The article The Phillies will pay a $7 million fine as one of eight teams that violated the MLB luxury tax originally appeared on NBC Sports Philadelphia.
According to the Associated Press, the Phillies officially owe $6.98 million for exceeding MLB’s Competitive Balance Tax in 2023.
The CBT, also known as the luxury tax, will be levied on eight teams.
The Mets received the harshest penalty ever, with a fine of just under $101 million, breaking the previous record of $43.6 million set by the Los Angeles Dodgers in 2015.
The initial $233 million tax threshold was exceeded by eight teams, the most ever:
• Mets: $100.8 million in excess revenue
• Padres: $39.7 million; Yankees: $32.4 million; Dodgers: $19.4 million; Phillies: $6.98 million; Blue Jays: $5.5 million; Braves: $3.2 million; and Rangers: $1.8 million.
As you can see, some of the financial penalties are quite different from the others. This is due to the four tiers of penalties (over $233M, over $253M, over $273M, and over $293M), which become more severe for repeat taxpayers. The Phillies earned approximately $256 million.
The Phillies, Mets, and Yankees went over the tax for the second year in a row, paying 30% rather than the 20% paid by the first-timers—the Blue Jays, Braves, and Rangers.
The Phillies, like Texas, Atlanta, and Toronto, had a relatively low tax bill of less than $7 million. The four teams paid between $1.8 million and $6.98 million, which is roughly the cost of a good veteran reliever.
The Phils’ tax was just under $2.9 million a year ago.
The Mets took the biggest hit after exceeding the highest tax threshold of $293 million, with a final CBT payroll of $374.7 million. They also pay a surcharge of 60% of every dollar between $293 million and that $374 million figure for finishing more than $60 million above.
In addition, the Mets’ first-round draft pick in 2024 will be shifted back 10 spots.
MLB collected just under $210 million from its eight luxury tax payers in total, money that will be used to fund player benefits and individual player retirement accounts, with the remaining half going to eligible revenue-sharing teams.
The luxury tax threshold rises with each passing year of the current Collective Bargaining Agreement, which expires in 2026. In 2024, it will be $237 million, $241 million in 2025, and $244 million in 2026.
The Phillies, as they currently stand, are right on the luxury tax threshold for 2024, though the exact figures will be determined at the end of the season. They still plan to add at least one more reliever and a fourth outfielder this winter, and they may be willing to spend more money at the trade deadline if they are in a strong position.
The Dodgers, Mets, and Yankees all have payrolls that are $40–50 million higher than the Phillies’.
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