MLB Reports: MLB Issues a Complicated System, Tough Payroll Debt Pattern to the Phillies

 

The Philadelphia Phillies will pay the Major League Baseball payroll tax in 2023. However, in comparison to their competitors in New York, they will accept this bill.

According to the Associated Press, the Phillies will pay only $6.98 million in payroll taxes, making them one of eight clubs to exceed the $233 million Competitive Balance Tax threshold.

The Phillies have had to pay tax for the second year in a row. According to the Philadelphia Inquirer, the Phillies’ total tax payroll was approximately $255 million, a club high. Their tax is increased because they are a repeat offender.

While the system is complicated, the CBT works in a tiered system:

Tier 1: 20% surcharge on any dollar spent between $233-$253 million;

Tier 2: 32% surcharge on any dollar spent between $253-$273 million;

Tier 3: 62.5% surcharge on any dollar spent between $273-$293 million;

Tier 4: 80% surcharge on any dollar spent over $293 million.

Because the Phillies are paying for a second time, the Phillies paid 30% of the first tier and 42% on anything above that.

But, again, that’s nothing when you get to the NLCS for the second straight year. And it’s a far cry from what their rival New York Mets spent to win just 75 games and finish in fourth in the NL East.

The Mets set record for luxury tax payroll spending ($374.7 million) and luxury tax penalties ($100.7 million) in 2023, destroying the record set by the Los Angeles Dodgers in 2015.

In all the eight teams that were taxed combined for a bill of $209.8 million and the Mets accounted for nearly half of it. Looking ahead to 2024, the Phillies may be able to avoid the CBT next season.

The 2024 CBT threshold goes up to $237 million and Spotrac estimates that the Phillies’ taxable payroll for next season is $223 million.

The other teams to pay the tax were the San Diego Padres ($39.7 million), the New York Yankees (32.4 million), the Los Angeles Dodgers (19.4 million), the Toronto Blue Jays ($5.5 million), the Atlanta Braves ($3.2 million) and the Texas Rangers ($1.8 million).