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This article explains how baseball teams decide on player spending as part of a "Baseball Business" series. It covers the luxury tax system that MLB uses instead of a salary cap, how teams value players using metrics like WAR, and the difference between rookie contracts and free agency deals. The article discusses how market size affects team budgets, with examples showing why big-city teams can spend more than small-market ones. It emphasizes that successful teams balance fair treatment of players with smart financial planning, honoring contracts while being careful not to overspend on single players at the expense of building a complete roster.
May 25, 2025
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