Wednesday, December 26, 2007

Yanks Recieve $24M Luxury Tax Bill

From the NY Daily News

After receiving a $24 million luxury tax bill at the end of last week, the Bombers really were a $232 million letdown.

Major League Baseball clubs adopted a team payroll threshold during the collective bargaining sessions in 2002 in an effort to contain costs; each time a team exceeds the league-wide figure, its tax rate increases as punishment.

The Yankees have been over the limit all five seasons and this year paid a 40% tax on all salary above $148 million. That means that when the club gave Roger Clemens a prorated $28 million deal at midseason - that equaled about $18 million in salary - the Bombers actually ended up paying him $25 million for the 18 starts during which he went 6-6 with a 4.18 ERA. Clemens then lasted only 2-1/3 innings in his lone playoff start before being named in the Mitchell Report.

"I can't imagine that was the return they were looking for on that deal," said one executive from another AL club who requested anonymity. "If his postseason - and theirs - had gone better, it might have been a different story."

The archrival Red Sox were over the tax threshold for the fourth straight season, bringing their rate to 40% as well. They owed $6 million on their team salary of $163 million. The Angels were the only other team over the limit - a first for the franchise - and owed $927,000. The bills are to be paid by the end of January.

I hope some of these cheapskate owners use this money for their teams instead of just pocketing it like a lot of them usually do.

The Yankees did bring their luxury tax bill down from $26M last year, and $33.98M in '05.


Mark said...

MLB needs to put restrictions on the money. Otherwise, it's just payola.