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MLB 2022 fancy tax payrolls pass $5 billion for the first time; Six clubs pay penalties

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Total compensation for players in Major League Baseball that includes salaries, benefits, medical costs, etc. for the purposes of the league’s luxury tax system exceeded $5 billion for the first time, signaling the league’s complete exit from the pandemic.

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to me Associated PressAnd Luxury tax salaries for the league in 2022 It was $5,164,589,774, a significant increase of $646,127,349 over the 2021 total of $4,518,462,425.

The luxury tax payroll is an important measure of player compensation because it includes costs above just salaries and takes into account potential penalties if clubs exceed certain thresholds. For purposes of calculation, the payroll is for 40-man rosters and includes average annual values ​​for contracts and $16,016,707 per club for benefits and extended benefits, which include items such as health benefits and pensions; club medical costs insurance; workers’ compensation, payroll, unemployment, and Social Security taxes; spring training suits; meal and tip; All-Star Game expenses; Travel and moving expenses. postseason wages; and college grants. Also included is $1,666,667 per team for the pre-arbitration bonus pool, a system to reward players who perform at high levels before they enter salary arbitration.

For payroll, these can include vested incentive bonuses, non-cash compensation, purchases of unexercised options, and cash transactions. In some cases, portions of deferred salaries are discounted to reflect current values.

Six record-breaking clubs are subject to luxury tax penalties

Major League Baseball operates under a collectively negotiated system in which clubs that exceed the salary cap are taxed at varying rates. For 2022, it starts with clubs crossing the $230 million luxury tax threshold. Six record-setting clubs crossed the 2022 threshold starting with the New York Mets that came precariously close to achieving MLB’s first-ever $300 million salary in luxury taxes. Recorded $299,842,423, they reached $6 million over the second-highest Los Angeles Dodgers. They are followed by the New York Yankees, Philadelphia Phillies, Boston Red Sox and San Diego Padres.

How much a club is taxed depends not only on them crossing the initial threshold, but on how far above the initial threshold they have gone, and whether they have done so in consecutive years.

Penalties for exceeding the minimum limit in consecutive years remain the same as in the previous employment agreement:

  • 20% for the first time
  • 30% for the second year in a row
  • 50% for the third or more consecutive years

Furthermore, there is a tiered surcharge system:

  • Exceeded Additional Charge Level I ($20 million over base tax threshold of $230 million for 2022): 32% (first), 42% (second year in a row), 62% (third year or more in a row)
  • Exceeding Additional Charge Level Two ($40 million over base tax limit): 62.5% (first), 75% (second year in a row), 95% (third year or more in a row)
  • New third surcharge level exceeded ($60 million over base tax limit): 80% (first), 90% (second year in a row), 105% (third year or more in a row).

Based on the system, the Los Angeles Dodgers, not the New York Mets, had the highest tax bill of 2022. At $32,397,344, it was just under what they paid for 2021. In just two years, the Dodgers have paid $65,047,309 or so in luxury taxes. Oakland A’s in 2022.

Here is a breakdown of how to access the penalties:

Dodgers pay

  • 30% on the amount over $230 million but less than $250 million;
  • 42% rate on amount over $250 million but less than $270 million;
  • 75% rate on the amount over $270 million but less than $290 million;
  • 90% on the amount over $290 million.

Parents pay:

  • 30% rate on amount over $230 million.

mets pay:

  • 20% on the amount over $230 million but less than $250 million;
  • 32% rate on amount over $250 million but less than $270 million;
  • rate of 62.5% on amount over $270 million but less than $290 million;
  • 80% on the amount over $290 million.

Yankees pay:

  • 20% on the amount over $230 million but less than $250 million;
  • 32% rate on amount over $250 million but less than $270 million

Phillies and Red Sox pay:

  • 20% on the amount over $230 million.

Total luxury tax fines:

  • Dodgers: $32,397,344
  • Mets: $30,773,938
  • Yankees: $9,681,093
  • Phillies: $2,882,657
  • Parents: $1,524,638
  • Red Sox: $1,229,936
  • Total: $78,489,606

Based on the last business agreement reached in 2022, the disbursement of the tax collected has changed. The first $3.5 million goes to former players’ pensions. The remainder sees half go to player benefits and the other half goes to a commissioner’s fund designed to be distributed to payee teams that have grown local revenues and meet the other criteria.

Nearly $700 million in luxury taxes has been collected since 2003

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The current welfare tax system has been in place since 2003. With approximately $78.5 million raised for 2022, the total amount dating back to 2003 is approximately $700 million ($693,182,973).

During the period, the Yankees paid the luxury tax in all years except 2018 and 2021 (no clubs paid the tax in the 2020 pandemic 60-game season). Priced at $357,191,398 Bronx Bombers accounted for more than half of the total collected.

But the Dodgers are catching up fast and doing it in less time. They first crossed the luxury tax threshold in 2013 and have since avoided overshooting in 2018. They have all amassed $228,051,815 in luxury tax penalties or 32.9% of the total.

What is extraordinary is how the Red Sox sidestepped the luxury tax line but kept the amount and frequency fairly manageable. They passed over four years in a row (2004-2007), but since then they’ve only been over two years in a row a handful of times (2010-2011, 2015-2016, 2018-2019). Finally, since 2003, the Red Sox have had a total of $45,882,352 in penalties, or 6.6% of the total. By comparison, in just one year, the New York Mets saw a $30,773,938 tax bill or 4.4% of the total.

Saw Major League Baseball Record revenue for 2022 of more than $10.8 billion.

Here are the 2022 MLB fancy tax payrolls by way of Associated Press:

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