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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.

Cubs sign Jeremy Jeffress

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The Chicago Cubs have signed reliever Jeremy Jeffress to a one-year, $850,000 deal.

While Jeffress is coming off a bad year — due mostly to hip and shoulder problems — this is a surprisingly low figure for Jeffress, who was said to have had a “sizable market” last September, with the Mets, Phillies, Reds, and Rays all rumored to be in on him. It’s also worth noting that he is just a year removed from an excellent 1.29 ERA season with the Brewers. He is reported to be eligible for $200,000 in incentives, which could bring this deal closer to what a reliever of his caliber’s going rate might be.

As for the Cubs, they haven’t been particularly active this offseason — indeed, this is their first free agent acquisition — but I suppose we should give them credit for buying low on a guy who should probably be able to help their bullpen.