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Major League Baseball luxury tax
Competitive balance tax in Major League Baseball
Major League Baseball luxury tax
Major League Baseball (MLB) has a luxury tax called the Competitive Balance Tax (CBT). In place of a salary cap, the competitive balance tax regulates the total sum of money a given team can spend on their roster. Salary caps are common across professional sports leagues in the United States. Without these measures, teams would not be restricted on the amount of money spent on players' salaries. Therefore, teams with greater funding or revenue would possess a competitive advantage in their ability to attract top talent via higher salaries. MLB first implemented the competitive balance tax in 1997 to reduce anti-competitive behavior in the league. The collective bargaining agreement (CBA) between MLB and the Major League Baseball Players Association (MLBPA), the labor union representing the players, sets the competitive balance tax thresholds for its duration. Unlike some other professional sports leagues, MLB allows teams to go over the threshold; however, doing so results in the team being...
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