MLB reportedly proposes $100 million salary minimum, new luxury tax

By , Audacy Sports

If you aren't a fan of deep discussions about the business side of baseball, the next four or so months don't figure to be your cup of tea.

Major League Baseball's Collective Bargaining Agreement concludes on Dec. 1, which means a new agreement will have to be in place before the 2022 season. And frankly, there are a ton of issues that the league and player's association could contest as part of labor negotiations.

Among the topics at the forefront of the conversation figures to be baseball's luxury tax threshold, and the disparity in how much some ownership groups are willing to spend on their team in comparison to others. With that in mind, Evan Drellich and Ken Rosenthal of The Athletic reported Wednesday that MLB proposed instituting a $100 million team salary minimum as part of talks with the MLBPA earlier this week.

According to Spotrac, 12 teams -- the Milwaukee Brewers, Texas Rangers, Arizona Diamondbacks, Oakland Athletics, Detroit Tigers, Kansas City Royals, Seattle Mariners, Tampa Bay Rays, Miami Marlins, Pittsburgh Pirates, Baltimore Orioles and Cleveland soon-to-be Guardians -- currently have payrolls under $100 million. If all teams were forced to get to $100 million, that, on the surface, would seemingly be great for players, especially when you consider that the Rays, Marlins, Pirates, Orioles and Cleveland are all currently spending under $75 million on their total payroll in 2021.

However, the proposal also calls for the increases in the payrolls of more than a third of the league to be funded, at least in part, by a lowered luxury tax threshold.

Currently, MLB's competitive balance tax kicks in at $210 million, with a 20% tax on all dollars over that number in year one, 30% for a second consecutive year and 50% for three straight years and beyond.

This new proposal -- which Drellich and Rosenthal acknowledge lacks full context -- would begin the competitive balance tax at $180 million. Not only would the first luxury tax threshold be lowered significantly from where it is currently, but the starting rate would be 25%, according to the report. It's not known what other tiers may be included in the system or if such a proposal would begin immediately in 2022.

Currently, there are seven teams -- the Los Angeles Dodgers, New York Yankees, New York Mets, Houston Astros, Philadelphia Phillies, Boston Red Sox and Los Angeles Angels -- believed to be spending in excess of $180 million in 2021. All those teams would be subject to at least the 25% tax under this proposal, though the Yankees and Dodgers seemingly could face an even stiffer tax considering they both have payrolls that top $200 million.

What should be noted, though, is that most ownership groups have done their best to steer clear of having to pay the luxury tax threshold for spending over $210 million. Only the Dodgers -- who now have a $267 million payroll after acquiring Max Scherzer and Trea Turner before last month's trade deadline -- are believed to be paying the collective balance tax in 2021. That makes you wonder if some of these major market contenders would be sure to stay under $180 million if that's the number a luxury tax would kick in.

Perhaps that would spread some talent around the sport, but it's fair to wonder how much players would actually see in increased salaries if a portion of the league is trying to get to the salary floor and another portion is trying to get under the competitive balance tax.

What's most important to remember here is that "competitive balance" is almost certainly not priority No. 1 for any of the parties involved. Owners do want to win -- some more than others -- but they also want to keep salaries in check and probably aren't thrilled that the Dodgers are closer to having a $300 million payroll than a $200 million one. The player's association wants to help get its players the most money possible, even if that comes at the expense of "competitive balance."

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