A reminder the ‘Steve Cohen tax’ hasn’t really hit yet

This article is free for anyone to read, but please consider becoming a Patreon subscriber to allow me to keep writing posts like this one. Sign up to receive articles like this one in your inbox here.

Shohei Ohtani won’t be a free agent until next winter, but he’s also literally Shohei Ohtani, so discussions about what his free agency will look like are already happening. A notable one occurred last week, when a “high-ranking exec” predicted to the New York Post’s Jon Heyman “a reckoning” when the current collective bargaining agreement expires to attempt to keep the spending of Mets’ owner Steve Cohen in check:

The current 90 percent so-called “Steve Cohen tax” hasn’t deterred Cohen much (though ultimately the tax became a factor after Carlos Correa’s physical issue came up, and Cohen presumably couldn’t match the $33 million annual Twins salary). But one high-ranking exec predicts a “reckoning” in four years when the CBA expires that could make spending even costlier for Cohen.

At 110 percent tax, a potential $50M Ohtani salary would cost him $105M annually. But other owners could press for even higher tax rates. Even at 110 percent, a 10-year, $500M deal would cost Cohen more than $1 billion.

…

Though one MLB source says it’s too early to say whether owners would try to press for a salary cap (which the union never would go for), word is going around that some owners were upset enough by the increasingly obvious wherewithal gap between Cohen and the have-nots that new measures may be tried to curtail him.

I’m glad even Heyman knew enough to insert “which the union would never go for” in there in relation to a potential salary cap. Saves me some time, or at least lets me save that discussion for a more pertinent moment.

I’d argue that Cohen could have matched that annual average value the Twins offered but chose not to, since it was attached to an ankle that multiple physicals have now apparently said is, to use a medical term, trash. Maybe Correa’s ankle isn’t that bad, in the same way you can find an executive or scout to say just about anything you want to for a headline, but the Mets and Cohen apparently felt it was bad enough to not make a deal happen after all.

Anyway, that 110 percent tax — which will hit teams in 2024 who have exceeded the base luxury tax limit by at least $60 million for three consecutive years — should actually work as an understandable threshold for slowing down or stopping spending, in a way previous luxury tax thresholds have not. The Red Sox trading away Mookie Betts — who very well could have wrapped his career in Boston as the greatest homegrown player they’ve ever had the pleasure of putting a uniform on — because winning a World Series in 2018 cost them an extra $12 million due to how far above the threshold they were, was obviously a joke. Steve Cohen deciding maybe they should figure something else out instead of paying Shohei Ohtani the largest annual average value ever and then a penalty that’s even bigger than that figure on top of that… well, he’s got the money to do it, but I at least can understand where he’d think maybe he should invest some cash elsewhere in the organization instead.

And since that massive tax penalty now exists for teams that want to spend so far beyond where everyone else is at, there’s even less need for a salary cap than there ever was (and there was never a need, because salary caps belong in the garbage). There is a cap, anyway: the previous forms of the luxury tax, due to the behavior of the league’s 30 teams, acted as a soft cap, and a tax that makes it so that you need to pay for 2.1 Shohei Ohtanis in order to have one Shohei Ohtani is much less soft.

That’s not to say the Players Association caved on a cap or “cap” or anything like that during the last round of bargaining — the rate at which “hey, should we commit ourselves to $110 million per year for a single player?” is going to come up during this CBA or even one 20 years down the road is, let’s say, infrequent — but that they found a way to get MLB moving again on raising the luxury tax threshold while also letting them try to avoid creating a new George Steinbrenner to contend with. Ultimately, Cohen is going to spend what he wants to spend — he might hover around the tax threshold that’s nicknamed for him for a few years, then back off to reset the tax so his players don’t cost 110 percent of their salaries, then ratchet right back up. I’d of course prefer he just shrugs and pays 110 percent for his roster and then makes fun of the other owners for needing him to finance their own transactions with his penalties, but again, trying to be realistic here.

Alright, well, maybe just one tweet about how the Pirates are poor, Steve. Maybe Bob Nutting will get so mad he’ll accidentally admit he isn’t actually destitute.