Mets need to exceed luxury tax for 2022 MLB season with perfect storm brewing

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Steve Cohen in front of two panel Citi Field 2021 TREATED ART
Steve Cohen in front of two panel Citi Field 2021 TREATED ART

The Mets are in the midst of an offseason where they will have to make a number of potentially franchise-altering decisions both on and off the field.

They'll make those decisions while determining just how much of the roster they want to shake up after going from first place to finishing with a losing record.

Along the way, the front office will be reshaped and a new manager will be hired.

Navigating this offseason won't be easy for the Mets with there being so many moving parts yet again, so soon after the necessary upheaval that took place following Steve Cohen's purchase of the team before the 2021 season.

One thing seems pretty certain, though.

If the Mets are intent on contending in 2022, they will likely have no choice but to exceed the luxury tax.

And SNY's Andy Martino wrote on Oct. 22 that he does not expect Cohen to be as disciplined about the luxury tax for 2022 as he was this past season.

Before delving into the tax threshold and the penalties that come along with exceeding it, it's important to note that with the Collective Bargaining Agreement set to expire on Dec. 1, the threshold and/or penalties could look different under the new CBA.

But the expectation remains that there will be a tax in place. And if there is a tax in place, the Mets will almost certainly have to blow past it.

As things currently stand, the Mets already have roughly $135 million committed to the payroll for 2022. That figure includes the return of Robinson Cano's contract to the books, but does not factor in any arbitration raises.

And while the Mets aren't locked in to deals yet with any of their arbitration-eligible players, the expectation is that many of them will be back.

Those players include Edwin Diaz, Brandon Nimmo, Pete Alonso, Jeff McNeil, Seth Lugo, and Miguel Castro. So add another $35 million onto the payroll for arbitration raises -- and that could be on the low end.

Aug 21, 2021; Los Angeles, California, USA; New York Mets center fielder Brandon Nimmo (9) rounds the bases after hitting a solo home run in the fifth inning of the game against the Los Angeles Dodgers at Dodger Stadium.
Aug 21, 2021; Los Angeles, California, USA; New York Mets center fielder Brandon Nimmo (9) rounds the bases after hitting a solo home run in the fifth inning of the game against the Los Angeles Dodgers at Dodger Stadium.

That takes the Mets to about $170 million before bringing back any of their internal free agents or making any external additions.

Want the Mets to extend qualifying offers to Noah Syndergaard and Michael Conforto? If they do and both players accept, they're at roughly $210 million (which was the luxury tax number in 2021). Even if only one of Syndergaard or Conforto is back on the QO, the Mets will already be close to $190 million.

What about the Mets' internal free agents? Want to bring back Marcus Stroman? That could cost in excess of $20 million per season. What about Javier Baez? He could cost $25 million or so per season. How about Aaron Loup?

When taking the above into account, it seems likely that the Mets could be above $210 million before making any external additions.

And coming off a season where the offense failed spectacularly and the starting rotation is in flux, some key outside additions will be needed.

Kris Bryant, anyone?

San Francisco Giants third baseman Kris Bryant (23) reacts after scoring against the Chicago Cubs during the eighth inning at Wrigley Field.
San Francisco Giants third baseman Kris Bryant (23) reacts after scoring against the Chicago Cubs during the eighth inning at Wrigley Field.

The Mets should also be considering contract extensions for some of their key players, like Alonso. And any extension like that would raise the payroll.

It's at this point that it should be pointed out that teams cannot get around the luxury tax by front-loading or back-loading contracts. The luxury tax payroll each season is calculated by the average annual value of a deal.

Now, exceeding the luxury tax should not be an issue for the Mets. And it can be argued that it is the prudent thing for them to do right now.

Cohen is on the record as being willing to exceed the tax, and the perfect storm really is forming now for the Mets to do it.

But if they do, they should look to get back under within three years at the latest. It would also behoove them to not blow so far past it that it becomes obscene.

Mets owner Steve Cohen
Mets owner Steve Cohen

Here's why...

Under the current rules, a club exceeding the threshold for the first time pays a 20 percent tax on all overages. A club exceeding the threshold for a second consecutive season pays a 30 percent tax, while three or more straight seasons of exceeding the threshold means a 50 percent tax. If a team that has exceeded the tax goes back below the threshold for a season, the penalty level is reset.

Teams that exceed the threshold by $20 million to $40 million are also subject to a 12 percent surtax, while teams that exceed it by more than $40 million are taxed at a 42.5 percent rate for the first time and a 45 percent rate if they exceed it by more than $40 million again in the following year(s).

For teams that are $40 million or more above the threshold, their pick in the MLB Draft (unless it's in the top six) is moved back 10 places. Teams that have a top six pick have their second-highest pick moved back 10 places.

Again, how these rules look could very well change under the new CBA.

But the Mets will not spend blindly, whether fans like it or not. There are only so many megadeals you can have on the books before the entire situation becomes untenable.

So even if you want the Mets to keep all of their key free agents and add someone like Bryant and other external free agents, it likely wouldn't make a ton of sense to also sign a big money player attached to a QO (such as Nick Castellanos) and surrender a first-round draft pick in the process.

Cincinnati Reds right fielder Nick Castellanos
Cincinnati Reds right fielder Nick Castellanos

Out of control spending with zero regard for the future is not the way any team -- including the Los Angeles Dodgers -- operates.

Spending blindly for a season or two while surpassing the luxury tax by a lot has been palatable for some teams, but those teams -- including the Yankees, who recently got back under the threshold in order to reset their penalty level -- do not exceed the tax forever.

As the Mets navigate this offseason and the possibility of exceeding the tax, it's fair to wonder how the new front office hires will feel about it.

But no matter who is running baseball operations, they will be inheriting an expensive roster and an expectation of immediate success.

If the Mets do indeed exceed the tax in 2022 (and perhaps in 2023 and 2024), it should be relatively easy for them to get back under sooner rather than later.

What will help the Mets do that is Cano's deal (at $24 million per year) coming off the books after 2023, plus the arrival of a wave of their top prospects in the next year or two -- including Brett Baty, Mark Vientos, Francisco Alvarez, J.T. Ginn, and Ronny Mauricio -- who could provide the Mets with potential impact talent at a relatively low cost.

For now, though, the time has come for the Mets to exceed the tax.