How Does the New Competitive Balance Tax Affect the Phillies?

In the 2022 MLB CBA, set to be ratified at 6 p.m. Thursday evening, the luxury tax threshold has been raised over 9% from $210 million to $230 million. This will give the Phillies plenty of room to spend before Opening Day.

© Kim Klement-USA TODAY Sports

The Philadelphia Phillies currently have $178,692,948 committed to their luxury tax salary. Before the ratification of the 2022 MLB CBA, the competitive balance tax was set at $210 million. 

Now that total has jumped over 9% to $230 million for the first luxury tax threshold. The Phillies had just over $31 million to spend before hitting the luxury tax in 2022, now they’ll have $51 million to spend.

Phillies owner John Middleton has made it very clear in the past that he will not exceed the luxury tax for anything less than a championship contender. Now the Phillies could become that championship contender without even clearing the first luxury tax threshold.

Philadelphia’s problem since 2018 has been a lack of depth. They have top level stars on huge contracts like Bryce Harper ($25.4 million AAV), Zack Wheeler ($23.6 million AAV) and J.T. Realmuto ($23.1 million AAV), but they’ve been missing the role players to replace those stars when they get injured.

That extra $20 million in spending room will afford the Phillies a huge level of possibilities. Now they’ll be able to sign at least one more high-level player and have room for a variety of utility players to fill the bullpen and bench.

They could also go “all-in” with their current strategy, signing two top level players, perhaps Kyle Schwarber, who’s been linked with the Phillies repeatedly, and Kris Bryant, who could fill multiple positions, from third base to outfield, as an elite utility man.

That money could also be used to extend expiring contracts currently on the roster. Rhys Hoskins and Aaron Nola are only under contract through 2023, while Zach Eflin is set to become a free agent this offseason.

Though there are multiple paths the Phillies could send the extra $20 million, more importantly, it gives the Phillies flexibility in their plans.

If Phillies President Dave Dombrowski now wishes to extend all three expiring contracts, he can. If Dombrowski wishes to spend $35 million on an elite bullpen, he can. If the Phillies want to trade for a high-risk, high-reward contract like Mike Moustakas to be a bench bat, they can handle his salary.

As MLB free agency resumes at 6 p.m. ET on Thursday, expect a flurry of moves all across the league and for the Phillies to be involved. They have a variety of holes to fill, from shortstop to left field and center field, to a leadoff bat and bullpen.

The Phillies will need to make plenty of moves to be a competitive team come Opening Day, set for April 7, but now they have plenty of money to do so.

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