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. 

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.

Recent comments

Subscribe to Recent comments
The first 600 characters of the last 16 comments, click "View" to see rest of comment.
  • crunch 30 min 2 sec ago (view)

    "MLB Network's Jon Heyman reports former player David Ross and Astros bench coach Joe Espada "appear to be the frontrunners" for the Cubs' managerial opening."

    espada's had 2 interviews.  for a guy who's actively at his "other job," having a 2nd interview seems like both sides want to make this work.  SF and PIT are also supposedly interested in espada.

     

  • JustSayin' 1 hour 54 min ago (view)

     That's a fair description of the benefits of the plan but If I have to choose between "better way" and "owners' greed," I pick the latter.  MLB wants better MiLB facilities, on average, without paying a cent.  They want to deal with the social and legal pressure they are getting for not even paying minor league players minimum wage per real hour worked by having less players.  In addition, the draft is to be moved to late August, so every draftee would lose compensation for the stub year in which they are drafted.  For this reason, I'm not sure your point about col

     

  • Hagsag 2 hours 19 min ago (view)

    Thanks Mr. Phil.

     

  • Arizona Phil 3 hours 21 min ago (view)

    HAGSAG: Besides reducing the costs that are associated with operating a minor league club, reducing the number of minor league affiliates would allow MLB organizations to increase the salaries of their remainng minor league players (who would be the organization's most-legit prospects) without having to increase the organization's aggregate minor league payroll. 

     

  • crunch 3 hours 47 min ago (view)

    The discussions on this matter have been quite varried.  There seems to be a lot of pressure connected to this on minor league team owners who haven't upgraded their facilities/park in a while or who lag in quality compared to their competitors.

    It seems like this would not only cause some teams to fold, but some radical redistribution of existing teams/cities into new minor league levels rather than just pruning some teams over others.

     

  • Hagsag 15 hours 59 min ago (view)

    AZ Phil, what are your thoughts on the discussion to eliminate 42 low minor league teams in 2021? What would this do to the Dominican League? Thanks.

     

  • crunch 22 hours 4 min ago (view)

    yanks/astros game 6 was a f'n classic.  wow.

    altuve continues to build his astros legend.

     

  • bradsbeard 1 day 12 hours ago (view)

    Thanks for this. I agree they’ll probably take their chances in the Rule 5 if he will resign, though I really wouldn’t mind adding him back to the 40 man. I feel like he has a good chance to be effective out of the bullpen. 

     

  • bradsbeard 1 day 12 hours ago (view)

    I hope Sagara doesn’t end up leaving because of the shakeup. The Athletic did report that his position might be eliminated but that he should be offered another role in the organization somewhere. All I know is Sagara’s name came up frequently in connection with the pitch lab, and he was credited for improvements with Ryan, Wick, and Wieck. Maybe he’ll end up focusing more specifically in that role helping guys tweak things in the lab. 

     

  • JustSayin' 2 days 21 min ago (view)

    Does anyone have insight into the new management hires and musical chairs the Cubs announced yesterday?  Craig Breslow might be the only guy out there with extensive MLB experience AND the grey matter to challenge any quant not making sense. His role intrigues me but are they going to give him real responsibility to clear out the deadwood (including the existing minor league coordinator who was never good enough to be the pitchers he's coaching?)  Or, is this a superficial change aimed at keeping ownership off Theo's back? 

     

  • Arizona Phil 2 days 1 hour ago (view)

    BRADSBEARD: I think the Cubs want to retain Oscar de la Cruz post-2019, just not on the MLB 40-man roster.

     

  • Charlie 2 days 2 hours ago (view)

    Who are you all rooting for in the World Series? I'm rooting for the Nats to face and defeat Houston, I think, but with very mild interest. Let them get that championship out of the way and then maybe go the way of the post-2016 Cubs.

     

  • bradsbeard 2 days 9 hours ago (view)

    AZ Phil, what do you think the Cubs will do with Oscar de la Cruz if they don’t add him back to the 40 man? Can they try to re-sign him but wait until after the Rule 5 to make it official? Do you think they will try to keep him in the organization in some fashion? 

     

  • bradsbeard 3 days 4 hours ago (view)

    Angels also make sense as a destination for Kris Bryant. 

     

  • azbobbop 3 days 21 hours ago (view)

    I wonder if Maddon will take any of the coaches with him.

     

  • Arizona Phil 3 days 23 hours ago (view)

    I doubt that Maddon would have taken the job if the Angels aren't fully prepared to sign one or maybe even two FA TOR SP (like Gerrit Cole and/or Stephen Strasburg if he opts out). 

    When you have the best player in MLB and now the highest-paid manager, not making the playoffs again in 2020 just can't be acceptable.