Yankees luxury tax bill keeps shrinking
Posted by: Chad Jennings - Posted in Misc on Dec 23, 2011 
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The Associated Press reports that the Yankees once again have been charged with baseball’s largest luxury tax, but it’s their lowest in nearly a decade and it’s been steadily declining in recent years. Here’s the AP with the details.
The New York Yankees have been hit with a $13.9 million luxury tax bill, their lowest since 2003.
The fee, assessed Thursday by Major League Baseball under its labor contract, is down from $18 million last year and $25.7 million in 2009, when the Yankees won the World Series.
Boston, which missed the playoffs this year, is the only other team that will have to pay a tax. The Red Sox received a bill for $3.4 million, up from last year’s $1.5 million.
Season-ending payroll information and the tax was sent to teams and obtained by The Associated Press.
According to the collective bargaining agreement, checks to pay the tax must be sent to the commissioner’s office by Jan. 31.
Happy Festivus LoHudders
I probably won’t be on the blog over the next couple of days, so I just wanted to pop in and wish everyone a Merry Christmas!
Same to you, Erin!
The luxury tax is separate from revenue sharing, which is a system to balance out the income distribution between large and small market teams by dividing money from merchandise sales and media contracts. The money generated from the luxury tax is not distributed to the rest of the league, as is the case with the NBA, but rather is used for other purposes. The first $5 million is withheld to cover potential refunds, and is contributed to the Industry Growth Fund (IGF) if no refunds are forthcoming. The remaining money is divided as follows: 50% funds player benefits, 25% funds developing baseball in countries without high school baseball, and 25% goes to the IGF.
So, what is Bud going to do when the Yankees are no longer funding this stuff?
Great news…..this means ticket prices will be cheaper for fans since they have less to pay in tax……..wait…..you mean it wont? Oh well……
As a fan I really don’t care how much tax the Yankees pay……they have a right to run things however they want because its their business and its their money……but all I care about is the product on the field. Take that savings in tax money and sign Soler…..that I would care about.
“So, what is Bud going to do when the Yankees are no longer funding this stuff?”
That’s probably what the Yanks want to find out.
So, what is Bud going to do when the Yankees are no longer funding this stuff?
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Good question, though I’d be surprised if the luxury tax dollars are the sole funding sources for the programs in question.
I don’t really understand this sudden need to avoid the luxury tax.
The reason the Yanks have incurred the tax through their high payroll is to reduce the risk of not making the post-season. The risk of not making the post-season is increasing with the emergence of the Angels, Rangers, and Rays, and the value of winning the wild card has diminished due to its becoming a one game all-or-nothing play-in to the post-season.
And missing the post-season will cost a heck of a lot more money than paying the luxury tax.
Wait so… between now and 2014 the luxury tax penalty is going to go from 7% to 50%?
Hard to believe that Erin would miss a complete week of not reading these captivating and genteel conversations on here. She’ll be lost because she won’t be able to follow the story line.
wave,
i think the yankees are sick of watching teams like the marlins use their money to go after free agents.
it lessens their advantage
without yankee money i doubt the marlins sign reyes and beurhle. maybe just one
As posted above, luxury tax $’s don’t get fed to the poor teams, it is separate from the revenue sharing program.
The Yankee’s can have as low of a payroll as they want, they will still be subsidizing the bottom half of the league.
I don’t really understand this sudden need to avoid the luxury tax
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Never bothered them before, but under the new CBA, revenue sharing is also impacted by whether you’re over the lluxury tax threshold.
The luxury tax for repeat offenders has been 40 percent.
I agree if the new frugality costs them the playoffs, they are being penny wise and pound foolish. Anyone who is confident how next season will go doesn’t know baseball. Injuries, slumps and off years always play a role.
They need positional depth and a no. 2 starter. I repeat myself.
kd-
I’m sure the luxury tax payments aren’t popular with the Yankee brass, but the benefit the Yanks get from exceeding the luxury tax threshold has to outweigh the competitive advantage the luxury tax recipients receive.
“Never bothered them before, but under the new CBA, revenue sharing is also impacted by whether you’re over the lluxury tax threshold.”
How so?
I understand wanting to stop giving other teams money…..that’s a strategic thing on addition to just becoming more efficient……however my question is what are the Yankees going to do with the money they are saving?
Are they going to reinvest it into the team or are the owners going to pocket it? The areas to invest without being taxes are yearly diminished……can’t add to the payroll…..because its taxed…….can’t invest it into the draft because its taxed……can’t invest it internationally ……because its taxed…….
Right back at ya, Erin – and to all the rest I don’t see before the holiday make sure you have a safe, happy, and healthy one!
Yanks hardly spent any more last year and they made the post season. I hardly think getting under $190 mil by 2014 is going to rocket the team to the bottom of the AL East.
They coukd have used it on Darvish’s posting fee…….but chose not to. Again its the Yanks money…….but as a fan I don’t have to be excited about the owners saving money unless it is going to directly affect the team I cheer for.
WYH – You can get exemptions from part of your revenue sharing obligations by being under the luxuray tax cap, iirc
my guess is that the yankees will spend the savings on coaching and scouting.
they should identify the best scouts in the league and bring them aboard. also, go out and hire the best major and minor league coaches
now’s the time to do it with some of the turmoil in the other big market teams, like the mets, red sox, and dodgers
“….but as a fan I don’t have to be excited about the owners saving money unless it is going to directly affect the team I cheer for.”
AHgreed.. this ain’t the Devil Rays and this fanbase isn’t going to be happy if they start to see the payroll going down while the ticket prices keep going up (they raised the price of bleacher seats again this year, right?)
“they should identify the best scouts in the league and bring them aboard. also, go out and hire the best major and minor league coaches”
Been saying this forever… I hope they do something about the instruction in the minors. They need to get better down there, top to bottom. You can have the most talented 18 year olds in the world, it isn’t going to translate to big league talent unless they have the right guidance.
Kd,
Absolutely ……that’s one of the only areas left……and its an important one.
maybe the front office is trying to stop other teams from using yankee welfare checks to raise the cost of doing business with other players. They’ve been supporting teams like Baltimore, Toronto and Tampa for years. How about just waiting to see what the rest of the off-season and the 2012 season brings before slitting your wrists.
go out and hire the all stars of major league coaches and staff, trainers, etc.
why go to arizona for API? make one at the Tampa facility and let the minor leaguers train there
i’m sure that jeter’s got room for santana, sanchez, williams, etc in his mansion down there!
Thanks for the explanation, ID. I’m not completely up on the new CBA yet.
Never bothered them before, but under the new CBA, revenue sharing is also impacted by whether you’re over the lluxury tax threshold.”
How so?
========================
As ID explained, being under the lux tax threshold a team gets exempted from a portion of theire revenue sharing contribution.
It’s why some of the sports business reporters are suggesting that the MLBPA has in effect agreed to a salary cap, albeit a soft cap.
“they should identify the best scouts in the league and bring them aboard. also, go out and hire the best major and minor league coaches”
The real question is… why haven’t they been doing this already? The amount of money this team pulls in should not have had them wanting for resources for scouting and player development.
The even better question is… what if they already are?
kd December 23rd, 2011 at 12:33 pm
go out and hire the all stars of major league coaches and staff, trainers, etc.
why go to arizona for API? make one at the Tampa facility and let the minor leaguers train there
i’m sure that jeter’s got room for santana, sanchez, williams, etc in his mansion down there!
————————————————————————————————————————-
There’s 5 locations including Gulf Breeze, FLA, just outside of Pensacola
Phoenix, LA, Frisco, Texas and Norwell, Mass.
“…as a fan I don’t have to be excited about the owners saving money unless it is going to directly affect the team I cheer for.”
Does this mean you aren’t going to watch the celebratory parade around Lonn Trost’s desk????
Merry Xmas lohudders, time to go enjoy some of this florida sunshine before i have to go home next week
“Does this mean you aren’t going to watch the celebratory parade around Lonn Trost’s desk????”
Lol.
gb7,
i’m sure you knew what i meant but i’d like for the yankees to take a more active role in player fitness.
it would avoid players like hughes or joba from showing up to camp out of shape.
young sudden millionaires shouldn’t be left to their own devices, not that i would know what that’s like, but i made enough bad decisions when i was 22 without having the world watch me.
let those guys get on a program from the team, and them monitor them
Less money for teams like the Orioles, Royals, and Pirates to not spend on their teams
dogface December 23rd, 2011 at 12:40 pm
Never bothered them before, but under the new CBA, revenue sharing is also impacted by whether you’re over the lluxury tax threshold.”
How so?
========================
As ID explained, being under the lux tax threshold a team gets exempted from a portion of theire revenue sharing contribution.
It’s why some of the sports business reporters are suggesting that the MLBPA has in effect agreed to a salary cap, albeit a soft cap.
—
With the recent changes, it’s probably even more appropriate to call it a semi-hard cap. If even the Yankees don’t want to go over the cap (by much at least), it’s pretty much a cap.
kd December 23rd, 2011 at 1:03 pm
gb7,
i’m sure you knew what i meant but i’d like for the yankees to take a more active role in player fitness.
it would avoid players like hughes or joba from showing up to camp out of shape.
young sudden millionaires shouldn’t be left to their own devices, not that i would know what that’s like, but i made enough bad decisions when i was 22 without having the world watch me.
let those guys get on a program from the team, and them monitor them
————————————————————————————————————————-
That’s a personal thing as far as keeping yourself fit. The cost to the organization would be huge to equp such a facility, not to mention the trainers, doctors and nutritionists. You have players from all over the country/world and many are minor leaguers making almost zero. Then, there’s housing, meals….and this isn’t a one week type thing. You can’t play ballgames and then beat them to death after the games. It’s something that the players have got to want to do. Hughes is making enough to afford this camp/training program. These minor league kids make at most $2500 a month in AAA and that’s only during the season.
I find it somewhat humorous that most around here feel that paying less luxury tax means Extra $$$ laying around. It’s a Penalty, it’s a Tax, It’s a Blackeye. it’s NOT disposible income.
Cashman shoulda gone the Beltran route and dealt Swish. Being assured of 2 yrs of Beltran woulda been better than the situation looming with Swish or finding his replacement in 2013. The roughly $3 Milll extra to sign Beltran woulda been worth the security down-the-road. Beltran coulda at least matched Swish’s production over 162, and how could he not exceed Swish’s Playoff numbers? Opportunity lost.
“You can get exemptions from part of your revenue sharing obligations by being under the luxuray tax cap”
I’ve searched for this on the internet and can’t find anything confirming this. Can anyone supply a link?
http://newyork.yankees.mlb.com.....y_card.jsp
Josh Norris’ conversation with Adam Warren on his call-up to NY in September
http://minormatterstrenton.blo.....-2011.html
scouts thoughts on Mason Williams
jnorris427 Josh Norris
“The best part about his game was his defense. He has an above-average major league center field profile.” Scout on Mason Williams
jnorris427 Josh Norris
Same scout, comparing Williams & Gardner. One quote that jumped out: “Defensively, I think Mason’s probably a little more dynamic.” #yankees
Beltran is better than Swisher when healthy, but it seems Cashman wasn’t going to gamble on him given his age and durability issues.
Can’t force moves that aren’t there.
Swisher is not perfect, but he is one of the more productive RF in the league.
Irreverent Discourse -
Long breaks between reading today.
Anyway, about runs scored, rbis and getting on base.
Yes. Getting on base yourself is all you can control.
But what I’m saying is if you’ve got a lot of runs scored, or a lot of RBI, then you yourself are getting on base a lot.
I know you have no control over whether or not you get “batted in” and RBI are depending upon someone being on base to begin with. I understand that.
I just feel like those particular stats are pooh-poohed when they really oughtn’t to be.
We might be saying the same thing. It’s hard to tell.
I believe you can’t just look at one statistic on a guy anyway – you have to look across the board and see what that particular players strengths are.
The problem I have with Beltran is that he’s 4 years older than Swisher and has missed 200 games the last three seasons. I agree he’s the better player, but I’m not sure you can count on him to be as productive over the whole season.
The Yanks payroll has not gone down significantly, but the luxury tax keeps kicking in at higher payroll numbers. I don’t buy the alleged commitment to get under $ 190 M in two years. It’s not realistic with $ 70 M already committed to ARod, Tex and CC for 2014.
Keeping payroll is the $ 200 -220 M range like it’s been for the last four years is more likely.
Jon Heyman @JonHeymanCBS 1h #redsox, gio losers seek starter. nyy, tor, bal, col, mia, det looking. SPs left: kuroda, e-jax, oswalt, jurrjens, TB guys
Three years ago on this date they announced that we had gotten Tex!
Norris complete conversation with scout on Williams
http://minormatterstrenton.blo.....liams.html
GB…..Pool service gals are wearing Santa caps and matching tops…..The Santa Ana winds are gone and things are looking good for tonight’s Christmas party…….So to you and all my LoHud pals, Merry Christmas and a most Happy Holiday………I still expect the Yanks to make an announcement sometime soon……I thought it would have happened before everyone breaks for the Holiday break but that might not happen until after……..Kuroda, the ball is in his court …..
Pat M.,
I know that you won;t believe this, but, I just shot you the bird.
Have a great and Merry Christmas and Happy Holiday, Pat. Best wishes and stay safe to you and your family and friends.
Still don’t think that Kuroda is made for Yankee fans. I think that Japan is mending his old uniforms.