Arizona Diamondbacks owner against proposed 'luxury tax' threshold

Posted at 5:37 PM, Mar 04, 2022
and last updated 2022-03-05 07:51:04-05

As negotiations between Major League Baseball and the players union continue to drag on, a new report details how Arizona Diamondbacks owner Ken Kendrick joined with three other franchise owners against a proposal by the MLB to raise the threshold on the Competitive Balance Tax.

The proposal would raise the total amount of money a team can spend on player salaries from $210 million to $220 million before they are subject to a "luxury tax" designed to keep the league more competitive.

MLB is the only major professional sport in the United States to not have an official salary cap.

Instead, the league has a competitive balance tax, or CBT that functions in a similar way.

In the 2022 season, teams can spend up to $210 million on player salaries before they are subject to the "tax," which is paid to the league.

Teams that go over this amount pay a 20% tax on the overages.

If they go over the CBT threshold for two consecutive seasons, the luxury tax increases to 30%. Three consecutive seasons and the luxury tax increases to 50%.

The CBT, like a salary cap, is designed to help keep the MLB competitive for smaller market teams by making it prohibitively expensive for large market teams to stuff their rosters with all-star players that command higher salaries.

This begs the question: Would an increase impact the Diamondbacks directly?

The answer is not directly.

Data shows that the team payroll for the Diamondbacks is just over $70 million. This is well under the league average of $120 million and the fourth lowest in the league.

Only four teams are currently subject to the luxury tax.

The New York Mets exceed the CBT threshold by $54 million, which makes their luxury tax bill around $19 million.

The Los Angeles Dodgers also exceed the threshold wit a payroll of $214 million, giving them an overage bill of $7 million.

The Athletic report also said that, according to their sources, more owners would have sided with Kendrick and the other three owners if the threshold increase was above $220 million.