Competitive Balance Tax

The Competitive Balance Tax (CBT) threshold will be $195M in 2017, $197M in 2018, $206M in 2019, $208M in 2020, and $210M in 2021. 

CALCULATING A CLUB'S COMPETITIVE BALANCE TAX (CBT) LIABILITY

For the purpose of calculating a club's CBT liability, a club's MLB payroll consists of the Average Annual Value (AAV) of player salaries and bonuses earned by players on the club's MLB Reserve List (40-man roster) and MLB 60-day Injured List. 
CoViD-19 EXCEPTION: A club's 2020 MLB payroll is the value of the aggregate contracts prior to salaries being pro-rated due to the truncated season.  

In addition, MLB Player Benefit Costs (PBC) and the AAV of "legacy salaries" paid to players who are no longer on the club's MLB 40-man roster (such as a player who has been released or outrighted to the minors, or who is being paid a deferred salary after becoming a free-agent) are considered to be part of the club's payroll when calculating the CBT.   

FINANCIAL PENALTIES FOR EXCEEDING COMPETITIVE BALANCE TAX

A club whose payroll from the just-concluded MLB season exceeded the CBT threshold will pay a 20% tax on the portion of the payroll that exceeded the CBT threshold, a club whose payroll from both the just-concluded MLB season as well as from the MLB season immediately prior to the just-concluded MLB season exceeded the CBT threshold will pay a 30% tax on the portion of the payroll from the just-concluded MLB season that exceeded the CBT threshold, and a club whose payroll from the just-concluded MLB season as well as from the two MLB seasons immediately prior to the just-concluded MLB season exceeded the CBT threshold will pay a 50% tax on the portion of the payroll from the just-concluded MLB season that exceeded the CBT threshold. 

A club whose payroll from the just-concluded MLB season exceeded the CBT threshold by more than $20M will pay an additional surcharge of 12% on the portion of the club's payroll in excess of $20M over the threshold, and a club whose payroll from the just-concluded MLB season exceeded the CBT threshold by more than $40M will pay an additional surcharge of 42% on the portion of the payroll in excess of $40M over the threshold.
NOTE: The surcharge for a club whose payroll from the just-concluded MLB season exceeded the CBT threshold by more than $40M will be 45% on the portion of the payroll in excess of $40M over the CBT threshold if the club paid a CBT tax in the both the just-concluded MLB season as well as in the MLB season immediately prior to the just-concluded MLB season.

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  • Hagsag 12 hours 41 min ago (view)

    Phil, is the 3 weeks camp going on now?

     

  • Arizona Phil 14 hours 53 min ago (view)

    The Cubs have signed free-agent LHP Stephen Gonsalves to a 2022 minor league contract.

    If he were to be added to the MLB 40-man roster at some point in 2022, he has no minor league options left and he has Article XX-D rights (he can elect free-agency if outrighted).

    So 78 Cubs minor leaguers are now eligible for selection in the 2021 Rule 5 Draft.

    Also, the Cubs off-season minor league Domestic Reserve List now stands at 173 (17 slots are open).

     

  • Arizona Phil 1 day 5 hours ago (view)

    jdrnym: That's correct.

    Under the new rules, the 38-man AAA reserve list is now only used beginning on the date reserve lists are filed in November and extending up through the conclusion of the Rule 5 Draft. Then after the conclusion of the Rule 5 Draft, everybody goes back into the off-season 190-man Domestic Reserve List hopper. 

     

  • jdrnym 1 day 8 hours ago (view)

    Phil, can you settle a Twitter discussion? A team can only select players in the minor league phase of the Rule 5 Draft until its 38-man Triple-A reserve list is full, correct? Don't believe this changed with the latest Major League Rules that introduced the Domestic Reserve List and eliminated individual level reserve lists during the offseason.

     

  • crunch 1 day 12 hours ago (view)

    "Mark Berman of FOX 26 in Houston reports that Carlos Correa's agent has been contacted by the Astros, Yankees, Red Sox, Dodgers, Cubs and Braves.

    It's not clear when the contact took place or what level of interest each club has."

    ...with the yanks and dodgers both with piles of cash and a bit of need, i wouldn't get too stoked...but at least there seems to be some interest in what his market is.

     

  • Arizona Phil 1 day 17 hours ago (view)

    Stroman's salary escalators apply to 2024, so if Stroman reaches 160 IP in either 2022 or 2023 (but not both) it adds $2M to his 2024 salary, and if he reaches 160 IP in both 2022 and 2023 it would add $4M to his to 2024 salary.

    So he gets $25M in both 2022 and 2023 (that's locked-in), and then either $21M, $23M , or $25M in 2024, depending upon whether he reaches his salary escalators in 2022 and/or 2023. 

     

  • Arizona Phil 1 day 17 hours ago (view)

    W-RAT: I should also mention that the Cubs cannot outright David Bote while he is injured or rehabbing from an injury, except during a window starting on the day after the conclusion of the MLB regular season up until the day that off-season reserve lists must be filed (normaly 11/20, but it was 11/19 in 2021 because 11/20 fell on a Saturday, and it will be 11/18 in 2022 because 11/20 will fall on a Sunday). 

     

  • Arizona Phil 1 day 17 hours ago (view)

    W-RAT: The Cubs can outright David Bote (if he is not claimed off waivers) once the transaction freeze is lifted. That's not a problem. 

    If he is outrighted and then elects free-agency, he would forfeit what remains of his contract - AS LONG AS - the contract is not fully guaranteed. 

    If the contract is fully guaranteed he would likely elect free-agency and the Cubs would be on the hook for what remains of his salary, offset by the MLB minimum salary if he were to sign an MLB deal with another club.

     

  • crunch 1 day 21 hours ago (view)

    kristin call has been named GM of the Myrtle Beach Pelicans.  she's been the assistant/associate GM for a few years and was formally a marketing director for the team.

    she's been involved in baseball for a living for 16+ years.

     

  • Wrigley Rat 2 days 3 hours ago (view)

    Hey Phil - Could David Bote be outrighted at any point before the start of the season (obviously not now while players are being locked out). I wonder because if someone claimed him, oh well. If he elected free agency, wouldn't that void his contract? These are the thoughts going through my head as I look to open up another 40-man spot, and Bote will be out until at least May.

    I've read your 40-man tag for him, but I'm not quite smart enough to figure this out! :) Thanks!

     

  • crunch 2 days 9 hours ago (view)

    Jeff Passan @JeffPassan
    Marcus Stroman signed a three-year, $71 million contract with the Chicago Cubs that includes an opt out after the second season, sources tell ESPN. He’ll make $25 million in 2022, $25 million in 2023 and $21 million in 2024. It includes $2M escalators for 160 IP in ‘22 and ‘23.

     

  • Arizona Phil 2 days 12 hours ago (view)

    The Cubs have re-signed RHRP Jonathan Holder and C-INF P.J. Higgins to 2022 minor league contracts, presumably with an NRI to MLB Spring Training. 

    They will be Rule 5 Draft-eligible, if and when there is a Rule 5 Draft. 

     

  • Dolorous Jon Lester 2 days 21 hours ago (view)

    Owners' stooge Bobby Manfred coming out swinging at the players with his statement about the owners instituting a lockout.

     

  • Arizona Phil 3 days 2 hours ago (view)

    The Cubs re-signed OF Michael Hermosillo to a 2022 Major League contract just prior to the midnight Wednesday MLB transaction freeze. 

    Hermosillo was non-tendered on Tuesday because he was a Rule 5 Draft-Excluded Player, and if he had remained on the 40 the Cubs would not have been able to outright him to the minors any earlier than 20 days prior to MLB opening Day. 

     

  • crunch 3 days 7 hours ago (view)

    we shouldn't, especially with how much payroll room for 2024+ this top-costing-for-fans team with a heavily monitized ballpark in a major media market has.

    backloaded contracts aren't exactly groundbreaking new things...neither are cheap-ass owners.  i don't expect them to compete every year, but i expect them to try after a punt season where they traded away the core.  NYY, NYM, LAD, LAA, BOS, etc. don't seem to have trouble doing this even if it means throwing a bit of money around...

     

  • Sonicwind75 3 days 8 hours ago (view)

    Stroman, a pleasant surprise.  Good to know we aren't completely punting until 2025.