Dodgers, Mets among 6 teams hit with MLB luxury tax penalty

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Wednesday, January 18, 2023

NEW YORK -- The Los Angeles Dodgers were hit with a $32 million luxury tax for the second straight season, among six teams paying a penalty as baseball payrolls rebounded after the lockout to a record $4.56 billion.

The New York Mets set a luxury tax payroll record at $299.8 million, topping the $297.9 million of the 2015 Dodgers, and will pay tax for the first time since the penalty started in 2003, according to final figures compiled by Major League Baseball and obtained by The Associated Press.

The NL champion Philadelphia Phillies, New York Yankees, San Diego Padres and Boston Red Sox also exceeded the $230 million tax threshold. The total tax of $78 million topped the previous high of $74 million in 2016, when six teams also paid.

The Dodgers, assessed at a higher rate because they exceeded the threshold for the second straight year, owe $32.4 million on a luxury tax payroll of $293.3 million. That was down slightly from their $32.6 million penalty for 2021.

Any money saved during pitcher Trevor Bauer's suspension under the domestic violence policy will be reflected in the Dodgers' 2023 payroll.

With pitcher Max Scherzer leading the big leagues with a $43.3 million salary, the Mets shot up to second in payroll and owe $30.8 million. Under owner Steven Cohen, who bought the team before the 2021 season, New York has boosted its projected tax payroll for 2023 to nearly $400 million. The Mets and the Dodgers both pay the so-called new "Cohen Tax," a new fourth threshold starting at $290 million agreed to by negotiators for teams and players this past March.

The Yankees owe $9.7 million, the Phillies $2.9 million and the Padres $1.5 million. The Red Sox owe $1.2 million after finishing last in the AL East. San Diego also exceeded the initial threshold for the second year in a row.

Tax money is due to MLB by Friday.

Total spending, based on regular payrolls, rose 12.6% from $4.05 billion in 2021, the lowest in a fully completed season since $3.9 billion in 2015. The previous high of just under $4.25 billion was set in 2017, also the first year of a collective bargaining agreement.

The first $3.5 million of tax money is used to fund player benefits and 50% of the remainder will be used to fund player individual retirement accounts. The other 50% of the remainder goes to a supplemental commissioner's discretionary fund intended to be given to teams receiving revenue-sharing money that have grown their non-media local revenue over several years.

Tax payrolls are calculated by average annual values, including earned bonuses, for players on 40-man rosters along with just over $16 million per team for benefits and $1.67 million for each club's share of the new $50 million pool for pre-arbitration players.

Last season's four tax thresholds were $230 million, $250 million, $270 million and $290 million. First-time offenders pay 20% on the amount above the first threshold, 32% above the second, 62.5% above the third and 80% above the fourth. As repeat offenders, the Dodgers and Padres pay 30% above the first, 42% above the second, 75% above the third and 90% above the fourth.

The Yankees have been taxed nearly $358 million since the penalties began, followed by the Dodgers at $215 million.

Among regular payrolls, the Mets led at $274.9 million, followed by the Dodgers at $270.6 million, the Yankees at $254.7 million and Philadelphia at $238.5 million. Six teams topped $200 million, up from two in 2021 and the previous high of five in 2019.

Oakland's $49.1 million was the lowest total of any team in a full season since Houston's $29.3 million in 2013.

Regular payrolls are based on 2022 salaries, earned bonuses and prorated shares of signing bonuses for 40-man rosters.

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