MLB payrolls saw a significant decrease of $1.75 billion from the initial $4.22 billion this season. The LA Dodgers topped the list with $98.6 million, though this is the lowest amount a league-leading spender has paid in twenty years.
MLB’s payrolls dropped as much as $1.75 billion from $4.22 billion this season. While the World Series champion LA Dodgers led with $98.6 million which is the smallest earning for the top spender in 20 years.
The cost for buying out unexercised 2021 options hit $58.2 million, doubling the $26.9 million spent in 2020. By investing heavily for the first time since 2017, Los Angeles managed to break their title drought dating back to 1988.
The New York Yankees held onto the second-highest spending spot for the second year in a row, spending $83.6 million. The Mets followed in third with $83.4 million, just as the team was acquired by Steven Cohen. Rounding out the top spenders were Houston at $81.4 million, the Cubs at $80.6 million, San Diego at $76.3 million, Washington at $76.2 million, Texas at $75.2 million, and the LA Angels at $69.9 million.
Boston's financial standing took a hit, sliding from first to 13th place with a payroll of $63.3 million. This decline followed a two-year World Series absence and the high-profile trades of Mookie Betts and David Price to Los Angeles.
Because of the pandemic, the season was delayed and the schedule was reduced from 162 games to just 60. Consequently, MLB and the players' association agreed to a proportional reduction in base salaries.
Had the season proceeded as normal with a full 162-game schedule and complete payouts, total payrolls would have actually increased by about 4% compared to 2019.
When calculating average annual values, benefits, and a COVID credit of $1.5 million per team, the Yankees, Houston, and the Cubs were the only teams expected to exceed the luxury tax limit. Under standard rules, the Yankees, Chicago, and Houston would have faced tax penalties of 30%, 42%, and 20% of their overages, respectively.
Due to the unique circumstances, these teams avoided the full tax burden. The Yankees paid $4,061,397 instead of nearly $11 million, the Astros paid $1,208,815 instead of over $3.2 million, and the Cubs paid $918,805 instead of roughly $2.4 million. However, they still would have received the compensation benefits of a luxury tax payer if they signed a free agent who had rejected another team's offer.
Philadelphia and the Dodgers narrowly avoided the tax threshold, missing it by $207.3 million and $204.6 million, respectively. Meanwhile, Boston's payroll sat at $184.9 million, a significant shift from 2019 when they paid a record $13.4 million in luxury taxes.