The Major League Baseball season is still on hold for the time being. As of now there is no timeline nor do the two sides seem like they’re bending a great deal though there has been some concessions made on both sides, however small they are.
One of the main sticking points in negotiations is the Competitive Balance Tax more colloquially known as the luxury tax. It’s basically a salary cap that teams can go past when making their payroll, but if they do, they get taxed for every dollar they go over the cap with penalties increasing every consecutive year they do so.
Players have seen this becoming more and more like a hard salary cap as last year only two teams exceeded the $210 million threshold for their payroll while several others, including the Houston Astros, made sure to stay just below it and it was definitely a consideration in both free agency and at the trade deadline last year for many big market teams.
Astros fans should be on the players side on this issue if for no other reason than it would give the Astros a better chance of re-signing all-star shortstop Carlos Correa if the luxury tax threshold goes up.
Jim Crane has not been shy about spending money. The Astros payroll has been in the top five over the last three years including in 2020 when they went over the CBT for the first time ever and this past season when they were right up against it.
Right now the owners are offering to raise the CBT line from $210 million to $220 million for 2022 with gradual increases each year until the next collective bargaining agreement. The players are countering with it beginning at $238 million in 2022 and increasing each year.
Even with a possible shift of the CBT, you can count out the New York Yankees from pursuing Correa following the lockout, Bob Nightengale of USA Today reports.
Where they’ll end up we don’t know but the closer this line gets to the players side, the better news for the Astros and their potential to re-sign Carlos Correa.
For those of us lucky enough to have owners who are willing to spend to win, that $18 million difference without going over the luxury tax could be huge.
Most owners don’t want to throw money away for free by going over the luxury tax hence why so many get as close to it as possible without going over.
Only the Los Angeles Dodgers blew past it owing $85 million in tax penalties last season while the other team who went over was the San Diego Padres, their tax penalty being a measly one million dollars.
The players aren’t wrong when they say this is basically acting like a salary cap based on how many big money teams nuzzle up to the threshold without going over it.
So if the tax threshold gets raised and the Astros suddenly have $28 million dollars more a year to spend than they did last year, it could go a long way in at least having a chance to re-sign Correa.
The big sticking point between Correa and the Astros seems to be centered more on the years than the money.
But if the Astros can make him the highest paid position player for five years in terms of average annual value, could that help convince Correa to sign a five year deal with player options for the sixth and seventh year?
If the Astros were the Pittsburgh Pirates, the Cleveland Guardians or the Tampa Bay Rays, this conversation wouldn’t matter. But Jim Crane went right up to the luxury tax threshold this past year and even the trades they made at the 2021 deadline were with the luxury tax in mind and avoiding fines for going over it.
With Zack Greinke’s contract off the books and $28 million more dollars from the 2021 season to spend along with the luxury tax threshold going up every year, it at least makes it possible the Astros re-sign Correa and convince him on a big annual salary for five years to stick with the team.
If Correa is dead set on a 10-year contract then nothing will get done. But at least the prospect of raising the AAV (average annual value) to a level that could be negotiated to keep him even if it is for a shorter time is something that plays to the Astros favor.
Astros fans should be rooting for the players on this one if they want a true shot at re-signing Carlos Correa.