David Stearns will have plenty of money to spend, but there are limits to consider.
We’re at the start of a very exciting offseason for the Mets. A deep playoff run has established the start of a new contention window, and more than $150M in money is coming off the books. David Stearns has already all but promised to spend a significant portion of that money on marquee free agents (looking at you Juan Soto).
Steve Cohen certainly has the budget to support significant expenditures, but there’s one additional obstacle; the competitive balance tax (CBT), also known as the luxury tax. You can find a digestible and comprehensive breakdown of the luxury tax here, but we can hit the key points. In short, if any team has a luxury tax number over $241M, they will pay a tax on the overages. For most teams, that’s 20%. For the Mets, as a third-time tax repeater, that tax rate would be 50%.
The tax is progressive as well. For every dollar between $20-40 million over the tax (so $241-261M), an additional 12% surcharge. Similarly, there is a 45% surcharge for dollars between $40-60M (42.5% for first time offenders), and a final 60% surcharge for all dollars $60M above the tax.
Let’s work a couple examples; if the Mets have a luxury tax number of $250M, they will pay a tax of $4.5M-$9M in overages at a 50% tax rate. if they spend $291M, they’d pay a tax of $31.65M-$50M in total overages at a 50% tax rate plus $20M above the second threshold at a 12% surcharge plus $10M above the third threshold at a 42.5% surcharge. Up it to the Mets 2024 payroll figure—roughly $317M—and the tax bill is a whopping $71.8M. Hopefully this demonstrates just how quickly this number can escalate.
The financials aren’t the most significant penalty, or at least they shouldn’t be for the Mets given their owner. No, the more frustrating penalty is draft related. If a team is more than $40M over the threshold, their highest selection in the draft is dropped 10 picks (unless that selection falls within the first six picks). This is why the Mets picked 19th in 2023 instead of 9th, a significant reduction in both the quality of players available (though we’re high on Carson Benge) and their bonus pool money available.
At present, the Mets have roughly ~$161M committed to the 2025 roster. That figure leverages arbitration projections from MLBTR, assumes no players will be non-tendered, assumes no players accept a QO from the Mets, and also assumes that Phil Maton’s option is exercised. That would give the Mets roughly $80M of room below the first tax line and $120M below the third.
Simply put, staying below the first threshold is probably not realistic given the number of additions the roster likely needs this offseason. That means that the Mets likely will not reset their luxury tax penalty anytime soon, a cost Steve Cohen’s wallet will have to bear. However, staying under the third threshold and avoiding draft pick penalties does seem feasible. One could fit contracts for Juan Soto, Sean Manaea, another free agent starter, and some depth pieces on the bench and in the bullpen comfortably into a $120M of luxury tax space.
In any event, the Mets should have ample room to operate this offseason barring an extremely unlikely pivot from Steve Cohen regarding payroll. That should give David Stearns ample ammunition to build a strong 2025 roster and potentially protect their 2026 draft positioning at the same time.