Dodgers' Luxury Tax

[cardstatman]

Another interesting thing is that players get over one half of the luxury tax money. Just under half goes to the revenue receiving teams.

Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.

If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.

If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.

So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!

IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.

Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.

[cardstatman]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

Fans did not bail based on a bad record. It was the arrogance and stubbornness of DeWitt and Mo that ran the fans off. Had they handled this differently the fan base would have supported the team through the lean years.

Yes, the Cardinals PR department seriously dropped the ball, too. They assumed their fans would stay loyal even if the local media tried to poison them against the ownership and front office in order to increase their own media income by stirring up dissention.

The Cardinals FO lost their focus and their cash machine fell apart along with their winning baseball. They had no message for the media... probably because they had no plan anymore so what positive messages were they going to tell the media?

Getting their momentum back will not be easy. Just ask Cincinnati or Pittsburgh. Milwaukee did it; we can do it, too, but it won't be easy.

[Ike Hammett]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

Fans did not bail based on a bad record. It was the arrogance and stubbornness of DeWitt and Mo that ran the fans off. Had they handled this differently the fan base would have supported the team through the lean years.

That's such [nonsense]! The "fans" bailed because they really don't understand baseball. You win some, you lose some, that's baseball. These spoiled brats and the talking heads that feul their livelihood on hate and need talking points and dip supporters killed the golden goose. There are 30 teams all trying to win, Cards were good and definitely had it better than most. The best we can do with this "rebuild" is get back to where we were, if you can even get there.

[Cusecards]

Yes, baseball is broken. The only people who refuse that fact are either fans of those few large markets or complete idiots.

No, it's the opposite! Dodgers fans showed up 4 million strong, root like crazy ( in a fun and happy way) people love their players and management, love baseball and pay big bucks to see it.

The system isn't really that broken, you "best fans in baseball" are. Yeah, Cards could definitely use a TV deal like that.

Dodgers drew 4 million in an area of maybe 14M to 18M people with a peaking team.

Cardinals drew 2.5 million in an area of maybe 3M people with a cratering team. Okay, be honest, it was 2.5M tickets but 1.5M people .

This huge difference shows up most strongly in Monday to Thursday games... which is around half of the games.
Working people aren't often going drive over an hour to attend a weeknight game.
They would watch on TV, but MLB is rarely on TV outside of St Louis unless you pay for a package.

There are 3 teams in Southern California. The Cards have historically owned the Southern Midwest and still have fans in lots of other places around the Midwest. Maybe if Cardinals fan types didn't kill economies and adopted a more fun loving and open type mindset you wouldn't destroy St. Louis either and more fans would show up during the week.

What in the holy hell are you even talking about?

I doubt he even knows. He’s either on some sort of street drug or his blood sugar is being poorly regulated.

SMH?

[ICCFIM2]

Another interesting thing is that players get over one half of the luxury tax money. Just under half goes to the revenue receiving teams.

Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.

If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.

If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.

So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!

IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.

Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.

Why can't it be both, the teams pay the luxury tax and they lose draft picks. The luxury tax has not made the game more competitive. In the system I proposed above, the amount of luxury tax that would be moved to pay for the draft picks would be quite small. As you pointed out above, just under half goes to the receiving teams. Now the amount that would go to receiving teams would partially go to pay for their additional draft pick. So under my suggestion, the amount of money and where it goes does not change at all other than some of the money going to receiving teams is not designated for additional draft picks they will receive.

[Jatalk]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

You’re right about Tv. But think beyond that. What is the most popular baseball cap in Japan? Dodgers or Cardinals?

I don't think baseball cap sales in Japan will decline because of a baseball salary cap.

Not my point.

[TheJackBurton]

Yes, baseball is broken. The only people who refuse that fact are either fans of those few large markets or complete idiots.

No, it's the opposite! Dodgers fans showed up 4 million strong, root like crazy ( in a fun and happy way) people love their players and management, love baseball and pay big bucks to see it.

The system isn't really that broken, you "best fans in baseball" are. Yeah, Cards could definitely use a TV deal like that.

Dodgers drew 4 million in an area of maybe 14M to 18M people with a peaking team.

Cardinals drew 2.5 million in an area of maybe 3M people with a cratering team. Okay, be honest, it was 2.5M tickets but 1.5M people .

This huge difference shows up most strongly in Monday to Thursday games... which is around half of the games.
Working people aren't often going drive over an hour to attend a weeknight game.
They would watch on TV, but MLB is rarely on TV outside of St Louis unless you pay for a package.

There are 3 teams in Southern California. The Cards have historically owned the Southern Midwest and still have fans in lots of other places around the Midwest. Maybe if Cardinals fan types didn't kill economies and adopted a more fun loving and open type mindset you wouldn't destroy St. Louis either and more fans would show up during the week.

What in the holy hell are you even talking about?

Not sure if we are allowed to conversate about such things, but this topic has passed and it's about luxury tax. THE PEOPLE OF HOLLYWOOD CAN AND DO AFFORD A LUXURY TAX AND HAVE WORLD CHAMPS TO ROOT FOR! The people of rural West Virginia, Kansas, Arkansas etc are whining about their luxury tax being hire than the whole payroll of the Cards. So root for the rural West Virginia team as i want to compete with the Dodgers! I'm not "talking" I'm posting about economics and the structures of economics. Which you lose at like you do at baseball!

None of this makes any sense unless you just did an 8 ball before typing any of it.

[TheJackBurton]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

Fans did not bail based on a bad record. It was the arrogance and stubbornness of DeWitt and Mo that ran the fans off. Had they handled this differently the fan base would have supported the team through the lean years.

Yes, the Cardinals PR department seriously dropped the ball, too. They assumed their fans would stay loyal even if the local media tried to poison them against the ownership and front office in order to increase their own media income by stirring up dissention.

The Cardinals FO lost their focus and their cash machine fell apart along with their winning baseball. They had no message for the media... probably because they had no plan anymore so what positive messages were they going to tell the media?

Getting their momentum back will not be easy. Just ask Cincinnati or Pittsburgh. Milwaukee did it; we can do it, too, but it won't be easy.

No media person made DeWitt the 3rd essentially go "Hey you showing up is our revenue stream, go ahead and boycott and see what happens" Not one media person made him say that.

[TheJackBurton]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

You’re right about Tv. But think beyond that. What is the most popular baseball cap in Japan? Dodgers or Cardinals?

I don't think baseball cap sales in Japan will decline because of a baseball salary cap.

Not my point.

It doesn't matter who the most popular cap in Japan is, MLB puts that money into a single fund and shares it among the 50 teams.

All MLB cares about are the cap sales. The only thing the cap sales might do in the future is make a fan of Ohtanis want to be a Dodger that's about it. If MLB actually gets their act together and does a proper draft like the rest of the developed world then even that won't matter anymore.

[Jatalk]

The difference is not star power, it is population base. The Dodgers make more in local TV money than the Card's do from all sources. The team had a bad year and the "Cardinal Fans" stopped going to the games. The best fans in baseball deserted their team. At least 20 of the MLB teams can not spend like the Dodgers. What the players need to realize is that if they allow a payroll cap and floor, they will still get their money. It just won't be in NY or LA.
They may get their 25 million a year in KC or Minnesota, but they will still get it and the competition created by balanced salaries will lead to more teams competing and that means more TV money and packed stadiums which will generate even more money for salaries.

You’re right about Tv. But think beyond that. What is the most popular baseball cap in Japan? Dodgers or Cardinals?

I don't think baseball cap sales in Japan will decline because of a baseball salary cap.

Not my point.

It doesn't matter who the most popular cap in Japan is, MLB puts that money into a single fund and shares it among the 50 teams.

All MLB cares about are the cap sales. The only thing the cap sales might do in the future is make a fan of Ohtanis want to be a Dodger that's about it. If MLB actually gets their act together and does a proper draft like the rest of the developed world then even that won't matter anymore.

Ok good point and bad example by me but I find it hard to believe the Dodgers image doesn’t benefit them in markets beyond their own market.

[cardstatman]

Another interesting thing is that players get over one half of the luxury tax money. Just under half goes to the revenue receiving teams.

Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.

If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.

If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.

So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!

IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.

Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.

Why can't it be both, the teams pay the luxury tax and they lose draft picks. The luxury tax has not made the game more competitive. In the system I proposed above, the amount of luxury tax that would be moved to pay for the draft picks would be quite small. As you pointed out above, just under half goes to the receiving teams. Now the amount that would go to receiving teams would partially go to pay for their additional draft pick. So under my suggestion, the amount of money and where it goes does not change at all other than some of the money going to receiving teams is not designated for additional draft picks they will receive.

It could be both but I could see the players being more agreeable to even stiffer financial penalties for exceeding the luxury tax threshold knowing that they will receive half of the money from the stiffer financial penalties.

They could keep the cap in the same neighborhood as today or may even lower it a bit.
2025: $241 million
2026: $244 million

I'd eliminate the 1st/2nd/3rd year surcharges and go directly to stiff penalties. No "resets" to get soft penalties as many rich teams with plenty of resouces to pay luxury taxes have been doing.

$00 million to $20 million: 50 percent tax
$20 million to $40 million: 100 percent tax
$40 million to $60 million: 150 percent tax
$60 million to $80 million: 200 percent tax
$80 million to $100 million: 250 percent tax
$100 million to $120 million: 300 percent tax
etc ...

Note the Dodgers exceeded the luxury tax threshold by $175M in 2025 so they are clearly laughing at their current 110% max tax.

Finally, don't call it luxury taxes, call it revenue sharing and player retirement funding.

IMHO, you want the big markets to spend a lot of money to get a smaller advantage than today with revenue sharing as a byproduct.
There are a dozen big markets who could be paying luxury taxes but usually only half-dozen do it. Their owners are pocketing money instead.
They need to feel like it is normal to live in the 1st or 2nd tier (or be a mid market team).
The small market teams will still have a large disadvantage but it won't be like the Dodgers/Brewers or Yankees/Rays chasm today.
The 50% revenue sharing money needs to go to the small market teams who are spending on payroll; those who are not spending on payroll need to forfeit some revenue sharing money... so a soft floor to go with a soft ceiling. Maybe forfeitures start with teams under 75% of the luxury cap. Maybe lower for the smallest market teams. But with more revenue sharing money, these teams need to be incentivized to spend more rather than pocketing money.

Also, when calculating payroll, I think signing bonuses of minor league and international players should be included.

[rightthinker4]

$169 million is a drop in the bucket for the Dodgers.

[Ike Hammett]

Yes, baseball is broken. The only people who refuse that fact are either fans of those few large markets or complete idiots.

No, it's the opposite! Dodgers fans showed up 4 million strong, root like crazy ( in a fun and happy way) people love their players and management, love baseball and pay big bucks to see it.

The system isn't really that broken, you "best fans in baseball" are. Yeah, Cards could definitely use a TV deal like that.

Dodgers drew 4 million in an area of maybe 14M to 18M people with a peaking team.

Cardinals drew 2.5 million in an area of maybe 3M people with a cratering team. Okay, be honest, it was 2.5M tickets but 1.5M people .

This huge difference shows up most strongly in Monday to Thursday games... which is around half of the games.
Working people aren't often going drive over an hour to attend a weeknight game.
They would watch on TV, but MLB is rarely on TV outside of St Louis unless you pay for a package.

There are 3 teams in Southern California. The Cards have historically owned the Southern Midwest and still have fans in lots of other places around the Midwest. Maybe if Cardinals fan types didn't kill economies and adopted a more fun loving and open type mindset you wouldn't destroy St. Louis either and more fans would show up during the week.

What in the holy hell are you even talking about?

Not sure if we are allowed to conversate about such things, but this topic has passed and it's about luxury tax. THE PEOPLE OF HOLLYWOOD CAN AND DO AFFORD A LUXURY TAX AND HAVE WORLD CHAMPS TO ROOT FOR! The people of rural West Virginia, Kansas, Arkansas etc are whining about their luxury tax being hire than the whole payroll of the Cards. So root for the rural West Virginia team as i want to compete with the Dodgers! I'm not "talking" I'm posting about economics and the structures of economics. Which you lose at like you do at baseball!

None of this makes any sense unless you just did an 8 ball before typing any of it.

What is so hard to understand?

Dodgers and people of LA/ Hollywood are rich. Cardinals fans from rural Oklahoma, Kansas West Virginia, Missouri are not. It's obvious as to why, and obvious as to why more players would rather go there.

[Poojols]

Yes, baseball is broken. The only people who refuse that fact are either fans of those few large markets or complete idiots.

No, it's the opposite! Dodgers fans showed up 4 million strong, root like crazy ( in a fun and happy way) people love their players and management, love baseball and pay big bucks to see it.

The system isn't really that broken, you "best fans in baseball" are. Yeah, Cards could definitely use a TV deal like that.

"It's the opposite" and "it isn't really that broken" are contradictory.

You're getting a little bit closer to the truth with your last sentence though. Keep going!

The two are not mutually exclusive, I get what you are stating though. No system will ever be completely perfect. Good luck trying to sell Cards fans on a more socialist type MLB TV structure or economic structure. Maybe the biggest downfall of Cards baseball and MLB is that. Everyone for themselves, right? Dodgers fans don't really think that way, they are in it together and want what is best for everyone, at least from my experience.

NFL and NHL are pretty balanced. I'm rooting for a lockout if rules aren't changed. Player's salaries have caught up enough the past 25 years.

I'm certainly not arguing this. Baseball is for everyone, it's for kids and a pastime to get through the day. Back in the day our great grandparents treated our sports heroes to discount groceries and a friendly smile and genuine caring about their families and lives. Today the love is 10s and hundreds of millions. That's capitalism and what Cards fans fight for, maybe the hardest of all fans. So deal with it.

I'm laughing at the socialism and capitalism mentions. This isn't government and different countries being discussed. It's entertainment. What fun is entertainment when it's imbalanced?

We get it. You hate capitalism.

[Ike Hammett]

Yes, baseball is broken. The only people who refuse that fact are either fans of those few large markets or complete idiots.

No, it's the opposite! Dodgers fans showed up 4 million strong, root like crazy ( in a fun and happy way) people love their players and management, love baseball and pay big bucks to see it.

The system isn't really that broken, you "best fans in baseball" are. Yeah, Cards could definitely use a TV deal like that.

"It's the opposite" and "it isn't really that broken" are contradictory.

You're getting a little bit closer to the truth with your last sentence though. Keep going!

The two are not mutually exclusive, I get what you are stating though. No system will ever be completely perfect. Good luck trying to sell Cards fans on a more socialist type MLB TV structure or economic structure. Maybe the biggest downfall of Cards baseball and MLB is that. Everyone for themselves, right? Dodgers fans don't really think that way, they are in it together and want what is best for everyone, at least from my experience.

NFL and NHL are pretty balanced. I'm rooting for a lockout if rules aren't changed. Player's salaries have caught up enough the past 25 years.

I'm certainly not arguing this. Baseball is for everyone, it's for kids and a pastime to get through the day. Back in the day our great grandparents treated our sports heroes to discount groceries and a friendly smile and genuine caring about their families and lives. Today the love is 10s and hundreds of millions. That's capitalism and what Cards fans fight for, maybe the hardest of all fans. So deal with it.

I'm laughing at the socialism and capitalism mentions. This isn't government and different countries being discussed. It's entertainment. What fun is entertainment when it's imbalanced?

We get it. You hate capitalism.

It's sports economics. Everyone knows leagues like the NFL/ NBA/ NHL are more democratic socialist models compared to MLB. Things like hard salary caps, equal revenue sharing etc are growing their sports, make them more fair and competitive. Don't blame or whine the Dodgers, LA or Southern California for being better at "capitalism".

"What fun is entertainment when it's imbalanced?" What does that even mean?

MLB better get its act together so it doesn't look like minor league and independent league baseball.

[ICCFIM2]

Another interesting thing is that players get over one half of the luxury tax money. Just under half goes to the revenue receiving teams.

Luxury taxes were $403M in 2025. The first $3.5MM will be used to fund player benefits. Half the remaining money goes to players’ retirement accounts, while the other half is used for revenue sharing distribution from MLB to teams.

If the luxury tax threshold was increased or eliminated, the players stand to lose over $200M in retirement account contributions! That is maybe $200K per player; but I don't know how evenly it is distributed.

If the threshold was decreased and more luxury taxes are paid, the players get even more money secretly stashed in their retirement accounts.

So the players now have a interest in not raising the luxury tax limits too much and in increasing the taxes paid!

IMHO, the players should move toward making all the penalties monetary rather than some of the penalties being draft picks.

Clearly the top dozen teams do have the revenues to pay steep luxury taxes and the players don't mind receiving $200K+ in their retirement account each year. This does at least help shrink the expansive revenue gaps in the game today.

Why can't it be both, the teams pay the luxury tax and they lose draft picks. The luxury tax has not made the game more competitive. In the system I proposed above, the amount of luxury tax that would be moved to pay for the draft picks would be quite small. As you pointed out above, just under half goes to the receiving teams. Now the amount that would go to receiving teams would partially go to pay for their additional draft pick. So under my suggestion, the amount of money and where it goes does not change at all other than some of the money going to receiving teams is not designated for additional draft picks they will receive.

It could be both but I could see the players being more agreeable to even stiffer financial penalties for exceeding the luxury tax threshold knowing that they will receive half of the money from the stiffer financial penalties.

They could keep the cap in the same neighborhood as today or may even lower it a bit.
2025: $241 million
2026: $244 million

I'd eliminate the 1st/2nd/3rd year surcharges and go directly to stiff penalties. No "resets" to get soft penalties as many rich teams with plenty of resouces to pay luxury taxes have been doing.

$00 million to $20 million: 50 percent tax
$20 million to $40 million: 100 percent tax
$40 million to $60 million: 150 percent tax
$60 million to $80 million: 200 percent tax
$80 million to $100 million: 250 percent tax
$100 million to $120 million: 300 percent tax
etc ...

Note the Dodgers exceeded the luxury tax threshold by $175M in 2025 so they are clearly laughing at their current 110% max tax.

Finally, don't call it luxury taxes, call it revenue sharing and player retirement funding.

IMHO, you want the big markets to spend a lot of money to get a smaller advantage than today with revenue sharing as a byproduct.
There are a dozen big markets who could be paying luxury taxes but usually only half-dozen do it. Their owners are pocketing money instead.
They need to feel like it is normal to live in the 1st or 2nd tier (or be a mid market team).
The small market teams will still have a large disadvantage but it won't be like the Dodgers/Brewers or Yankees/Rays chasm today.
The 50% revenue sharing money needs to go to the small market teams who are spending on payroll; those who are not spending on payroll need to forfeit some revenue sharing money... so a soft floor to go with a soft ceiling. Maybe forfeitures start with teams under 75% of the luxury cap. Maybe lower for the smallest market teams. But with more revenue sharing money, these teams need to be incentivized to spend more rather than pocketing money.

Also, when calculating payroll, I think signing bonuses of minor league and international players should be included.

Except we have already seen that the money alone has not helped even out the competitive balance of MLB. Even though the penalties went directly to the pension, I don't believe the actual pensions went higher, it was just a more certain funding mechanism. So your revised suggestion does not directly help the players so much as it provides more money to the lower teams. But, how much will that help them? My point is that they need to try something different.