Which MLB teams are spending the most and which are pinching pennies?
is an outlier in the American sporting landscape in that teams do not operate under a salary cap. There is no limit to the amount of money organizations can spend in pursuit of the World Series. On the other side of the coin there is no salary floor, which creates widespread disparity across the 30 teams.
Clubs that exceed a predetermined payroll threshold must pay the Competitive Balance Tax, known more commonly a the luxury tax. This is an escalating figure that went up to $244 million for the 2026 season. A team's Competitive Balance Tax figure is calculated using the average annual value of each player's contract on the 40-man roster, plus any additional player benefit.Whether one thinks the latitude for teams to spend whatever they want is a good thing for baseball or bad, there is no argument against the blatant evidence thatThere are many ways for teams to construct contracts. For this exercise we will use the average annual value for each player's current contractThe winning formula in baseball is not as easy as "highest payroll equals World Series" but historic trends suggest that small-market, tight-pursed teams have an uphill battle on their hands competing against the big boys. Nineteen of the past 26 World Series champions have been in the top-10 of payroll.Kyle Koster is an assistant managing editor at Sports Illustrated covering the intersection of sports and media. He was formerly the editor in chief of The Big Lead, where he worked from 2011 to '24. Koster also did turns at the Chicago Sun-Times, where he created the Sports Pros blog, and at Woven Digital.
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