In the first in-person meeting this year between MLB and its players association, baseball owners proposed a novel idea: a salary floor.
The owners’ concept would introduce a $100 million payroll minimum for MLB’s 30 teams and a lower luxury tax threshold, per The Athletic.
The current system introduces a 20% tax on payrolls over $210 million. The owners’ proposal would lower the threshold to $180 million, raise the tax to 25%, and introduce additional tiers at higher levels.
Funds from the tax would go to smaller-market teams, as they do now.
- Seven teams have projected 2021 payrolls below $100 million.
- Eight others would currently exceed a hypothetical threshold of $180 million.
The MLBPA has sought to incentivize teams to spend more and would likely resist a lower luxury tax threshold.
The players have pushed proposals that would allow them to reach free agency sooner. MLB players typically play their first three years at league-minimum salaries, followed by three years under team control with salaries dictated or informed through the arbitration process.
This leads to many scenarios in which salaries do not correlate with production.
American League MVP frontrunner Shohei Ohtani is making $4.25 million this year — almost exactly league average ($4.2 million). Breakout phenom Vladimir Guerrero Jr. is making a league-minimum $605,400.