Sometimes called a competitive balance tax, what is the name for the financial penalty that large market baseball/basketball teams such as the Yankees or the Knicks must pay for spending more than a particular threshold?
Luxury tax (sports) "Technically called the 'Competitive Balance Tax', the Luxury Tax is the punishment that large market teams get for spending too much money. While MLB does not have a set salary cap, the luxury tax charges teams with high payrolls a considerable amount of money, giving teams ample reason to want to keep their payrolls below that level." The threshold level for the luxury tax will be $189MM in 2014 (up from $178MM from 2011-2013) and will remain at $189MM through 2016. From 2012 through 2016, teams who exceed the threshold for the first time must pay 17.5% of the amount
Major League Baseball luxury tax a competitive disadvantage against rich teams. Major League Baseball implemented the “competitive balance tax” in 1997 to keep a competitive balance in the league. At the beginning of each year, a threshold is set by the Commissioner's Office of Major League Baseball that limits how much a team can spend on their players. In Major League Baseball, the “competitive balance tax” allows teams to go over the threshold, but at a premium. The goal of this is to encourage big spending but to still maintain balance in competition. Major League Baseball's tax has undergone several changes since 1997. The 1994