Major League Baseball’s financial landscape has evolved significantly in recent years. Record revenues, soaring franchise values, and new revenue streams are shaping the game off the field. This in-depth five-part analysis will break down how MLB teams make money and spend it. It will also compare financial figures across the league, and zoom in on the New York Yankees, the sport’s most valuable franchise.
Running a Major League franchise is an expensive endeavor. Teams incur costs ranging from player salaries in the hundreds of millions, down to day-to-day operational expenses. Below are the major expense categories for MLB clubs in 2025.
Player Payroll
This is by far the largest expense for most teams. MLB salaries have risen sharply in recent years, and top teams now carry payrolls well above $200 million. In 2024, a record nine teams exceeded the luxury tax threshold (set at $237 million payroll for 2024). The New York Mets led with a $347.7 million payroll, and the Yankees were third at about $316.2 million. These figures include the salaries of the 40-man roster and player benefits. Player payroll encompasses not only superstar contracts (like $30+ million annual deals for aces and sluggers) but also dozens of younger players making the league minimum (around $720,000 in 2025 after the new CBA’s increases). Despite a handful of big spenders, many teams spend far less, the A’s had the lowest payroll in 2024 at around $84 million. Generally, however, average team payrolls (including benefits) sit in the $150–200 million range. A new factor in 2025 is the recent unionization of minor league players, which has substantially raised minor-league pay (this cost is still much smaller than the MLB roster payroll, but teams now budget a few million more for their farm system players’ salaries).
Luxury Tax Payments
Teams that spend over the payroll threshold face the Competitive Balance Tax (CBT), commonly called the luxury tax. The tax rates escalate based on how far above the threshold a team goes, and whether they are a repeat offender. For example, in 2024 the Yankees and Dodgers paid the highest tax bills as repeat payors, Los Angeles owed an unprecedented $103 million in luxury tax penalties, while New York owed about $62.5 million in tax. These taxes are distributed in part to lower-spending teams and to player benefit funds. The luxury tax effectively makes a dollar of payroll much more expensive for the top teams (e.g. the Yankees paid roughly $1.62 for each $1 of salary for portions of their payroll due to repeater penalties). Teams treat luxury tax payments as another expense of doing business, some (like the Mets under owner Steve Cohen) have been willing to pay huge tax bills to assemble talent, while others try to stay just below the threshold to avoid the tax. Notably, the Yankees have paid luxury tax in most years since the system’s inception, reflecting their commitment to fielding a competitive (if costly) roster.
Revenue Sharing Contributions
As mentioned in the revenue section, high-revenue teams must pay out a share of their local revenues to support lower-revenue clubs. For teams like the Yankees, Dodgers, and Red Sox, this can mean $50–100+ million effectively redistributed each year. This is an important “expense” to account for when considering a big-market team’s profitability, a club might be operating at a loss on paper partly because tens of millions were transferred to other teams via revenue sharing. Conversely, small-market teams like the Tampa Bay Rays or Pittsburgh Pirates receive revenue sharing, offsetting some of their expenses. The new CBA (2022–2026) also instituted provisions to ensure recipients use those funds to improve their team (to discourage simply pocketing the money as profit). Still, revenue sharing is a significant cost for wealthy franchises and a key part of MLB’s financial ecosystem.
Player Development and Minor League System
MLB clubs typically field 4–6 affiliated minor league teams (from rookie ball to AAA). Running a minor league system incurs costs for player signing bonuses (amateur draft and international signings can run $10+ million annually), minor league salaries (which as noted have increased under the new Minor League CBA). Teams invest in academies (especially in Latin America), advanced training centers, and analytics for player development. While these costs don’t grab headlines like a free agent contract, they are crucial: clubs may spend $20–30 million (or more) on scouting, player development, and minor league operations per year. The Yankees, for example, have a robust farm system and scouting department that ownership funds to cultivate the next generation of Yankees stars.
Front Office and Coaching Staff
Beyond players, teams employ dozens of coaches (hitting, pitching, base coaches, etc.) and front office staff ranging from the General Manager and analytics team to marketing, sales, and administrative personnel. In the modern game, analytics and tech staff have grown significantly. Teams have poured money into data analysis, video scouting, and even tech infrastructure to gain a competitive edge. These expenses, while relatively small compared to player salaries, can still be a few million dollars for a cutting-edge analytics department. Front office salaries (for GMs, etc.) and staff payroll are part of a team’s fixed costs of operation.
Stadium Operations and Maintenance
Owning or leasing a ballpark comes with hefty costs. Teams must maintain the stadium, pay utilities, property taxes or PILOT agreements, and staff the venue for 81 regular-season games (plus any postseason or events). For newer parks, there may be debt service if the team financed construction. (Yankee Stadium, for instance, was built with significant private investment via municipal bonds – the Yankees have annual payments related to that). Even routine upkeep, from cleaning the stands to keeping the grass (or turf) in top shape, adds up. Many clubs have significant capital improvement projects regularly as well, such as upgrading video boards, seating areas, or building new training facilities. In 2025, some teams are planning or constructing new ballparks (the A’s received approval to relocate to Las Vegas with a new retractable-roof stadium project). Projects like this involve huge expenditures, though often with public funding components. Teams like the Kansas City Royals and Tampa Bay Rays are also exploring new stadium plans, which could impact finances down the line. In general, stadium-related costs can easily run in the tens of millions annually for upkeep and improvements.
Travel and Logistics
MLB teams travel constantly from April through September (and into October if they make playoffs). Clubs charter flights for all road trips, book thousands of hotel room nights, and cover daily meal and stipend costs for players and staff. While MLB’s schedule is regionalized to reduce travel, teams like Seattle (which is far from most other franchises) incur larger travel budgets than, say, teams in densely clustered East Coast cities. Nonetheless, every team might spend a few million a year on travel. In 2025, with all teams now playing each other at least in some fashion (due to the recently introduced balanced schedule), even distant interleague trips are part of the routine. Along with travel, other operational logistics include spring training expenses (running a separate facility in Florida or Arizona for two months, plus minor league spring camps), equipment, and insurance.
Marketing, Community and Miscellaneous
Teams also budget for marketing and fan engagement with advertising campaigns, events (fan fests, etc.), and community outreach programs (which, aside from being altruistic, also build the brand and future fanbase). While these costs are relatively smaller, they’re part of the full financial picture. For example, a team might invest in a new fan experience mobile app or a promotional giveaway (like bobblehead nights) which costs money but can drive higher attendance or loyalty. The Yankees, for instance, have one of the largest marketing and community relations departments, reflecting their global brand aspirations.
All told, the expense side of an MLB team in 2025 often matches or even exceeds its revenues, especially if the owner is aggressively investing in on-field success. Teams like the Yankees or Dodgers run very high payrolls (and thus pay taxes and sharing), which can yield only modest operating profits or even losses in a given year. On the other hand, teams that keep payroll low and manage costs shrewdly (often smaller-market clubs) can turn sizable profits if revenue sharing and league distributions cover a big chunk of their expenses. It’s a delicate balance between spending to win and managing the bottom line.
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