll be there for 3 years and they’ll restock their farm then. Big deal.
I wonder how Mickey feels about the Dodgers tax bill.
There should not be a cap on threshold penalties. It should keep going up and up year in and out. That will eventually force these teams to get under.
Then only revenue share with teams that made post season the past 5 years and get rid of divisions.
Thats as fair as you can make it
Cubs management has to be kicking itself a little. They were that close to resetting the tax, but paid it anyway, and with no playoffs to boot.
A lot of Jays fans like to rip the current management, but at least they managed to do one small thing right. No reason to pay the tax on a team that bad.
Can’t build it, buy it.
This is a competitive sports league?
The Dodgers payed more in tax than 7 teams did in salary. The Mets paid more in tax than 5 teams did in salary. The Yankees paid more in tax than one team did in salaries.
So those 7 teams made profits? Why not. Who invests money to lose money? But reality is that the Dodgers, Mets, and Yankees played with the money and made far, far more than any of the other 27 MLB franchises.
Again, it’s not really the owners that I feel for one way or the other. It’s the sad fact that fans of teams in MLB have the illusion that their teams can be successful on the field more than once in a while.
In the NBA today the Cleveland team has the best record in the East. The teams in Oklahoma City and Memphis have the best record in the West.
Currently in the NFL, teams that have won 10 or more games at this point are in: Kansas City, Buffalo, Philadelphia, Detroit, Minneapolis-St. Paul, and Green Bay (Milwaukee). Of those only Philadelphia is in a major market.
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No wonder that most people under age 45 or so don’t understand the sport of baseball. They didn’t play it growing up, and in most American markets their teams are 2nd and 3rd class citizens. But boy, do they understand and follow pro football and pro basketball.
Is the majority of this money being funneled back into the league to develop and grow the game, or is it just an additional revenue stream for the commissioner and his cronies (other owners)?
MLB payroll set up is absolutely broken. It will never change.