The Blue Jays could be approaching the limits of the luxury tax threshold this offseason

The Blue Jays could be approaching the limits of the luxury tax threshold this offseason

SAN DIEGO — In recent years, the Blue Jays Payroll has steadily increased, reaching historic levels for the franchise that has set its sights on building a championship-caliber club.

The expectation is that the team’s payroll will continue to rise for the 2023 season. How high? This is the information that this reception keeps closed MLB teams jockey to sign free agents. But during a briefing with reporters at the winter meetings on Tuesday, Blue Jays president Mark Shapiro said the team doesn’t see the competitive balance tax threshold as a “stumbling block” and he has the support of the property to spend above him, should they need to. .

“It’s not what’s going to limit us,” Shapiro said from his suite at the Manchester Grand Hyatt in San Diego.

Each season, there is a predetermined payroll threshold. Teams that spend above are liable to pay the CBT, often referred to as the luxury tax. For the 2023 season, the cap is set at $233 million.

A team has an active payroll and a luxury tax payroll, the latter of which is determined using the average annual contract value of each player on the 40-man roster, plus player bonuses. By this nature, CBT payroll exceeds active payroll and the tax kicks in if that number exceeds $233 million.

In the two decades since MLB’s current luxury tax system has been in place, the Blue Jays have never gone over that predetermined threshold. Speaking to reporters after the 2021 season, Shapiro was asked about the expenses of the CBT line and said “it’s not something I’ve thought about a lot.”

“I’m not sure how we’re currently built, let’s have the revenue to support a team going through the CBT. That doesn’t mean ownership won’t make the strategic decision at some point to go there,” he said at the time. .

More than a year later, Shapiro delivered a different message.

“We’re going to have a budget that we’re limited to,” Shapiro said. “But the CBT will not be what sets our budget.”

The Blue Jays estimated payroll for the 2023 season is $176 million and their CBT payroll estimate is around $201 million. by resource from the list.

As the Blue Jays continue to look to fill roster holes, including adding a starter and an outfielder, to build their 92-win team in 2022, he has wondered how willing owners would be, Rogers Communications.

Again, no one in the organization is tipping their hand toward a specific figure, but the message from the front office has been that they have the full support of ownership to build a winner.

Whether the Blue Jays actually break the $233 million threshold is another matter entirely. Just because Shapiro said they could doesn’t mean they will. But for a team like the Blue Jays, who aren’t a big spender but could comfortably reside in the tier just below, knowing that the CBT threshold isn’t impenetrable is important from a team-building perspective .

“The payroll is increasing in a way that I would say is commensurate (with) our team, our success and our expectations, which is to be a championship-caliber team,” Shapiro said. “We are not a team that works without a budget. I think almost every team has one. We certainly have limits. But the support and growth of this payroll is unprecedented in franchise history and remains very strong from ownership.”

Asked if anything has changed about its financial structure that has allowed the team to consider crossing the CBT threshold, Shapiro pointed to the “ownership commitment.”

“We’re still in that phase where our expenses exceed our income,” Shapiro said. “I think when we finish the renovation (of the Rogers Center) we’ll have more ability to compete within some of the upper levels of Major League Baseball, not necessarily the top teams in our division from a revenue perspective, but we will. certainly be able to be more in line with supporting those payrolls. But just as COVID presented massive challenges where ownership had a commitment and faith in the plan and wanted to see it through, we benefiting. And our fans continue to benefit.”

The Blue Jays may have a plan and the money to back it up, but they stayed quiet on the free agent front on the second day of the winter meetings, even as players they liked have left of the board, including the right-hander. Andrew Heaneywho signed a two-year, $25 million contract with the Texas Rangersand outfielder Cody Bellinger, who signed a one-year, $17.5 million deal with the Chicago Cubs.

Prospects for a long-term extension for the young core

Even if the Blue Jays ultimately stay under the CBT threshold for the 2023 season, the increased cost of their payroll will be something to watch in the coming years, especially as their young players get more expensive and slowly approach free agency. .

It hasn’t been that long since he felt it Vladimir Guerrero Jr. i Good Bichette they were rookies on a rebuilding Blue Jays team, but now both are just three years away from free agency. As pillars of the team’s core, the Blue Jays have long been interested in signing both players to long-term deals. That interest remains now, and according to Shapiro, the team continues to have conversations with both players to sign long-term extensions.

“Three years is a long time, but we are also aware that three years can come quickly and we will take advantage of what this means for our window to compete and always maintain an openness, a will and a desire to stay here longer,” he said Shapiro.

When talking in general terms about signing arbitration-eligible players to extensions, Shapiro has always talked about the concept of sharing the risk in these types of deals. Usually, for a deal to materialize, both club and player need to find the “sweet spot” they’re both comfortable with.

“Where are you comfortable with a level of risk? Us, with what the commitment means, and them with what they could potentially give up,” Shapiro said.

Presumably, the longer Bichette and Guerrero play in the majors and establish themselves as franchise players, the perceived risks of signing them to a long-term contract diminish for the team, which can better project the futures of these players and , therefore, feel comfortable with a major commitment. For players, however, the closer they get to free agency, the more likely they will see how they could fare on the open market.

“The closer they get to free agency, the more their risk equation changes,” Shapiro said. “It probably makes them less willing to give up the risk of what it means to be out there. Timing, it affects risk sharing and the sweet spot equation.”

Renovation of the Rogers Center

Rogers Center renovations are well underway, with demolition completed last month and work on the new construction beginning.

The early stages of the project have gone well, according to Shapiro, and the stadium is expected to be ready for the home opener on April 11, 2023.

The Blue Jays announced a two-phase plan to significantly renovate the Rogers Center in July. The first part of these renovations, which began as soon as the season ended, will create new social spaces throughout the stadium, raise the bullpens in the gardens and replace all the seats in the 500 floor. The goal is to transform the Rogers Center from a cavernous stadium to a more intimate experience that appeals to both dedicated and casual baseball fans.

“It will be done in time. We’ll be ready to go,” the Blue Jays president said. “I think as we’ve gone through it, we’ve been clear that there are certain things that absolutely have to be completed in order for us to play through this phase as well as the second one.” .

The main goal of the renovations is to improve the fan experience, Shapiro said, but a side benefit would be that the renovated stadium would lead to increased revenue, though it will likely take several years to show results.

“I think the hope would be that we create some amenities, some attractions, some experiences that are so attractive that the revenue comes from it, that more people want to come to our games and more people feel like it’s a fun place to be.” Shapiro said.

(Photo of Vladimir Guerrero Jr. of the Toronto Blue Jays, left, with Bo Bichette: Ron Schwane/Associated Press)

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