Toronto Blue Jays: An early look at projected 2024 luxury tax payroll

Projected 2024 Luxury Tax Payroll

With 16 arbitration-eligible players in 2024 on the Blue Jays current 40-man roster, including ace Alek Manoah, who should reach ‘Super Two’ status after next season, as well as All-Star catcher Alejandro Kirk in his first year of eligibility, they will again face significant payroll headwinds just from salaries for these players.

That number will surely be higher than the expected $45.6M in 2023 with Manoah and Kirk eligible, as well as another year of experience for the young core. The arbitration-eligible number would also change if non-core players are traded or cut from the 40-man roster.

However, Ryu’s $20M Average Annual Value (AAV) contract will drop off, as will Chapman’s $12.5M, Keirmaier’s $9M , Merrifield’s $8.8M salary for luxury tax purposes in 2023, plus the $5.5M for García and $3M for Bass. The $4.33M retained salary for Randal Grichuk in 2023 also drops off.

That assumes they don’t exercise the $18M mutual option for Merrifield, or the $5M club option on García, although that option converts to a $6M guarantee with a combined 110 innings or 110 games cumulative across 2022-23; García pitched 61 innings over 61 games in 2022, so would only need 49 innings pitched or 49 games in 2023 for his option to vest for 2024.

With the CBT (luxury tax) threshold set to rise ~$4M to $237M in the 2024 season, plus the above 2023 salaries removed from the 2024 payroll calculation, the Blue Jays should have ~$67M under the threshold to resign Chapman, pay the $6M guarantee on García's vested option for 2024, and pay the year-over-year salary increases for arbitration eligible players.

Note that does not assume trades, DFAs or new free agent signings, nor does it include any longer term extensions to buy out the arbitration years for young stars like Vladimir Guerrero Jr., Bo Bichette, Alek Manoah, Daulton Varsho, Alejandro Kirk, Danny Jansen or Jordan Romano.

Extensions for any of those players could cost anywhere from $80-120M AAV in active player payroll. That would take them above the $237M CBT threshold to the $250~290M range, triggering the luxury tax of 20% on all overages (or 30% if it was over for a second consecutive year), plus a 12% surcharge on overages $20-40M above $237M, or 42.5% above $277M.

New York Mets Owner Steve Cohen Smashes the $300M Barrier

A recent in-depth report by Evan Drellich of The Athletic (subscription required) on the Mets offseason free agent shopping spree noted ramifications for ther rest of MLB. With the 12 year, $315M contract for Carlos Correa, owner Steve Cohen has hiked his payroll near $380M before luxury-tax penalties,. As Drellich notes, “he’s taken his payroll to a total level the sport hasn’t seen ever. And relative to his peers’ spending, Cohen is an outlier the game hasn’t seen since George Steinbrenner.”

Under the new CBA - and as a second time offender - the Mets will be taxed at 90% for every dollar above the $293M upper luxury tax penalty tier. Cohen seems to have no qualms about paying a 90% tax on overages even above $300M.

The article cites another unnamed MLB official saying, “there’s no collusion. But … there was a reason nobody for years ever went past $300M. You still have partners, and there’s a system.” While “a system” certainly sounds a bit like “collusion”, fans of smaller market teams should be feeling some angst about payroll escalation for the wealthiest teams.

Given Rogers is one of the wealthiest ownership groups, could they be willing to engage in this payroll arms race and take on longer term contracts with higher AAVs for their young core? Such extensions could easily drive the 2024 payroll to the $250-290M range and trigger luxury tax penalties.

The Yankees ($292M estimated luxury tax payroll for 2023) have approached that upper tier already as well, but they compete directly against the Mets in the New York market. Per RosterResource, the Padres ($267M), Phillies ($251M) Braves ($240M), Dodgers ($233M) and Blue Jays ($233M) are also in luxury tax territory for 2023.

And judging from the arbitration eligible Jays in 2024, plus Chapman and García, plus potential long term extensions for younger stars and new free agent signings, the Blue Jays will be above the luxury tax threshold in 2024, although still likely well below the Mets and Yankees!