How the newest agreement impacts Mets on luxury tax
Mets fans can breathe a sigh of relief, because the new competitive balance tax seems like the best-case scenario for the Amazin’s billionaire owner.
According to multiple reports, the new CBT, or luxury tax, thresholds are as follows: $230 million in 2022, $233 million in 2023, $237 million in 2024, $241 million in 2025, and $244 million in 2026. The initial $230 million threshold for this season is up from $210 million in 2021.
MLB and the players union also agreed to a new, fourth CBT tax level — known as the Steve Cohen Tax among industry officials — which will be at $60 million above the base threshold, according to a source, to address runaway spending. Everything else in the CBT will be status quo from the previous collective bargaining agreement. Teams will continue to pay a percentage of every dollar their payroll exceeds the base threshold.
First-time offenders will pay a fee of 20% on the dollar, second-time offenders will pay 30% on the dollar, and third or subsequent time offenders will pay 50% on the dollar. In the new CBA, there will be CBT levels at $20 million above the threshold, $40 million above the threshold and now $60 million above the threshold. There are no new draft-pick penalties for going over the CBT, per a source.
So, how can a fourth CBT tax level — specifically aimed at Cohen — be good news for the Mets?
The best-case scenario for Cohen and the Mets was always going to be strictly tax penalties — not newer, harsher draft-pick penalties — for going over the CBT.
For the richest owner in MLB, richer than the next three richest owners combined, the fourth CBT tax level should be no issue for Cohen. The only thing it will cost him is money.
For now, the Mets current projected payroll for 2022 is $263 million, or $33 million over the CBT threshold. GM Billy Eppler worked hard and fast to acquire Max Scherzer, Starling Marte, Mark Canha and Eduardo Escobar just before the lockout was enacted. The spending spree led to an exciting free agency period for the Mets, setting them up advantageously before the lockout’s transaction freeze, which lasted 99 days.
But the Mets still aren’t done. They have holes to fill in the bullpen, decisions to make at third base, and depth to acquire in the rotation. After all is said and done, it’s possible the Mets will blow past a $300 million payroll, which would represent the highest in the franchise’s history.
At least a portion of MLB’s 30 owners were keen to address Cohen’s runaway spending because he is setting the bar for the rest of the league. Now, the Mets can certainly work to get under the base threshold in future seasons and reset their penalty levels to avoid becoming repeat offenders and paying higher overages.
But that will be up to Cohen, who according to Forbes currently sports a net worth of $15.9 billion. This offseason, Cohen’s spending spree led to the unimaginable — Scherzer in a Mets uniform — and there is little reason to believe he will stop until the Amazin’s put their 36-year championship drought to rest and become World Series winners again.