Paying the luxury tax shouldn't be a problem for the brave

Paying the luxury tax shouldn’t be a problem for the brave

Much attention has been paid this offseason to the Braves’ spending prospects. Atlanta has one of the best rosters in the league, but is currently facing a major shortstop question. Dansby Swanson hit the open market as one of the best players available, and the Braves must consider whether they need to make another big investment to keep the Gold Glove winner in the fold.

Retaining Swanson would surely involve pushing the club’s spending beyond the tax threshold of basic competitive equilibrium. That figure is pegged at $233 million for 2023. Roster Resource currently projects Atlanta about $228 million in luxury tax liabilities. This includes screenings for players eligible for arbitration Max fried, A. J. Minter and Denis Santana, which come with small error bars until these salaries are finalized. Still, the team can be estimated to be at least $10-15 million away from next year’s base tax threshold before trying to retain Swanson or further increase the roster in left field. or designated hitter.

Justin Toscano of the Atlanta Journal-Constitution writes that the Braves are internally considering going over the luxury tax in the right situation. This is not a surprising development. The Atlanta brass have already publicly declared their affinity for Swanson, and they reportedly offered him a deal worth around $100 million during the season. An offer in that area would push the Braves into luxury tax territory if accepted, and Swanson should comfortably beat that number quite easily. MLBTR anticipates he will receive a seven-year, $154 million contract. If Swanson’s contract ends up falling in that area, it would add somewhere in the neighborhood of $22 million a year to the signing team’s ledger.

A team’s Competitive Balance Tax Number is calculated by adding the average annual values ​​of a club’s commitments, in addition to player benefits. For CBT purposes, there is no difference between deferred, anticipated or evenly distributed contracts. This reduces (but doesn’t entirely eliminate) the ability for teams to creatively structure deals around the tax. Yet for most teams, the club’s luxury tax number is higher than their actual wage bill for the coming season. That’s especially true for the Braves, who signed a number of players to early-career extensions with salaries rising later in the trade. For example, the Spencer Strider the deal contains a tax impact of $12.5 million, but he will actually only earn $1 million next season.

Roster Resource projects Atlanta’s actual spending in 2023 just under $196 million at this time. Toscano writes that the organization places more emphasis on this number than its current CBT number. While it looks like there’s still some wiggle room from that perspective, the Braves are already projected well above their previous franchise record. They opened last season with a payroll just south of $178 million, according to Cot’s baseball contracts. It was an organizational high, and they’re nearly $20 million above that for 2023 before considering Swanson or any outside additions.

The payroll would certainly be expected to rise on the heels of five consecutive division titles, including their 2021 World Series. eventually have a top-five payroll, but as MLBTR’s Steve Adams explored in October, they’re not far off that pace. It’s also difficult to identify ways for Atlanta to cut payrolls without subtracting top contributors from the MLB roster. The team could likely find a taker for most or all of the $4.5 million owed to the third receiver manny pina. They would have a harder time losing much of the $9 million they owe Eddie Rosario after the left fielder’s difficult year, and they surely won’t find other clubs willing to take on much (or part) of the $37 million due to Marcell Ozuna over the next two seasons.

With the franchise already in uncharted waters, it’s hard to glean from the outside how much flexibility President of Baseball Operations Alex Anthopoulos and his team have. Should the Braves end up paying the luxury tax in 2023, the penalties they would face would be relatively minor. They would be taxed at a rate of 20% for every dollar spent between $233 million and $253 million. This would be followed by a 32% tax on expenses between $253 million and $273 million, and they would face stiffer penalties in the unlikely event that they exceeded that second tier penalty.

Finishing with a CBT number between $233 million and $253 million — which would be viable even if they re-sign Swanson — would result in a maximum of $4 million in additional fees. For a team that would already spend over $200 million on player payrolls, that’s a relatively modest additional sum. Financial penalties are escalating for teams that exceed the CBT threshold in consecutive years, but the Braves are expected to see about $55 million in guaranteed commitments off the books by the end of next season.

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