Atlanta Braves payroll will exceed the first tier of the competitive balance tax in 2023 for the first time, but it could cost more than money.
Three weeks ago, I wrote that the Atlanta Braves looked poised to thunder past the first competitive balance tax threshold in 2023, a prediction supported by a story in yesterday’s Atlanta Journal Constitution.
Justin Toscano’s report repeated the numbers you’ve seen here and said that the Braves were already working on ways to manage the impact.
"Internally, the Braves . . . don’t see the threshold as a hard-and-fast limit . . . the penalty for first-time offenders – a 20% tax for the overages – isn’t seen as debilitating."
Owners understood that taxing teams who surpassed the tax thresholds wouldn’t deter teams with deep pockets. After all, if you’ve spent $233M and remained below the second tier, the cost is only $4M, which is pocket change to a Major League team.
To deter owners with deep pockets, MLB added other, non-monetary, penalties to restrain the richest from crushing the less-wealthy teams with the weight of their checkbook.
CBT limits and penalties
The new, and as yet unpublished, collective bargaining agreement changed the way the CBT is calculated, the tax brackets, and penalties. The payroll level for each bracket increases each year.
| Tier | 2022 | 2023 | 2024 | 2025 | 2029 |
| 1st | $230M | $233 M | $237 M | $241 M | $244 M |
| 2nd | $250 M | $253 M | $257 M | $261 M | $264 M |
| 3rd | $270 M | $273 M | $277 M | $281 M | $284 M |
| 4th | $290 M | $293 M | $297 M | $301 M | $304 M |
Tax penalty percentages go up when teams are CBT payors in consecutive seasons.
| Tier | 1st-time payor | 2nd-time payor | 3rd-time payor |
| 1st | 20% | 30% | 50% |
| 2nd | 32% | 42% | 62% |
| 3rd | 63% | 75% | 95% |
| 4th | 80% | 90% | 110% |
The new CBA also includes a progressive surcharge for significantly exceeding the basic tax level. Teams that exceed the first-tier tax level by:
- $20 million to $40 million: 12% surcharge
- $40 million to $60 million: 42.5 % surcharge for the first year; 45% for each consecutive year after that, and
- Have their highest selection in the next Rule 4 Draft moved back 10 places
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- A pick in the first six is protected; team’s incurring this penalty with a top-six selection will have the second-highest pick moved back 10 spots.
- $60 million or more: 60% surcharge
But wait, there’s more!