01/24/09

The Mogul League of Champions has adopted a Luxury Tax plan to help promote fiscal responsibility among owners. The Luxury Tax is not a salary cap, but is intended to help small market teams by penalizing owners whose total payroll exceeds a certain amount.

Example:

A team's average payroll is $165.0M. This is $40.0M over the $125.0M threshold. That team's tax is $40.0M.

The tax will be applied during the off-season, after the resigning period for players whose contracts have expired, and will be based on the average payroll for each team for that season.

If any funds are collected for luxury taxes, those funds will be added to the revenue sharing pool, to be distributed to all teams.