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Cubs, Red Sox, Yankees exceeded competitive balance tax threshold in 2019

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Jorge Castillo of the Los Angeles Times reports that the Cubs, Red Sox, and Yankees exceeded the competitive balance tax (more colloquially known as the luxury tax) threshold for the 2019 season, set at $206 million. It will rise to $208 million for the 2020 season and $210 million in 2021.

Teams that exceed the CBT threshold pay a penalty on the overage, which is compounded depending on how consistently they have exceeded the threshold. The base penalty is 20 percent. If a team has exceeded it in a second consecutive year, the penalty rises to 30 percent. Three or more consecutive seasons yields a 50 percent tax on the overage. Furthermore, teams that exceed the CBT threshold by $20-40 million see an additional 12 percent tax. Above $40 million brings a 42.5 percent penalty which rises to 45 percent if the team exceeds the CBT by more than $40 million in a consecutive year.

The luxury tax has acted as a de facto salary cap. Front offices typically have gone out of their way not to exceed it, especially in recent years. The Cubs, Red Sox, and Yankees are each widely believed to be looking to stay below $208 million in 2020.

In pursuit of payroll efficiency, the Cubs are believed to be willing to listen to offers for catcher Willson Contreras, third baseman Kris Bryant, outfielders Kyle Scharber, Albert Almora, and Ian Happ, as well as pitcher José Quintana. The Red Sox are believed to be pursuing trades of outfielder Mookie Betts and/or J.D. Martinez. Outfielder Jackie Bradley Jr. is also believed to be available.

As we have been discussing the ongoing labor tension in baseball lately, one wonders if the CBT threshold might also be changed within the next collective bargaining agreement. It has served ownership well, giving them something to point at as a reason not to invest as much into putting together a competitive and entertaining product for fans.

Blake Snell becomes client of Boras Corporation

Blake Snell
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Ken Rosenthal and Josh Tolentino of The Athletic report that Rays starter Blake Snell has switched agencies, going from Apex Baseball to Boras Corporation. Snell is currently signed to a five-year, $50 million contract and will be under contract through 2023.

Snell found himself in hot water two weeks ago when he said on his Twitch stream that he wouldn’t risk his life to play baseball during a pandemic while receiving significantly reduced pay. Some described Snell as tone deaf for saying, “I gotta get my money. I’m not playing unless I get mine, okay?”

Boras represents many of baseball’s highest-paid players, including Gerrit Cole and Bryce Harper. Snell is not likely to win over any of the people he recently irritated by appearing to go after more money by hiring the highest-profile agent. What often goes unsaid is that players have a very limited window in which to use their elite athletic skills to make money.

Snell won the 2018 AL Cy Young Award, going 21-5 with a 1.89 ERA and a 221/64 K/BB ratio over 180 2/3 innings. He did not have nearly the same success last year, going 6-8 with a 4.29 ERA and a 147/40 K/BB ratio in 107 innings.