Although trade season got off to an early start this year, we typically view July 1 as the unofficial kickoff to the player swap meet. Trade rumors will be swirling for the next month. Regardless of who the Cubs may target in trade, they will try to avoid going over the luxury tax cap. This provides an upper limit on the average annual value (AAV) of players the Cubs will look to acquire.
As of today that limit is $23 million. By the trade deadline, however, it will rise to $32.7 million.
The luxury tax, technically called the Competitive Balance Tax (CBT), levies monetary penalties for exceeding a specific payroll limit. As of opening day, the Cubs were $11.3 million below this year’s cap of $197 million. Yet the Cubs are not limited to players making $11 million or less. Rather, two factors affect how much salary the Cubs can absorb without exceeding the luxury cap: 1) the AAV of the salary and 2) the number of games remaining in the season as of the trade date.
For luxury tax purposes, only the AAV of a player’s salary counts towards the cap limit, not the actual amount …Read the Rest
Source:: Cubs Insider