The Los Angeles Dodgers, the reigning World Series champions, are one of a record nine Major League Baseball teams who must pay a luxury tax bill before Jan. 21, according to the Associated Press.
The Dodgers owe $103 million, making them one of three teams -- the New York Mets ($97.1 million) and New York Yankees ($62.5 million) being the others -- with a luxury tax bill exceeding $50 million. Each of those three teams reached at least the League Championship Series, with the Dodgers and Yankees subsequently playing in the World Series.
The other teams who owe luxury tax bills over the next month include the Philadelphia Phillies ($14.4 million), Atlanta Braves ($14 million), Texas Rangers ($10.8 million), Houston Astros ($6.5 million), San Francisco Giants ($2.4 million), and Chicago Cubs ($570,000). In all, MLB teams owe $311.3 million -- that too is a record, toppling last year's figure of $209.8 million.
MLB's luxury tax (or Competitive Balance Tax) is a mechanism designed to discourage runaway spending. The calculations aren't based on actual year-to-year salaries for their 40-man roster players, but each player's average annual value -- a player on a two-year, $20 million contract will count as $10 million per season, no matter the actual breakdown. Teams are also charged for benefits and retirement funds.
There are multiple tiers to the luxury tax system, as well as multipliers that go into effect once a team earns repeat offender status. The tax line last season was $237 million (this coming season, that number will increase to $241 million). Teams who exceed the threshold by more than $40 million also suffer from having their top draft pick moved down 10 slots (unless said team chooses in the top six).