Earlier this year, MLB Trade Rumors formally launched the Payroll Tracker, a feature for Front Office Subscribers authored by Ethan Hullihen. Ethan has also written up this glossary for those interested in learning more about baseball’s economic landscape and the work that goes into his numbers…
LRD vs CBT
In my several years doing these calculations publicly, this is the question I get asked the most, so it’s important to explain the difference between the two calculations.
Competitive Balance Tax payroll—or more appropriately “Actual Club Payroll”, as the Collective Bargaining Agreement (CBA) refers to it—is the agreed-upon measure between the Major League Baseball Players Association (MLBPA) and Major League Baseball. With the calculations ratified in the agreement, it’s the figure that the sides are going to fight over when one accuses the other of not following the rules.
However, to be totally honest, it’s really just a “paper” number, with lots of accounting tricks written into the agreement that can increase or decrease the final total. For the most part, it’s based on the Average Annual Value (AAV) of contracts, which for one-year deals is the same as what a player actually makes in a year; however, long-term contracts are where it’s much more important. Meanwhile, what the league calls its Labor Relations Department (LRD) calculation, by-and-large, reflects actual cash being paid, making it a much more “true” valuation of outgoing payroll expenses in a given season.
AAV evenly spreads out the total guarantee of a contract—base salary, signing bonus, buyout, and deferred compensation—valuing that total in any given year of a contract. The hangup about this calculation is that it can often differ greatly between what a player actually was paid in total compensation versus the AAV of their contract.
To illustrate this, the Athletics are a great example of the difference in these two totals. After locking up a lot of their young hitters to long-term extensions, the A’s have quite a few backloaded deals on the books moving forward. The team has almost a $50MM difference between their CBT and LRD payrolls in 2026, with players like Lawrence Butler ($9,357,143 AAV vs $3,250,000 2026 salary), Tyler Soderstrom ($12,285,714 vs $1,000,000), and Jacob Wilson ($10,000,000 vs $1,000,000) accounting for that difference.
Finally, part of the CBT calculation—and a major reason why it’s so much larger—is each team’s share for benefits—which was $18,206,789 in 2025. Each team also shares an even split of the $50 million Pre-Arbitration Bonus Pool—$1.67 million per team—however, that is centrally funded, so it’s not really an actual expense for the teams.
Payroll Categories
As for the payroll estimates themselves, they are made up of 14 different categories. Below is a brief explanation of each, along with any assumptions baked into the calculation and some interesting tidbits about each.
Major League Salary
This section tracks players who are either active or on the injured list—thus making major league pay. It is only the share for the team being summarized, as players who are no longer active on any given team are denoted with “[New Team]”.
While a lot of these salaries are public, not all of them are, which can lead to incomplete information at some sites, whereas our tracker has every contract sourced. For example, other sites have Josh Rojas estimated at an $850,000 salary for the Kansas City Royals, while his actual salary is $2.5 million, resulting in a difference that is two thirds of the Royals’ actual ledger.
Subsequently, each players’ contract—as well as in the Minor League, Outright Assignment, and Termination Pay sections—is shown, with either the total guarantee or the one-year major league amount noted in the “Contract” column. Then the Average Annual Value (AAV) of the contract—or total guarantee divided by the number of years (in most, but not all, cases)—is listed, with a yearly breakdown of a player’s contract or remaining contractual control noted, with different colors denoting different contractual options or contractual control status—like yellow for minimum, purple for Super 2, etc.
While other sites have future guaranteed contracts, no other site is tracking every transaction made, which allows for in-season service time to be calculated and future contractual control to be tweaked as necessary.
For example, MJ Melendez of the Mets entered 2026 as an Arb2 player after qualifying for Super 2 after 2024, meaning he would have projected to hit free agency after 2028. This is how every major site currently shows his future projection; however, he is not currently tracking to earn enough service to surpass 4.000 years after 2026, pushing back his clock another year. This is reflected on our payroll tracker, not only for Melendez, but for every player after every transaction.
Minor League Salary
The major league salary for a pre-arb player isn’t technically “guaranteed”—they have an amount written into the contract that they are paid while on assignment. Guaranteed contracts do not have them, well, because they are guaranteed for the entire amount.
Salary being made in the minors is what is being tracked here, and it’s a major difference between other sites. While others are simply assigning one estimated lump sum, these figures are being tracked individually.
Finally, they are not estimates—they are sourced—as minor league salaries are barely ever reported and are something you won’t find anywhere else.
Outright Assignments
When a player clears waivers and is assigned to the minors outright, their salary still counts against payroll. It didn’t used to be this way, but the Jose Tabata/Mike Morse trade in 2015 helped change that in the 2017 agreement, as Tabata was acquired because he was on outright assignment at the time of the trade, lowering the Dodger’s tax bill.
Anyway, usually a player will make their minor league rate after an outright—as it is a minor league assignment—unless the contract is guaranteed. We choose to note a player’s minor league rate in this section (we had to pick one) since that is most common outcome. Players without minor league rates will show as zero in the “Contract” column here.
Termination Pay
When a player is released while on a guaranteed contract, the team still owes them Termination Pay—whatever they would have been committed to pay them if they were still on the roster. Usually this is the player’s guaranteed major league rate, which is what we chose to go with here in the “Contract” column, but again, if a player is actually making their minor league rate after being released while on assignment, this column will read as zero, same as above.
Signing Bonuses
Despite usually being paid all upfront—or in two or three payments, but usually not much more—signing bonuses are prorated over the life of a guarantee. This will be shown for LRD purposes, while it reads zero for CBT because they are baked in to the AAV assigned in the major league section.
Also, these amounts do not follow a player after a trade—which is a common misconception—they stay with the team that signed the player.
Option Buyouts
Sometimes when a contractual option (Club, Player, Mutual) isn’t exercised, the player receives a buyout in lieu of the salary. For LRD payroll, these payments hit in the year in which the option would have covered, while they are already accounted for in the AAV of the prior years in which a contract was guaranteed.
For example, Brandon Woodruff had a $10 million buyout on a 2026 mutual option with the Milwaukee Brewers as part of a two year, $17.5 million deal that covered 2024 and 2025. Woodruff’s AAV for those years was $8.75 million—including the buyout—so nothing hits CBT payroll in 2026.
Buyouts will come up again later in another section, so keep a pin in this for now.
Award/Performance Bonuses
Many contracts have incentives baked in to account for player performance—despite being called “performance bonuses”, rules state teams cannot agree to bonus that pays for “player, pitching or batting skill”, so take that as you will.
Our payroll tracker is not only updated with these on a weekly basis, but also contains sourced information for contracts that no one else has—like Tejay Antone, who has already earned $30,000 (and counting) in games pitched incentives with the Cincinnati Reds.
Cash Considerations
Sometimes when players with large contracts—or if teams are trying to offload unwanted contracts—cash is included to make the deal work better financially for both sides. The rules stipulate these amounts are calculated for LRD and CBT based on when the payments are to happen and how many guaranteed years are being covered—all which are accounted for here, of course, while other resources aren’t doing so correctly.
Small trades in which salary is not being covered—typically designated players and other lesser transactions—can only be for as much as $100,000. Despite the amounts sometimes being less—not often, but sometimes—that amount is used as the assumption, since the actual amount is usually unknown 99% of the time. No other resource is accounting for these transactions in their calculations.
Assignment Bonuses
Certain players will sometimes have stipulations in their contracts to be paid a bonus in the event they are traded. This payment, which can either be made by the assignor or assignee, goes towards payroll for the team that made said payment.
Adjustments
This is a tricky one. Sometimes contract machinations can happen that can mess with the AAV of a contract—things like a trade to a new team, the declining of a player option, or restructuring an existing contract.
Because payments of long-term contracts must “balance out”—actual cash paid (LRD) and AAV (CBT)—sometimes adjustments need to be made to assist in this balancing, and these are the amounts you will find in this section; however, it will only ever be for CBT totals, as it is the AAV that always needs to be recalculated.
Credits
I’ve typed so many words I’ve forgotten where, but somewhere above I probably talked about buyouts and how they are factored into the AAV of a long-term contract. Well, of course, that is under the assumption that those amounts actually get paid, but what if they don’t?
If a team or player nullifies a buyout by exercising an option, the AAV is off, as discussed in the previous section. The team can then take a credit in the year the option covers, perfectly balancing the two sides, and that is where these adjustments go.
Also accounted for here are the salaries for players which are suspended, meaning they aren’t getting paid and the team isn’t realizing those expenses.
Non-Cash Compensation
The rules stipulate that perks that a player receives not in the form of cash—hotel suites, plane tickets, interpreters, and a whole host of others—must be accounted for somehow. So, cash values for those are assigned to the team; however, the values aren’t known until after the season, if at all.
The values I’ve been able to source are weird in that not every team realizes them, despite most every team having players on the roster with these benefits. I haven’t really been able to figure out why (since it seems like a competitive advantage for the teams at or above the tax threshold), but some teams have amounts as little as a few hundred dollars for most every player on the roster, while others realize nothing.
One way or the other, no other resource is accounting for these values, but this tracker is.
Estimated Player Benefits
As noted above, every team in the league shares the cost of benefit plans and extended benefits for players, including but not limited to: workers’ compensation, unemployment, Continuing Education Programs, and social security.
While I’ve never been able to totally ascertain if teams actually pay this or just share the cost on paper, it still is something that bigger spenders must account for, as it goes towards their CBT payrolls and not LRD.
Pre-Arbitration Bonus Pool
As part of the 2022 Collective Bargaining Agreement, the players achieved a new form of compensation—the Pre-Arbitration Bonus Pool—in which players yet to reach arbitration would receive a bonus for their performance above and beyond their peers.
The pool totals $50 million, and while teams do not pay these bonuses themselves, everyone does share in the cost, with every team receiving 1/30 of the costs ($1,666,666.67).
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