The San Diego Padres, who finished the season just two wins over .500, are on the hook from nearly $40 million after the 2023 season, a side-effect of their monster payroll.
Still, things could be worse: The New York Mets must pay a record luxury tax of nearly $101 million after their fourth-place finish in their division.
The Friars are on the hook for $39.7 million luxury tax after their team-record-setting $255 million 2023 payroll. The news comes in the wake of the Padres losing their local-market TV deal and reportedly seeking a $50 million loan toward the end of the season.
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Tax payrolls are calculated by average annual values, including earned bonuses, for players on 40-man rosters along with just over $17.1 million per team for benefits and $1.67 million for each club’s share of the $50 million pool for pre-arbitration players that started in 2022. Deferred salaries and bonus payments are discounted to present-day values.
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MLB has not finalized regular payrolls, which are based on 2023 salaries and earned bonus plus prorated shares of signing bonuses.
Because they owe tax for the third straight year, the Padres and Dodgers pay at a 50% rate on the first $20 million above the $233 million threshold, a 62% rate on the next $20 million and a 95% rate on the amount from $273 million to $293 million.
The Mets, Yankees and Phillies owe tax for the second year in a row and pay 30% on the first $20 million over, 42% on the next $20 million, 75% on the third $20 million and 90% on the amount over $293 million.
The first $3.5 million of tax money is used to fund player benefits and 50% of the remainder will be used to fund player Individual Retirement Accounts. The other 50% of what's left goes to a supplemental commissioner’s discretionary fund intended to be given to teams receiving revenue-sharing money that have grown their non-media local revenue over several years.
Next year's initial threshold is $237 million. If the Mets, Yankees, Dodgers, Padres or Phillies go over, they would pay at the highest tax rate, rising to 110% for the amount over $297 million.
Owner Steve Cohen's Mets finished with a tax payroll of $374.7 million, according to figures finalized by Major League Baseball on Thursday and obtained by The Associated Press. That topped the previous high of $291.1 million by the 2015 Los Angeles Dodgers.
The Mets' tax bill came to $100,781,932 after they finished fourth in the NL East at 75-87 in the most expensive flop in baseball history. That more than doubled the prior high of $43.6 million by the 2015 Dodgers.
Other teams owing tax money are the New York Yankees ($32.4 million), the Dodgers ($19.4 million), Philadelphia ($6.98 million), Toronto ($5.5 million), Atlanta ($3.2 million) and World Series champion Texas ($1.8 million). The Blue Jays, Braves and Rangers are paying tax for the first time.
The Yankees and Mets were the only teams to exceed the fourth threshold of $293 million, added in the 2022 labor contract, an initiative dubbed the Cohen Tax and aimed at reigning in Cohen.
The previous high for taxpayers was six, in 2016 and last year. This year's tax totaled $209.8 million, more than double the prior record of $78.5 million for 2022.
The Los Angeles Angels finished with a tax payroll $28,654 below the $233 million tax threshold. The Angels were projected at $231.15 million on June 30 and got under by allowing pitchers Lucas Giolito, Matt Moore, Dominic Leone and Reynaldo López along with outfielder Hunter Renfroe to be claimed off waivers on Aug. 31.
Texas was projected at $220.2 million on June 30 before boosting its pitching staff by trading for Scherzer, Aroldis Chapman, Jordan Montgomery and Chris Stratton and also acquiring catcher Austin Hedges. The Rangers' final payroll was $242.1 million.
Total spending on luxury tax payrolls rose 12.2% to a $5.79 billion from $5.16 million last year, the previous high.
The Yankees have been taxed just under $390 million since the penalties began in 2003, 43% of the $901 million total, followed by the Dodgers at $234 million. Fourteen of 30 teams have owed tax over the two decades.
LISTEN: With NBC 7 San Diego's Darnay Tripp and Derek Togerson behind the mic, On Friar will cover all things San Diego Padres. Interviews, analysis, behind-the-scenes...the ups, downs, and everything in between. Tap here to find On Friar wherever you listen to podcasts.
