Cards Notebook: The specter of the luxury tax, outfield injuries, and pondering the bullpen game

As the regular season approaches and the injuries mount, let's hit a variety of Cardinals matters

Let’s jump in …

The luxury tax excuse is a hollow one

The luxury tax on MLB team payrolls, which is officially and misleadingly known as the Competitive Balance Tax (the tax has everything to with suppressing labor costs and nothing to do with league parity), is unfortunately a relevant matter right about now. 

That’s because of where the Cardinals’ 2024 payroll currently stands, ownership’s unwillingness to advance into tax territory, and the pressing need for rotation help. All of that brings us to this recent nugget: 

I of course can’t speak to the accuracy of Olney’s insight, and I can’t speak to the notion that the Dallas-Ft. Worth Metroplex is somehow a smaller market. But let’s take this as being reasonably reflective of Montgomery’s actual preferences. It tracks in that he’s played for both the Cardinals and Rangers, and perhaps as a native of a small city in South Carolina he’s partial to less intense work environments than those found in, say, New York, Philly, Boston, Chicago, and so forth. 

The Cardinals’ need for a front-line-ish arm like Montgomery is well established and is perhaps now even greater given Sonny Gray’s hamstring strain. No, you don’t make a nine-figure investment just because Gray may miss his first turn or two, but the need for a true No. 2/No. 3 starter behind Gray was undeniable even before that hammy betrayed us all. 

Now there’s this: 

Payroll for CBT/luxury-tax purposes is calculated using the average annual value (AAV) of each player’s contract on the 40-man roster. With most long-term contracts, the AAV is going to be different from the year-to-year salaries because of back-loading, front-loading, and or deferrals. CBT payroll also includes various miscellaneous club expenses like player-benefit contributions and deposits to the salary pool for pre-arbitration players. As Jones hints, FanGraphs/Roster Resource tabs the Cardinals’ CBT payroll for 2024 at a bit more than $215 million (let’s emphasize CBT payroll is very different from the Opening Day, active-roster payroll we’re used to seeing and talking about). Their calculations pass the sniff test. 

The CBT penalizes teams for exceeding the payroll threshold and layers on additional penalties based on how much they’re above the penalty line and how many consecutive years they’ve been in penalty territory. For 2024, the CBT line is $237 million, and the Cardinals indeed appear to be a little more than $21 million shy of that threshold. So here’s how it works for teams over the line: 

• First year over the CBT threshold: 20% penalty on all overages. 

• Second consecutive year over the CBT: 30% penalty on all overages.  

• Third or more consecutive year over the CBT: 50% penalty on all overages.

Additionally, the amount by which team is over also determines the bill: 

• $20-40 million over CBT threshold: 12% surcharge.

• $40-60 million over CBT threshold: 42.5% surcharge for first year; 45% for each consecutive year after that. 

• More than $60 million over CBT threshold: 60% surcharge. 

As well, teams that are $40 million or more over see either their first- or second-round draft pick dropped 10 spots, depending on where their top pick lands. For repeat offenders who are way over the line, these are steep penalties, and they have the desired effect of suppressing top-end payrolls, or at least getting big spenders to seek a “penalty reset” by getting under the threshold for one year. 

This, however, does not describe the Cardinals. The Cardinals are among the subset of teams for whom the CBT line is more convenient excuse than anything else. “It would be irresponsible for us to push our payroll into penalty territory,” the owner/paterfamilias solemnly intones as fans nod at the self-evident sensibility of his remarks. 

You, however, are free to deny the concocted premise – that it would be irresponsible – and that’s especially the case with the Cardinals. The Cardinals have never before exceeded the CBT threshold, so we’d be talking about the mildest suite of penalties levied against them for the crime of trying to win. 

Insofar as Montgomery is concerned, let’s go with six years, $150 million, which is what MLB Trade Rumors predicted he’d get on the market at the start of the offseason. That’s $25 million per, and that would push the Cardinals’ 2024 CBT tax to a little more than $240 million. That, in turn, would mean a tax of about $600,000 on the Montgomery commitment. That’s a pittance for an MLB franchise – less than the minimum salary. 

As well, such margins would make it quite easy to dip under the tax line for 2025 and reset the penalties (the CBT limit also goes up to $241 million next year). That’s assuming it’s not possible to defer enough salary to stay under the limit for 2024. Deferrals are a bit of a thing this offseason, you know. In the Cardinals’ circumstances, citing the CBT threshold as the budget limit is effectively arbitrary and tailored to sound reasonable to those who otherwise might be inclined to criticize the commitments of ownership. (Yes, I’m aware of the RSN situation, but the position here is that the Cardinals are probably going to be better off than most other teams when it all gets resolved.)

None of this is breaking news. We’ve known for a while that the Cardinals aren’t going to spend much more – and probably no more after Keynan Middleton and Brandon Crawford – because BD3 said so. We’ve known for even longer that the CBT line shall not be breached. There’s no real reason for this other than a lack of will on the part of the DeWitts, and it’s harming the roster and, by extension, the team’s hopes in 2024. 

The outfield situation