I just read the article by Speier from back in Dec/19.
In the last CBA, and I suspect it's the same in the new one, teams that go over the tax threshold repeatedly do not forfeit their share of the revenue sharing pool.
What they might forfeit is their share of the “market disqualification refund”, which is a much smaller amount. Here is an excerpt from Speier's column:
■ REDUCED REVENUE SHARING REBATES: This is perhaps one of the most significant and least discussed or understood aspects of team decision-making.
Larger-market teams that repeatedly spend past the threshold would forfeit a “market disqualification refund” on potentially sizable revenue sharing rebates – something that is significant in the decision-making of teams that traditionally rank among the biggest spenders and drivers of free agent contracts.
The 2012-16 CBA first introduced the possibility of a revenue-sharing rebate for large-market teams that stayed below the threshold – but that was viewed as somewhat disappointing by the Yankees and Red Sox, the biggest revenue-sharing contributors.
For years, the A’s – despite residing in what MLB and the MLBPA characterize as one of the bigger markets in the game – had received massive revenue-sharing subsidies of tens of millions of dollars annually due to a dismal, revenue-starved stadium. But the 2017-21 CBA decided that after years of such subsidies, Oakland needed to start standing on its own financial feet, resulting in a phase-out of its eight-figure annual payout. In 2017, Oakland’s revenue-sharing allowance was reduced by 25 percent; in 2018, by 50 percent; in 2019, by 75 percent; next year, it will be phased out completely.
The money that had been earmarked for the A’s will go back to the other 12 teams located in above-average market sizes, with payouts proportionate to revenue-sharing contributions. The Red Sox are believed to be a top-three contributor to revenue sharing, and thus would be entitled to one of the biggest payouts.
But teams that spend past the threshold – even by $1 – for at least two straight years will forfeit some to all of that refund. A team that goes past the threshold two straight years (such as the 2018-19 Red Sox) loses 25 percent of its refund in the second year; that penalty increases to 50 percent when paying the luxury tax a third straight year, 75 percent in a fourth straight year, and 100 percent when going over the threshold in five straight seasons.
How big is the penalty? According to multiple major league sources, the Sox’s forfeiture of 25 percent of their 2019 revenue-sharing rebate will be in the low seven figures. If they reset their penalties by staying below the threshold in 2020, they’d ensure their full rebate next year and in 2021.
Consider two scenarios: In one, the Red Sox maintain a $243.5 million payroll in 2020, 2021, and 2022. In the other, the team spends $205 million in 2020 then returns to $243.5 million in 2021 and 2022.
Using a speculative low-seven figures rebate loss of $2.25 million for 2019, the Sox would lose $27 million in revenue sharing rebates over the next three years if they stay over the threshold. By getting under the threshold this year, they’d reduce that figure to $3 million.
