Where does the SF Giants CBT payroll stand after offseason activity?

Aside from a couple of big moves, it has been a relatively quiet offseason for the SF Giants. With the moves they have made, where do they stand from a Competitive Balance Tax (CBT) standpoint, and do they have room left to add?

Where does the SF Giants CBT payroll stand after offseason activity?

Teams maintain two sets of books for payroll purposes. The first set is the actual accounting of cash outflows for contracts in a given year. This often includes deferred money for players no longer with the team.

The language in the contracts determines the payment schedule. Even if a player signs a two-year, $20 million deal, that money could be frontloaded, backloaded, deferred, or distributed evenly.

The other set of books is the CBT payroll. This simply (or not so simply) takes the average contract value for every player under contract and applies it evenly. For players under their rookie deals, their cap hit is the amount owed to them for that season. For example, LaMonte Wade Jr. avoided arbitration by settling on a $5 million salary for 2025, so his CBT cap hit is $5 million dollars.

It gets a little more complicated when options and opt-outs are factored. However, I do prefer CBT payroll because that is the amount calculated by the league for luxury tax purposes. Whereas the internal payroll is usually based on the projected cash inflows and outflows for the upcoming year. That is usually imposed by the front office and ownership.

The CBT threshold is agreed upon and articulated in the Collective Bargaining Agreement (CBA). Under the current CBA, the CBT threshold for 2025 is $241 million. Teams can opt to go over that amount as it functions as a soft salary cap. If a team does exceed the CBT threshold for a given year, they owe a tax on the overage. That tax rate varies based on a few factors.

There are additional penalties if a team is a repeat offender or signs a player who rejected a qualifying offer. Teams can reset those penalties by coming in below that CBT threshold for a given year. This strategy becomes especially important if the front office or ownership do not see the team as being competitive.

For the Giants, they exceeded the 2024 CBT threshold of $237 million with a payroll of $249 million. As a non-repeat offender, they owe a tax of 20 percent on the overage, which comes out to about $2.4 million.

Plus, they forfeited their second-and-fifth highest selections as well as $1 million in international bonus pool money after signing Willy Adames. Adames had rejected a qualifying offer from the Milwaukee Brewers earlier in the offseason. It should be noted that the $1 million in international bonus pool money applies to the 2026 signing period. The draft picks apply to the 2025 draft.

The Giants have conveyed that they would prefer to reset the penalties this season. If that approach proves true, they still have some wiggle room to add.

The only moves that have made so far have been signing Adames and Justin Verlander. Adames carries a cap hit of $26 million, whereas Verlander has a cap hit of $15 million.

According to Cot's, the Giants have an estimated CBT payroll of $220.6 million for 2025. This does include some estimates that are tough to project such as the contract for injured players as well as salaries for pre-arbitration players. That number is relatively reliable, but there is always some noise with an estimate.

This means that the Giants are approximately $20.4 million below the CBT threshold. This does not mean that they have $20 million left to spend. It bears mentioning that teams do like to preserve some payroll space in case they are in a position to add at the trade deadline.

More than likely, they can comfortably add another $10 - $12 million to this year's payroll before the season begins. That probably means only one more notable addition.

I should preface this by adding that there are exceptions to every rule. Even if the Giants intend to dip below the CBT threshold this year, a deal could come along that adjusts that approach. For now, they have $220 million committed to the 2025 season with a little room to add.