According to the Associated Press, the Phillies officially owe $6.98 million for exceeding MLB's Competitive Balance Tax in 2023.
Eight teams must pay the CBT, often referred to as the luxury tax.
The harshest penalty ever went to the Mets, who have to pay almost $101 million, breaking the Dodgers' previous record of $43.6 million from 2015.
Eight teams, the most ever, have exceeded the initial tax threshold of $233 million:
• Mets: $100.8 million over
• 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
• Rangers: $1.8 million
As you can see, some of the fines are significantly different from the others. This is because there are four levels of penalties (over $233 million, over $253 million, over $273 million and over $293 million) and these are increased for repeat offenders. The Phillies made a profit of around $256 million.
It was the second straight year the tax was exceeded for the Phillies, Mets and Yankees, who pay 30% on their overtime, instead of the 20% paid by the newcomers – 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 $1.8 million and $6.98 million, essentially the cost of a decent veteran reliever.
A year ago, the Phils' tax was just under $2.9 million.
The Mets were hit the hardest after crossing the highest tax threshold of $293 million and ending up with a CBT payroll of $374.7 million. For closings of more than $60 million, they also pay a 60% premium on every dollar between $293 million and $374 million.
Additionally, the Mets' first-round pick will be moved back 10 spots in the 2024 draft.
In total, MLB collected nearly $210 million from its eight luxury taxpayers. This money will be used to fund player benefits and individual player retirement accounts, while the other half will be distributed to eligible teams for revenue sharing.
The luxury tax threshold increases 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.
As it stands, the Phillies are right at the luxury tax threshold for 2024, but the exact numbers will be calculated at the end of the season. They still expect to add at least one more reliever and a fourth outfielder this winter and could make more money at the trade deadline if they find themselves in a promising position.
The Dodgers, Mets and Yankees each have a projected payroll $40 million to $50 million higher than the Phillies.