newish fan, can someone explain the finances?

[randywatson]

Hi lads,

 

as ive stated here recently, im a relatively new fan to baseball. Im in Ireland, so needless to say baseball its not exactly a common sport to watch.

 

but one of the tv networks does show a few live games, plus i have a firestick so i can watch whatever games i like.

 

a few things im trying to get my head around, which i hope someone can explain.

 

how exactly do the finances work in baseball, i read about luxury tax and other stuff. So how does it work, can a team just spend what it wants and go out and buy/trade for the best players money can buy, or is there a cap on how much each team can spend, depending on how much they make.

 

Any help or information would be greatly appreciated.

[Bellhorn04]

Here's a recap from MLB.com.

 

Competitive Balance Tax | Glossary | MLB.com

WWW.MLB.COM

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The Official Site of Major League Baseball

[Bellhorn04]

Here's an analysis of the Red Sox 2023 payroll from Cot's Contracts.

 

https://docs.google.com/spreadsheets/d/1WWRsQNsGZkWuJZwlY8--xVBXMJGjh230D45KiHTHuvY/edit#gid=1520401900

[Bellhorn04]

There's no hard cap. Teams can spend as much as they want. But there are penalties for going over the tax thresholds that get more and more severe the more you go over. The penalties are higher when you go over 2 years in a row or 3 years in a row.

 

The first threshold for 2023 is $233 million.

 

The 2023 Mets have a total payroll cost for tax purposes of $376 million, and will pay about $104 million tax on top of that.

 

Plus there are other penalties that affect the team's draft picks and money available to sign International free agents.

 

It's crazy complicated.

[randywatson]

There's no hard cap. Teams can spend as much as they want. But there are penalties for going over the tax thresholds that get more and more severe the more you go over. The penalties are higher when you go over 2 years in a row or 3 years in a row.

 

The first threshold for 2023 is $233 million.

 

The 2023 Mets have a total payroll cost for tax purposes of $376 million, and will pay about $104 million tax on top of that.

 

Plus there are other penalties that affect the team's draft picks and money available to sign International free agents.

 

It's crazy complicated.

 

so it does it keep it alot more fair that traditional european sports, especially football.

 

is each team alloacted a certain tax threshold, or is it the same for everyone? seeing as both the Sox and the Yankess generate the most income, they do have a higher tax threshold?

[Bellhorn04]

so it does it keep it alot more fair that traditional european sports, especially football.

 

is each team alloacted a certain tax threshold, or is it the same for everyone? seeing as both the Sox and the Yankess generate the most income, they do have a higher tax threshold?

 

The teams all have the same tax thresholds.

 

There's also a "revenue sharing" system which flows money from the higher revenue teams to the lower revenue teams.