kane

They have what they call a luxury tax. Basically they pick an amount. For next year that number is 162 million. If your teams salaries go over that amount you have to pay a tax to the league. You pay an amount per dollar over that to the league (the amount varies depending on how many times you have gone over it) and the league then takes all the luxury tax money and spreads it out to the smaller market teams.

The yankees will be over it for the fourth time next year so they will get the 40% hit. So say their payroll is 200 million that is 38 million over the cap. That means they will get about a 15 million dollar luxury tax hit. That money goes to the league and the league gives it to smaller teams so they have more to spend in an effort to keep some of their star players around.

The beauty of baseball is that anything can happen. Sure there are teams that normally won't make the playoffs, but often smaller teams do and make a splash. The yankees finished a 3 peat in 2000. Since then there have been 7 different teams that have one it and only Boston has won it twice.