The Phillies barely stayed under the luxury tax in 2021

Earlier this week, the Associated Press released a report on 2021 league payrolls. Overall, payrolls were down 4% from 2019, the league’s last full season.

The Phillies, along with the Yankees, Mets, Red Sox and Astros, finished with a tax payroll within $4 million of last season’s $210 million collective bargaining tax threshold. According to information sent to clubs from the commissioner’s office and obtained by the Associated Press, the Phillies’ final CBT number for 2021 was $209.4 million. If you do the math, the Phillies were just $600,000 shy of going over the luxury tax.

Philadelphia finished third in MLB in luxury tax payroll behind the Padres ($216.5) and Dodgers ($285.6 million). The Dodgers paid a $32.65 million luxury tax bill while the Padres were charged $1.29 million.

Luxury tax payroll is calculated using a contract’s average annual value. For example, Andrew McCutchen earned $20 million in the final year of his three-year, $50 million deal, but his average annual value of $16,666,667 counted towards the Phillies’ luxury tax payroll. Also included in the calculation of the luxury tax payroll are the salaries for all players on the 40-man roster as well as a $15.5 million sum for player benefits.

The Phillies finished fourth behind the Dodgers, Yankees and Mets in real payroll at $192.4 million. The number is lower than the team’s luxury tax payroll because it reflects the actual salaries the team paid out to players in 2021.

Dave Dombrowski said at the trade deadline that ownership did not give him a mandate to stay underneath the $210 million threshold. Jayson Stark of The Athletic reported at the time that the Texas Rangers sent around $4 million in cash to Philadelphia in the Kyle Gibson and Ian Kennedy trade, which essentially helped them stay under the tax. Gibson and Bryce Harper also met performance incentives in 2021, which increased the Phillies’ CBT and real payroll obligations.

The Phillies already have about $182 million committed towards the luxury tax in 2022. The tax number next year could vary anywhere between the $214 million total the owners reportedly proposed and the $245 million threshold the players are seeking.

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