The Role of the NY Mets In Reforming Luxury Tax Agreements in 2026
The MLB lockout shook up the world of baseball for months heading into the 2022 season. One of the major contention points for the players association (“MLBPA”) when assessing a new bargaining agreement to end the lockout was the ability to increase the threshold of money spent on player salaries before the luxury tax was applicable. More specifically, the players wanted the tax threshold increased to $240 million, but many team owners wanted the threshold at a lower number to reduce the amount of capital spent on talent per year. The main takeaway is that the luxury tax serves as an “equator” between MLB teams. Since MLB does not have strict salary caps, the luxury tax serves the purpose of punishing exuberant organizational spending and upholding an “equal opportunity” of sorts within the league.
A record-tying amount of organizations paid the luxury tax in 2022. This year, the New York Mets, Los Angeles Dodgers, New York Yankees, Philadelphia Phillies, Boston Red Sox, and San Diego Padres were all required to pay the tax. Five of the six aforementioned teams made the MLB playoffs this season, and four are still in contention for the World Series title for the 2022 season. Perhaps the most notable of the high paying teams that appeared in the playoffs this season was the New York Mets.
The Mets were undeniably successful this year, with a final record of 101 games won and 61 games lost. Although the Mets clinched a playoff spot with a win against the Milwaukee Brewers in mid-September, much of the team’s success throughout the season stemmed from owner Steve Cohen’s willingness to expand the club’s payroll. Cohen has exceeded the threshold for the luxury tax every year since 2020, when he took over as majority owner in hopes of building a World Series winning team. The most notable recent acquisition was Max Scherzer who, in combination with deGrom and Alonso, helped to mold the Mets’ depth chart into its current state. The high spending on behalf of the organization, plus the high performance of the Mets’ players this season resulted a great regular season record and the team making the playoffs.
Witnessing the success of the Mets and the other high-paying organizations who paid the luxury tax begs the question of whether the luxury tax threshold should be increased. The threshold has seen little increase in recent years, usually only inflation adjustments, despite recent large changes in profits. The start of the 2022 MLB season was characterized by a lift on stadium capacity limits that were heavily enforced during the COVID-19 pandemic, the introduction of exclusive media deals with providers like Apple TV and ESPN+, and high-ticket sales that seemingly cushioned the already high earnings of many MLB teams. The initiatives for further media exposure and higher profits by the MLB have seemingly worked in favor of the highest paying teams, as five of the six teams paying the luxury tax in 2022 had higher ticket sales and average attendance at games.
Taking into account the notable increase in profits, game attendance, and financial resilience against COVID-19, it is likely that the CBA agreement in 2026 will have to include an increase in luxury tax threshold (and an increase of pay for players) to avoid another lockout. Should the Mets’ successes this season demonstrate anything to MLB, it is that increases in pay for the players leads to high performing results and higher game attendance. However, it also proves that increases to the luxury tax threshold need to be implemented in conjunction with stricter punishments for organizational overspending if the league wants to level the playing field between teams and return to the true heart of healthy competition in baseball.
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