Glossary

Definitions for the payroll, revenue and labor terms used on this site. For where the numbers come from, see About the data.

Payroll

Term	What it means
Cash payroll	Salary and bonuses a club pays its players for the season, as paid. Money deferred to later years counts when it’s paid.
CBT payroll	The figure the luxury tax is calculated on. It counts each contract’s average annual value for the 40-man roster and 60-day injured list, plus a per-club charge for player benefits and the pre-arbitration bonus pool.
AAV	Average annual value: a contract’s total value divided by its years. A 3-year, $30M deal counts $10M each year for tax purposes, however the cash is scheduled.
Deferrals	Salary paid after a contract ends. For CBT purposes, deferred money is discounted to present value, which lowers the tax number.

The luxury tax

Term	What it means
Competitive balance tax (CBT)	MLB’s luxury tax. Clubs whose CBT payroll passes a set line pay a tax on the amount over it.
CBT threshold	The payroll line where the tax starts: $244M in 2026. Rates rise for clubs that pay it in back-to-back years and for each tier above the line.
Surcharge	Extra tax on payroll far above the threshold. The higher the tier, the higher the rate.

Revenue

Term	What it means
Revenue (Forbes)	Forbes’ estimate of a club’s revenue, after revenue sharing and stadium revenue used to pay down debt, and excluding playoff revenue.
Operating income	Forbes’ estimate of revenue minus operating costs for one regular season, before interest, taxes and depreciation. It counts luxury tax payments as a cost and leaves out playoff revenue, franchise value growth and businesses owners run alongside the club. A negative figure isn’t the same as an owner losing money.
Revenue sharing	Each club pays 48% of its net local revenue into a pool that’s split evenly. Clubs with less local revenue get back more than they pay in.
Local media	TV and streaming deals a club signs for its own market, separate from national deals shared by the league. Most values aren’t public.

Players and contracts

Term	What it means
Service time	Days a player has spent on a major league roster. It decides when he can go to arbitration and free agency.
Pre-arb	Players with under three years of service time. Most earn close to the league minimum.
Pre-arbitration bonus pool	A league fund that pays extra to the best-performing pre-arb players.
Arbitration	Players with three to six years of service time. If player and club can’t agree on a salary, a panel picks one side’s figure.
Free agency	After six years of service time, a player can sign with any club.

Labor terms

Term	What it means
CBA	Collective bargaining agreement: the contract between owners and the players’ union that sets payroll rules, the tax, revenue sharing and more. The current one expires at 11:59 p.m. ET on Dec. 1, 2026.
Salary cap	A hard limit on what a club can spend on payroll. MLB has never had one.
Payroll floor	A minimum a club must spend on payroll.
Lockout	Owners shutting down the sport until a new CBA is signed.