DONE DEAL: The Dodgers, the World Series champions, have agreed to pay MLB $103 million to sign with the New York Mets on two terms.
NEW YORK (AP) — The New York Mets’ $97.1 million payment brings their tax total under high-spending owner Steve Cohen to over $229 million, while the Los Angeles Dodgers’ historic $103 million penalty this season put them at the top of a record nine clubs owed Major League Baseball’s luxury tax.
For the fourth consecutive year, the Dodgers, the World Series champions, will have to pay taxes. The Dodgers paid Shohei Ohtani $1,032,454 in non-cash compensation as part of their tax payroll of $353 million. Ohtani’s deal includes an interpreter and the usage of a suite at Dodger Stadium.
The Associated Press got data approved Friday by Major League Baseball and the players’ association that show the Yankees owe $62.5 million. Philadelphia ($14.4 million), Atlanta ($14 million), Houston ($6.5 million), San Francisco ($2.4 million), Texas ($10.8 million), and the Chicago Cubs ($570,000) came next.
Eight clubs paid a total of $311.3 million in taxes, surpassing the previous high of $209.8 million. MLB must receive tax money by January 21.
Since the penalty began in 2003, more than $1 billion in taxes have been collected, with 15 clubs paying $1.23 billion. With $452 million, the Yankees are in first place, followed by the Dodgers ($350 million) and the Mets.
After making a number of summer deals, Toronto’s tax payroll fell below the $237 million barrier to $233.9 million. The Blue Jays were expected to make $244.3 million at the beginning of the season.
Chicago’s $239.85 million was narrowly above the mark.
The Mets reduced their tax from the previous year’s then-record $100.8 million and their luxury tax payroll from the previous year’s record $374.7 million to $347.7 million. The only clubs that exceeded the fourth barrier, which was introduced in the 2022 labor deal and dubbed the Cohen Tax in an effort to curb his spending, were the Dodgers, Mets, and Yankees ($316.2 million).
The Cubs, Rangers, and Giants were among the clubs who did not make the playoffs despite paying the fee.
over $5.793 billion to $5.924 billion, the total amount spent on luxury tax payrolls increased 2.3% over the previous year.
In addition to little over $17 million per team for benefits and $1.67 million for each club’s portion of the $50 million pool for pre-arbitration players that began in 2022, tax payrolls are determined by average yearly values, including earned bonuses, for players on 40-man rosters. Present-day values are used to discount delayed bonuses and salary.
The Mets, Dodgers, Yankees, and Phillies pay a 50% tax on the first $20 million over the $237 million barrier, a 62% tax on the following $20 million, a 95% tax on the amount between $277 million and $297 million, and a 110% penalty on the amount beyond that since they have been in arrears for three consecutive years.
For the second consecutive year, the Braves and Rangers are in debt to the government. They must pay 30% of the first $20 million and 42% of the subsequent $20 million.
Although the Astros exceeded the threshold in 2020 when the penalty was deferred due to the coronavirus outbreak, Houston is now paying taxes for the first time. The Cubs are making their first payment since 2019, while the Giants are making their first since 2017.
According to the labor deal, player benefits will be funded with the first $3.5 million in tax revenue, with player Individual Retirement Accounts to receive 50% of the remaining funds. The remaining 50% goes into a supplemental commissioner’s discretionary fund, which is disbursed to clubs who have increased their non-media local revenue and qualify for revenue-sharing funds. MLB and the union agreed to let teams whose local media income has decreased since 2022 or 2023 to receive discretionary fund payments of up to $15 million per for this season.
The initial barrier for next year is $241 million. The maximum tax rate, which rises to 110% for amounts exceeding $301 million, would be applied if the Mets, Yankees, Dodgers, Phillies, Braves, or Rangers exceeded.
