Post by Commissioner Erick on Sept 4, 2017 22:57:11 GMT -5
Hey everybody, I wanted to get everybody's awareness on an issue. Most of the constitution of the league is copied over from another commissioner I've been in two leagues with. Way in the back end of the league, I copied the luxury tax settings over.
Those settings state that there is a soft cap of 170% of the league average payroll. If a team is 170% of the league average, then that team will be taxed 20% of their money above that soft cap.
Right now at 170%, no team would be affected, which is not in the spirit of what Revenue Sharing is supposed to promote and accomplish. Most leagues have the number set to 20%.
I would like to request making a tweak to get the PBA in line with other leagues which use 120%. Revenue Sharing goes into affect the first day of the offseason so this rule has not had any tangible affect on any team so far. It's merely forward facing. Before I do so, I want to make sure people see this, are aware of this, and can propose any counter arguments.
Post by Ben_Dodgers on Sept 5, 2017 0:07:32 GMT -5
What is the tax rate, and what would happen to the money paid in taxes?
In MLB, Revenue Sharing and the Luxury Tax are two separate things. Luxury taxes aren't distributed back to other teams but used by the league to fund other things. It sounds like they're kind of being combined here, though.
Based on the latest reports, the current average payroll is $125 million. 120% of average would be $150 million (11 teams are above that). 170% is $212 million (everyone is under that). 150% is $187 million (only Boston exceeds that now - I'm not sure if that was true at the beginning of the season).
I guess I'd rather see this closer to 150% than 120%. As a team that's likely to be well below the average payroll for a while, I think a lower cap would make it harder for me to trade away high salary players, as other teams would be more worried about exceeding the cap.
Post by Commissioner Erick on Sept 5, 2017 6:33:16 GMT -5
I think for all intents and purposes OOTP uses the Luxury Tax as a way to redistribute funds since they aren't using, to my knowledge, the specific formulas for revenue sharing that the MLB does.
From the manual:
The league sets a "Soft Cap" as a % of the league average payroll, and a "Tax above Soft Cap" as a %. On the first day of the offseason, OOTP totals the payroll expenses of all teams in the league and averages them. It multiplies this number by the Soft Cap % to determine a cap figure. Any team that spent over this cap pays the "Tax above Soft Cap" into a revenue sharing pool. This pool is split equally between the bottom spending teams.
There's something incorrect about who receives the funds in that it isn't proportional to lowest spenders if it's "bottom spending teams," but i think in principal, the tax acts the way it should for the teams paying the tax. We just need to determine how much is "correct."
Post by TorontoGM_Joe on Sept 6, 2017 9:16:24 GMT -5
Does having the national media contracts set to being fixed, rather than based on market size, mitigate the need for luxury tax? It seems like small market teams are already being put on a more level playing field because of this setting
I would like to propose the option of the "flat tax", which taxes revenue rather than expenses. At least, that is how I think I understand it. My concern is that if a mid-market team had a VERY generous owner, they could be taxed via the luxury tax pretty harshly. If the owner dies and is replaced by a more frugal one, the team will not only have to deal with a shrinking budget, but also a hefty tax on the way down.
Revenue is more stable, regardless of ownership. Yes, it penalizes big market teams, but they usually have large payrolls anyway.