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The competitive balance tax is a weak excuse for the Mets not to spend

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With a fantastic core, the Mets shouldn’t limit their ability to contend because of a small tax.

New York Mets Introduce Carlos Beltran - Press Conference Photo by Rich Schultz/Getty Images

Figuring out what the Mets’ actual payroll has been at any given time over the past decade-plus has always been something of a shell game. But as this offseason continues and the team presumably ignores the best—and most expensive—of the available free agents, it’s important to remember that there’s a difference between actual payroll and the theoretical payroll that’s used by Major League Baseball to determine whether or not a team will be required to pay a competitive balance tax, commonly referred to as the CBT or luxury tax.

Those two figures are spelled out over at Cot’s Contracts, which has always been a great resource for these sorts of things. As an example of the difference, the Mets’ Opening Day payroll for the 2019 season was $158 million, per Cot’s, but their competitive balance tax “payroll” was $197 million. Part of that is because that calculation includes the average annual value of a player’s contract regardless of what that player is earning in any particular year, and part of it comes from player benefits, which are the same for every team and included in the calculation—currently estimated at $15 million per season.

For the 2020 season, the threshold at which a team would be charged the CBT is $208 million. A team that exceeds that threshold for the first time, which would be the case for the Mets, pays a 20 percent tax—but only on the amount by which they surpassed the threshold. There are additional taxes for teams that exceed it by $20 to $40 million or more than $40 million.

Right now, Cot’s has the Mets projected for a $174 million payroll and a $188 million CBT calculation for the 2020 season. It’s very important to note that those figures include David Wright at $12 million for real payroll and at $17.25 million—the average annual value of the contract he had—for the CBT. Specific details of the team’s settlement with Wright haven’t been made public, but it’s been common knowledge for years that the team has recouped the vast majority of what he’s been paid since his spinal stenosis diagnosis through insurance. That doesn’t make a difference in the CBT number, but it absolutely make a difference in the real payroll for the roster.

It has also been public knowledge that the Mets have been able to recoup the vast majority of the $29.5 million they paid Yoenis Cespedes in 2019—likewise via insurance—and would continue to do so if he’s unable to return in 2020. There hasn’t been any update on a timeline for his potential return to the field yet, but there’s a real chance that the Mets will get additional relief in terms of his salary.

But let’s assume Cespedes plays a full season, putting the Mets on the hook for all of what he’ll earn, and that the team is getting back $9 million in insurance—75 percent of the $12 million from the final year of David Wright’s contract. Even going up to $20 million over the CBT threshold would result in just $4 million in tax, less than half the amount that’s being recouped on Wright’s salary. Given the additional tax charged at higher overages, the Mets would need to be roughly $28 million over the $208 million threshold just for the tax to be a wash with Wright’s salary.

And even if the Mets blew past the CBT threshold by more than $28 million, the odds are very good that they’d be able to get back under it very quickly. Yes, they’ll have players who earn raises in arbitration for 2021 and beyond, but their guaranteed salaries and estimated CBT payrolls drop off precipitously following the 2020 season.

So as things play out this winter, remember all of that. If the Mets are out on Gerrit Cole, Stephen Strasburg, and Anthony Rendon and luxury tax comes up as the reason why, remember that the tax, relative at a major league team’s budget, would be an extremely low amount.

The Mets have a great core right now, a huge chunk of which is earning very, very little by major league standards. If the team chooses not to spend and backs that stance up with the CBT, it is making an active decision that prioritizes avoiding a small, temporary financial burden over giving Jacob deGrom, Pete Alonso, Jeff McNeil, Michael Conforto, Amed Rosario, and their teammates—plus new manager Carlos Beltran—their best chance at making it to the postseason.