Future payroll: the benefits of the Atlanta Braves’ contract extensions
With Austin Riley now locked up, where do the Atlanta Braves go from here?
The Atlanta Braves have a stated goal of bringing their team into the category of having a “Top 5” payroll, but beyond the question of what that means is the bigger question about how that will help the club going forward.
First, let’s identify those clubs already in the Top 5 tier for 2022, based on COTS site figures for 2022’s Opening Day:
- Dodgers: $280.8 million
- Mets: $264.4 million
- Yankees $245.9 million
- Phillies: $228.7 million
- San Diego: $211.2 million
- Boston: $206.5 million
Yep – I can count… that’s six teams in our Top 5 list. Stand by for a sec about that.
These are the actual payroll figures. However, the numbers counting against each team’s Competitive Balance Tax level (the amount determining whether they are above the taxing threshold of $230 million) range from 3-17% higher than these.
It’s because of that calculation that we have six teams listed for this “Top 5”… the Boston Red Sox rank 6th in real payroll, but they are 4th against the luxury tax threshold since their CB tax level ($241.8m) surpasses that of San Diego’s ($230.3m) and the Phillies ($237.1m)… at least for now.
The Atlanta Braves, by the way, sat at $177.6 million (actual payroll) back at Opening Day, and are reckoned to be at $206.1 million for CB tax purposes. Both figures rank 9th overall.
Regardless of whether you measure these numbers using actual payroll figures or fully-loaded CD Tax figures, one thing is clear: all six of these teams are above the $230 million taxing threshold for 2022.
Thus we should now talk about the consequences of doing so.
You must pay the penalty!
The penalties for spending this much vary depending on how often a team repeats the violation:
- 1st time: 20% tax on the amount above the threshold.
- 2nd year in a row: 30%
- 3rd year in a row or more: 50%
Dropping below the barrier in any given year resets the counter to zero… along with eliminating any tax liability for that period.
Then there’s the so-called Steve Cohen rule, which penalizes not just the duration above the threshold, but the egregiousness of the crime in any given year:
- Exceeding the threshold by $20-40m: 12% tax surcharge
- $40-60m for 1 year: 42.5% surcharge
- $40-60m for additional years consecutively: 45% surcharge
- Beyond $60m above the threshold: 60% surcharge
In addition, any team at $40 million or more above the threshold will lose 10 positions in the next Rule 4 (1st-year player) draft. That happened to the Dodgers this year; both they and the Mets are looking at the same penalty for the 2023 draft.
Still with me? Good… we’re almost done with this necessary nonsense before we get to the main point.