There is no salary cap in MLB. There is something called a 'luxary tax'. This is a 'tax' on the amount of salary over a threshold as decided by the labor agreement between the players and management. For 2008, this threshold is $155,000,000. Any team whose total salaries exceed this threshold will have to pay a 'tax' on the amount over the threshold. This tax is 22.5% for teams that have gone over the threshold for the first time, 30% for teams that have gone over the threshold for the second time, and 40% for teams that are over for the third time or more. The money accumulated from luxary taxes is placed in a fund and divided among small market teams.
Chat with our AI personalities