The final bills for those teams exceeding the Competitive Balance Tax (CBT) -- known as the luxury tax -- threshold for 2019 have arrived. According to documents obtained by the Associated Press, the Red Sox, Yankees, and Cubs are the only teams that will owe for this past season.
The AP reports that the Red Sox owe a team-record $13.4 million tax. The Cubs are next with a $7.6 million bill, and then the Yankees check-in with $6.7 million owed. The Red Sox this past season led MLB with a payroll of $228 million, but they managed just 84 wins and a third-place finish in the AL East. The Cubs also missed the postseason 2019, while the 103-win Yankees stand as the only taxed team to make the playoffs last season. The champion Nationals were tied for fourth with a luxury tax payroll of $205 million, but wound up just under the limit.
The CBT is levied on average-annual-value payrolls above a certain dollar figure -- $206 million for 2019. A team over the tax for the first time has to pay a 20 percent fine on the overage. A team over the line for two years in a row must pay a 30 percent fine. And three or more years in a row entails a 50 percent tax on the overage. The CBT also includes additional surtaxes for exceeding the threshold by $20 million (12 percent); $40 million (42.5 percent); and repeating over $40 million (45 percent). A team that goes more than $40 million over also has its highest draft pick moved down 10 spots provided it isn't picking in the top six.
The Red Sox's relatively hefty bill is why they're committed to getting under the CBT line for 2020, and by extension that's why Mookie Betts and, , veteran lefty David Price. The Cubs also intend to, at the very least, not worsen their tax situation. That's why they've been inactive on the free agent market and may be looking to deal the likes of Kris Bryant and or Willson Contreras.about star outfielder
As for the Yankees, the recent signing of Gerrit Cole in tandem with their other commitments mean they'll blow past the line for 2020. Per Cot's Contracts at Baseball Prospectus, right now the Yankees are almost $50 million over the $208 million threshold on 2020 payrolls. If their offseason efforts yield a World Series trophy, then they, of course, won't much care about that tax bill.