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We’re one season into MLB’s most recent collective bargaining agreement, and spending seems to be up. That’s good! It’s up in a couple of ways, too: as Maury Brown pointed out (by way of the Associated Press) at Forbes, the collected spending of the luxury tax clubs exceeded $5 billion for the first time, and that’s over $600 million more than they spent in 2021. A whole lot of cash goes into those figures, though, beyond just player salaries:
The luxury tax payrolls are a significant measure of player compensation as they include costs above just salaries and factor into possible penalties should clubs exceed certain thresholds. For calculation purposes, the payrolls are for 40-man rosters and include the average annual values of contracts and $16,016,707 per club for benefits and extended benefits, which include items such as health and pension benefits; club medical costs; insurance; workman’s compensation, payroll, unemployment, and Social Security taxes; spring training allowances; meal and tip money; All-Star game expenses; travel and moving expenses; postseason pay; and college scholarships. Also included is $1,666,667 per team for the pre-arbitration bonus pool, a system to reward players that perform at high levels before they enter salary arbitration.
More is better than less, and over $5 billion sounds impressive, but we’re still just talking about six teams that exceeded the luxury tax threshold here. Out of 30, well, you don’t need me to do the math, but still: that’s just 20 percent of the league accounted for, so only so much excitement is possible when far more teams were capable of spending at least $230 million on all of the bits in the above paragraph, but didn’t.
Still, spending as a whole seems to be moving in the right direction. As Jon Becker noted on Twitter, over two-thirds of the league have increased their payroll from last year:
All in all, it's good that 20 of 30 teams have raised payroll, and equally good that league wide, payrolls are up 5.5% before all the FA are even signed, which is ahead of league revenue increases year over year, typically. Hoping some more teams join those 20 though!
— Jon Becker (@jonbecker_) January 19, 2023
I am aware that “20 of 30” is not “over two-thirds,” but Becker threw up a clarifying tweet afterward that explained that the Cardinals’ payroll has actually gone up, not down, because the Rockies aren’t sending them any cash for Nolan Arenado in 2023, as they did in the previous year.
You can probably guess what I’m going to mention here, but, what are the other nine teams doing? The White Sox, Tigers, Royals, Brewers, Red Sox, Dodgers, Nationals, Rays, and Reds have seen small to massive drops in their payrolls year-over-year to this point. The Nats are continuing their trend of not even really trying to put a watchable team out there after winning in 2019, of course, and with some more money off the books from those salad days, it’s now cheaper than it used to be for them to lose. The Red Sox gave Rafael Devers a massive extension, but their payroll is still down from last year’s $217 million mark to $189 million, a drop of over $27 million and 12.5 percent, because their goal now appears to be [footage not found]. The Reds have slipped from just under $113 million to $81.5 million, a drop of over $31 million that is second only to the Dodgers in total dollars, and is tops in terms of percentage change at 27.8 percent. Not one of these clubs needs to spend less — hell, the Brewers could have reloaded a bit and competed but decided to sell, instead, and the Dodgers are going to send a worse roster out there than they needed to because they wanted to reset the luxury tax counter — but this is where they’ve decided to be as of mid-January, anyway.
And beyond that question about the nine, it’s worth pointing out that the Twins have increased their payroll by all of $263,647, the Phillies by $3.6 million, the Orioles by just $3 million even though they spent all of $60 million in 2022… of those 21 clubs, six of them increased their payroll by just 6.8 percent or less, and clubs like the Pirates (22.3 percent increase) and A’s (14.6 percent) had such pitifully low payrolls that even meager spending like they’ve managed (+$13 million; +$7 million) makes it look like they’re making significant changes to their approach when measured by percentages. When, in truth, the Pirates’ current payroll is all of $74 million while the A’s are at $56 million. I know not everyone is going to spend like the Yankees, but the last time New York spent like the A’s do now was 1995, so maybe Oakland can pick up the pace a little. At least the Phillies’ and Yankees’ meager increases can be justified by the fact they were, respectively, already over the first and second tax thresholds. The other clubs have no such excuse.
So, spending is up, but there’s still plenty of up left to go. The A’s and Pirates spending a little bit more so the Players Association doesn’t decide to file another grievance against them for a lack of spending revenue-sharing dollars isn’t a sign of improvement, especially when Pittsburgh might end up unloading Bryan Reynolds and his $6.75 million salary in a trade, which would wipe out basically half of what they increased their payroll by, anyway. The Twins retaining Carlos Correa is obviously a positive, but only barely when we’re talking about what it means for their payroll since he was just there. In short: spending good. Even more spending? Better. And possible, at least in terms of what’s in everyone’s wallet — hello, new revenue record for 2022 — but you won’t find clubs admitting as much if they aren’t forced to.
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