Chicago Cubs: Big market teams and players are hurt by the luxury tax.
The biggest issue with the current collective bargaining agreement is the luxury tax. If teams spend more than $206 million on player salary this season they are over the luxury tax. The further over the luxury tax and the more consecutive years a team is over the luxury the more severe the penalties.
In 2018 the Cubs, Dodgers and Yankees all stayed under the luxury tax to reset their penalties. That was at least one factor that led to last year’s slow offseason. Three of the biggest teams were trying to stay under the luxury tax.
This year according to a leaked internal memo for investors, the Dodgers are once again trying to stay under the luxury tax. The luxury tax is essentially becoming a salary cap. Even if a team doesn’t try to stay under it every year, the desire to reset the luxury tax encourages teams to stay close enough to it that they can get below it every few years or cycle down below it when a competitive window closes.
The luxury tax was put in place to help with the competitive balance between the big market teams and the small market teams. It might be helping with that a little bit. But it sure feels like the Yankees, Red Sox and Dodgers are only minimally impacted by the luxury tax. Whereas players limit how much the biggest spenders can spend both on superstar contracts and on depth players.
Now that the Cubs are finally spending like the big market team that they are, I don’t want them to be held back by the luxury tax. I’d like to see the luxury tax system done away with completely. I know the players, their agents and the large market teams would too. The only group that likes the luxury tax are the small market clubs. So why did the players agree to a luxury tax?
Perhaps the small market teams should be given a bigger piece of national broadcast and streaming deals instead of the current luxury tax system.
Changes will be made to the next collective bargaining agreement. I hope that it doesn’t take a work stoppage for that to happen. I’m also hoping the changes make sense, fix some obvious problems and don’t unfairly disadvantage the Cubs.