It’s time for six MLB teams to pay up on their luxury tax bills

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Updated: December 18, 2016
(PHOTO BY: GETTY IMAGES)

By Liz Roscher

Sunday’s Say Hey, Baseball includes MLB’s luxury tax offenders, Aroldis Chapman sharing his feelings, and news about Joe Buck.

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It’s tax time, folks. No, wait! Don’t leave! It’s tax time for MLB teams! Good, thanks for coming back, I know it’s a scintillating topic. Okay, it might not be the most exciting thing out there, but it’s important. It’s luxury tax payment time for MLB teams, which means that any team that has a payroll that’s over the arbitrarily set “limit” has to pay up. The point of this is to encourage “competitive balance” and discourage teams from spending tons of money and building a massive payroll to sign the best players out there. This year, six teams (more than ever before) are footing a bill that totals $74 million: the Dodgers ($31.8 million), Yankees ($27.4 million), Red Sox ($4.5 million), Tigers ($4 million), Giants ($3.4 million), and Cubs ($2.96 million). The Dodgers and Yankees are both multi-year offenders, so they both are paying 50% tax on the overage. It’s the fourth straight year the Dodgers have had to pay, and the 14th (!!) for the Yankees.

Make no mistake about the luxury tax: it’s not a good thing. As I said, it’s meant to stop teams from spending money like they’re in “Brewster’s Millions,” but that’s a relatively simplistic view. What it’s really meant to do is artificially keep payroll down, which means teams are less willing to pay players what they’re worth. Teams are shying away from Edwin Encarnacion right now because he’s so “expensive.” Of course, the Rockies are paying Ian Desmond $70 million to be shortstop-turned-centerfielder-turned-first-baseman-somehow, and so there’s absolutely no way that Encarnacion is too expensive.

There are a few other angles to this as well. Even though the luxury tax is punitive, a number of teams are raking in so much money that paying a steep luxury tax doesn’t really matter. Teams like the Dodgers, Yankees, and Cubs are in big markets with high attendance and lucrative TV deals, and have owners that could dive into their own Scrooge McDuck vault of money if they wanted to. And while the luxury tax threshold will be increasing starting in 2017 (thanks to the new CBA), it won’t rise quickly enough to account for the massive amount of high quality free agents coming onto the market in the next few years. Either teams will have to try and entice players to sign contracts far below what they’re worth, or they’ll have to start shoveling cash aside to cover those luxury tax bills. But wouldn’t players like Bryce Harper and Clayton Kershaw be worth it? (Hint: the answer is yes.)

Via:: http://www.sbnation.com/mlb/2016/12/18/13996894/its-time-for-six-mlb-teams-to-pay-up-on-their-luxury-tax-bills

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