Phillies Offseason

Phillies to pay $7 million penalty as one of eight teams over MLB luxury tax

Championship Series - Arizona Diamondbacks v Philadelphia Phillies - Game One

PHILADELPHIA, PENNSYLVANIA – OCTOBER 16: Philadelphia Phillies principal owner John S. Middleton looks on prior to Game One of the Championship Series between the Arizona Diamondbacks and the Philadelphia Phillies at Citizens Bank Park on October 16, 2023 in Philadelphia, Pennsylvania. (Photo by Tim Nwachukwu/Getty Images)

The Phillies officially owe $6.98 million for exceeding MLB's Competitive Balance Tax in 2023, according to the Associated Press.

Eight teams will have to pay the CBT, often referred to as the luxury tax.

The stiffest penalty ever went to the Mets, who have to pay a shade under $101 million, shattering the previous record of $43.6 million by the 2015 Dodgers.

Eight teams, the most ever, surpassed the initial $233 million tax threshold:

• Mets: $100.8M over
• Padres: $39.7M
• Yankees: $32.4M
• Dodgers: $19.4M
• Phillies: $6.98M
• Blue Jays: $5.5M
• Braves: $3.2M
• Rangers: $1.8M

As you can see, a few of the financial penalties are far unlike the others. This is because there are four tiers of penalties (over $233M, over $253M, over $273M and over $293M) and they stiffen for repeat taxpayers. The Phillies finished around $256 million.

It was the second straight year over the tax for the Phillies, Mets and Yankees, who pay 30% on their overages rather than the 20% paid by the first-timers — the Blue Jays, Braves and Rangers.

Like Texas, Atlanta and Toronto, the Phillies had a relatively low tax bill of less than $7 million. The four teams paid between $1.8M and $6.98M, essentially the cost of a decent veteran reliever.

A year ago, the Phils' tax was just under $2.9 million.

The Mets were hit hardest after exceeding the highest tax threshold of $293 million, finishing with a final CBT payroll of $374.7 million. For finishing more than $60 million above, they also pay a surcharge of 60% of every dollar between $293 million and that $374.M figure.

Additionally, the Mets' first-round pick in the 2024 draft will be moved back 10 spots.

In total, MLB collected just under $210 million from its eight luxury tax payers, money that will be used to fund player benefits and individual player retirement accounts with the other half being distributed to eligible revenue-sharing teams.

The luxury tax threshold increases during each year of the current Collective Bargaining Agreement, which expires after 2026. It is $237 million in 2024, $241 million in 2025 and $244 million in 2026.

The Phillies as presently constructed are right at the luxury tax threshold for 2024, though the exact figures are calculated at season's end. They still figure to add at least one more reliever and a fourth outfielder this winter and could take on more money at the trade deadline if they're in a promising position.

The Dodgers, Mets and Yankees each have projected payrolls $40-50 million higher than the Phillies.

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