Max Scherzer echoed familiar criticism of the Yankees on Tuesday when discussing MLB’s competitive balance tax.
Scherzer spoke at a union panel following the league’s decision to cancel games, a move that came after owners and the MLBPA failed to agree on a new collective agreement before the 5 p.m. deadline imposed by MLB. One of the main issues was CBT, also known as luxury tax, and penalties for teams that exceed its thresholds. Here’s what the two sides came up with regarding CBT, via MLB Trade Rumors:
- MLB: Base thresholds at $220M in 2022, $220M in 2023, $220M in 2024, $224M in 2025, $230M in 2026
- MLBPA: thresholds at $238 M in 2022, $244 M in 2023, $250 M in 2024, $256 M in 2025, $263 M in 2026
- Variance: $18M in 2022, rising to $33M in 2026
The CBT threshold was $189 million from 2014 to 2016 and gradually increased from 2017 to 2021. It was $210 million last season.
CBT was initially seen as a way to limit breakout expenses. However, it operated as a de facto salary cap, with big market teams often refusing to exceed the thresholds in order to avoid costly penalties. The Yankees have been on those teams in some years, including 2021, a fact Scherzer referenced when noting that the financial behemoths have a lower payroll than the San Diego Padres.
The Yankees were just over $208 million in 2021, per Cot’s baseball contracts. With the goal of resetting penalties in mind, they were sure to stay below the $210 million threshold even when upgrading before the trade deadline. The Padres were over $216 million, per Baby cot. Meanwhile, before the lockout, Scherzer signed with Steve Cohen’s Mets, who passed as if CBT didn’t exist. Scherzer’s record three-year, $130 million deal was part of a spending spree that topped $250 million before the rosters froze.
Such spending was once expected of the Yankees on an annual basis, but owner Hal Steinbrenner said he would be okay with a similar lower CBT threshold before CBA negotiations.
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While the Yanks have remained among the payroll leaders every year and have made costly splashes that force them over the line — like signing Gerrit Cole ahead of the 2020 season — there’s no doubt that their membership in the CBT has handicapped their roster building in some years. It also drew criticism from fans and pundits. New York’s decision to stay in free agency ahead of the lockdown – while other teams splurged – has heightened skepticism over whether the organization will make the necessary upgrades each time the market reopens.
General Manager Brian Cashman previously said that he expects the club’s payroll to rise in 2022, but that was still expected to happen with little money off the books and a slew of top Yankees due for raises by arbitration. New York, after an inconsistent season, has question marks at shortstop, first base, center field and rotation, among other positions. Will he spend the money necessary to address some of these concerns?
Recent history warrants doubt, but it will take some time to answer that question as MLB and the union prepare for further negotiations. Expect CBT to remain a sticking point whenever the two sides start talking again.
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