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Yankees, Red Sox only teams hit with luxury tax bills

Dec 22, 2011, 7:23 PM EDT

red sox and yankees logos

It’s time for baseball’s biggest spenders to pay up.

According to the Associated Press, via NBCSports.com, the Yankees were hit with a $13.9 million luxury tax bill from MLB on Thursday and the Red Sox were asked to pay $3.4 million.

For the Yanks, it’s their lowest luxury tax bill since 2003, down from $18 million in 2010 and $25.7 million in 2009. For the Red Sox, it’s their highest bill ever, up from the $1.5 million they paid last year. Both fees, which are based on the teams’ payrolls for 2011, must be paid to the MLB commissioner’s office by the end of January. The luxury tax threshold was $178 million.

  1. Ari Collins - Dec 22, 2011 at 7:51 PM

    Both teams likely to pay it again in 2012. As are the Phillies for, I believe, the first time.

    • Ari Collins - Dec 22, 2011 at 7:53 PM

      And possibly the Angels, but I believe you have to go over twice in a row to start paying tax. Not sure about that, though.

    • Jonny 5 - Dec 22, 2011 at 8:22 PM

      Actually, right now with commitments as well s expected arbitration raises the Phillies are at 164 million for 2012 So after filling out the roster, without making any more big moves, they should be around 170 M. I thought you said the Phills exceeded the RS last season in salary?? ;)

      http://www.philly.com/philly/blogs/phillies_zone/A-look-at-the-current-payroll.html

      • uyf1950 - Dec 22, 2011 at 9:08 PM

        Jonny 5, please read my comment below. I meant to post it here but obviously I messed up. Sorry to disappoint you about Phillies chances of escaping the luxury tax in 2012 when you read it.

      • Ari Collins - Dec 22, 2011 at 9:10 PM

        That’s the payroll for this season, but for luxury tax purposes, it’s based on AAV and includes other expenses (such as medical expenses).

        Not sure they’ll pass it this season or not, but they did last season. And their payroll was, in fact, greater than Boston’s (by about $11MM). But you need to cross the threshold in consecutive years to begin paying the tax, which is why only Boston and New York did this year, and why even if the Angels cross it, I don’t believe that they’ll have to pay any tax.

      • uyf1950 - Dec 22, 2011 at 9:37 PM

        Ari, Philadelphia will pass it this year (2012) for sure. I’m 99.999% certain they will have to pay it. Baseball-reference had the Phillies 2011 payroll at $170MM based on about 30 players. And they only calculated Lee’s payroll at $11MM in 2011. Which we already know for luxury tax purposes is based on his AAV of the contract 5yrs/$120MM ($24MM per). So that’s an extra $13MM just for Lee to the $170MM total,

        As I said below when you figure they will go over, actually they can’t help but go over in 2012 (this coming year). That will be 2 years in a row and they will get a nice little bill from MLB. Just another way to subsidize the poor owners of the other 27 teams. That’s a joke.

      • Jonny 5 - Dec 22, 2011 at 10:01 PM

        Ari, after you pointed it out, it would only make sense for MLB to use the AAV or else teams would take full advantage. (smacks forehead)

    • ame123 - Dec 22, 2011 at 8:31 PM

      Nope, very unlikely that the Phils will exceed it.

  2. Jonny 5 - Dec 22, 2011 at 8:44 PM

    I just wonder which of these two teams is going to sign Oswalt? That’s the move that could actually win the AL east.

  3. uyf1950 - Dec 22, 2011 at 9:04 PM

    Actually Jonny it’s closer to $168.6MM. That piece you are referring to didn’t include the pro-rated portion of of 2 signing bonuses one of them was for Blanton and even that number only accounts for 20 players. The luxury tax is based on a teams 40 man roster. It’s impossible for the Phillies not to go over the luxury tax in 2012. Even if all 20 remaining players left to be account for not including benefits make the league minimum in 2012 that’s 20 X $480K = $9.6MM. That comes to just over $178MM. And we all know not all 20 players will sign for the league minimum.

    Remember also the luxury tax is based on a players AAV. So for example even though Howard’s official 2012 pay is $20MM his contract which starts this season is for 5 years $125MM. So the Phillies luxury tax number for Howard is actually $25MM for this season not $20MM. That same thing applies to Lee’s 5 yr/$120MM contract as well and his AAV not 1 individual years compensation.

    Sorry my friend but the Phillies are destined to go over the luxury tax threshold for 2012.

    • Jonny 5 - Dec 22, 2011 at 9:48 PM

      Thanks for the crash course there (goes for Ari too) I wasn’t aware of the structure used to calculate the tax. I assumed it was straight up salary spent. I learn something new every day, I wouldn’t want it any other way. And uyf, no need to be sorry buddy, I’m happy that my team is willing to spend the cash to build up my rooting interest, after all It’s not my money, but my favorite baseball team since I was a squirt. It’s almost like a dream come to fruition. uyf, what’s with all the luxury tax knowledge anyway? Hobby?You seem to stay away from the statistical side of baseball (at least here) but know the ins and outs of the financial side of things, which is number crunching as well.

      • uyf1950 - Dec 22, 2011 at 10:09 PM

        My friend, I learned a long time ago numbers can tell a person anything he/she or it wants them to. Financial stuff is relatively simple. As a baseball fan I prefer to just enjoy or cringe at a players performance as it happens. I enjoy the game and the team I root for a lot that way without worrying about things like Zips and projections and factoring different ballparks for a players performance. I’m just a fan let the people who get paid to do that stuff worry about it.
        I think I’ve said this once before and got all sorts of grief from some posts here. But sometimes the best way to evaluate a players performance might be the simplest But that’s just me.

        In any case my friend. So I don’t forget have a Very Safe and Happy Holiday season. And good luck to the Phillies that is until and if they play the Yankees.

  4. Jonny 5 - Dec 22, 2011 at 10:23 PM

    Well you’ll not catch me giving people grief over wanting to keep the game simple. Although I do find some fun in debating stats with those who also feel the same way sometimes. Thanks for the good wishes for the holidays, And may you and yours enjoy the same. I’m still waiting for another Yanks/ Phills post season match up myself.. You know why..

    • uyf1950 - Dec 22, 2011 at 10:26 PM

      May be this year. I can guess why.

  5. humanexcrement - Dec 23, 2011 at 12:55 AM

    I’m glad Red Sox mania is starting to fade a little–and I’m not talking about real Red Sox fans here, people from New England and whatnot. I’m talking about the poser Sox fans who think they’re being a cool, hipster rebel for being a Sox fan and not a Yankee fan. The kind of guy who thinks he’s a badass for wearing a spiked bracelet and drinking PBR with his backwards Boston hat pulled down to his eyebrows. In Oregon. Thankfully the poser Yankee fans are taken seriously by no one, even in New York, soon the poser Soxfags will be joining them, and the trend will go away. I swear, growing up I never knew one single Sox fan who didn’t have some kind of tie to New England, now every time I leave the house I have to elbow fratboy douchebags in Sox caps out of the way.

    • Ari Collins - Dec 23, 2011 at 1:36 AM

      I was right with you until “soxfags”. Seriously?

      But yeah, hey, bandwagons are fun places to be. Even if the wagon’s a bit bigger than you thought it would be.

      • humanexcrement - Dec 23, 2011 at 3:07 AM

        I use the word “fag” here having nothing to do with sexuality. I know plenty of “fags” who aren’t gay and plenty of gay people who aren’t “fags.” I understand it offends some people but the word in its original context had nothing to do with sexuality. I use “fag” as a synonym for “douchebag,” basically. We all know the kin of person I’m talking about. Maybe I am one to you. So be it. I think it’s a powerful word and I’m going to continue using it.

      • Ari Collins - Dec 23, 2011 at 8:45 AM

        You kind of can’t just decide a word means something different. It will still mean “fag,” even if you WANT it to mean “douchebag”, or it originally meant “a bundle of sticks”.

        I mean, hey, do what you want. But you’re going to piss off and/or hurt a good number of people that way.

      • bozosforall - Dec 23, 2011 at 10:25 AM

        Typical crybaby New England sports fan comment. Your team is the most underachieving team in all of baseball. All that money spent with very little return. The Yankee organization will always rule over your pathetic team.

      • Ari Collins - Dec 23, 2011 at 11:47 AM

        “Always” except for five years from ’04 to ’08, when the Yankees collapsed against the Sox and spent the next four years never winning a postseason series while Boston swept two championships.

        I’m not saying the Red Sox are always better than the Yankees. In fact, I think the Yankees have a bit of an edge on paper this year. Do you honestly think that New York will forevermore finish ahead of Boston?

        And by the way, New York still has the most underachieving, overspending team ever – 2008, when they became the most expensive team in history to not make the playoffs.

      • proudlycanadian - Dec 23, 2011 at 12:06 PM

        I am not a Red Sox fan, but I am giving Ari a thumbs up all the way in the above conversation.

      • bozosforall - Dec 23, 2011 at 1:45 PM

        Try reading more closely, Ari. The Yankee organization will always be better than the Red Sox organization. Overall, not just picking out a year or two here and there. Then again, you Red Sox fans are good at trying to find little grey areas like that to salve your wounds for being dominated so thoroughly in the last 100 years. Winning a couple of measly titles in the last 90+ years doesn’t change anything. Even in those years, the Yankee ORGANIZATION was still better, even if the results on the field didn’t go their way. Red Sox fans will continue to be jealous of the Yankees’ success, that will never change.

      • Ari Collins - Dec 23, 2011 at 2:02 PM

        So what you’re saying is that no matter who wins the actual baseball games, the Yankees will always be better.

        Mmhmm.

      • marshmallowsnake - Dec 23, 2011 at 5:48 PM

        Bozo, are you talking about the Cubs?

    • marshmallowsnake - Dec 23, 2011 at 5:46 PM

      At least you got your handle spot on…

  6. proudlycanadian - Dec 23, 2011 at 8:38 AM

    From what I have read, under the new collective bargaining agreement the luxury tax becomes very onerous to teams that continue to stay above the luxury tax threshold. That could explain why New York and Boston have been quiet this off season.

    • Jason @ IIATMS - Dec 23, 2011 at 10:24 AM

      Yanks are shooting to be at/under $189M in ’13, if only to reset their lux tax %. It goes to 50% next year (I believe), but if they can get it under $189M, the tax % resets to somethng like 17.5%. And they get some $50M rebate or something like that.

      And more money goes to the owners, not to the players. So that’s a +1 if you’re pro-management and a -1 if you’re pro-labor.

  7. uyf1950 - Dec 23, 2011 at 1:29 PM

    Ari, actually your reply about 04-08 is not only misleading but completely inaccurate. For example in 2005 both the Yankees and the Red Sox made the post season both were eliminated in the ALDS, the Yankees by the Angels and the Red Sox by the White Sox. But the Yankees did hold a 10-9 regular season series advantage that year winnning the division. Then in 2006 the Yankees made the post season losing in the ALDS to the Tigers. The Red Sox missed the post season entirely that year finishing 3rd in the division 11 games behind the 1st place Yankees as well as losing the season series 8 games to 11.

    So in reality of the 5 years 04-08 the Red Sox only bested the Yankees 3 of those years (04/07/08). The other 2 years (05/06) the Yankees really bested the Red Sox.

    But that’s history, today is today. I just wanted to set the record straight.

    • bozosforall - Dec 23, 2011 at 1:49 PM

      Thanks for clarifying that uyf. Red Sox fans are always exaggerating. Much to the chagrin of their spouses when they are in the bedroom. LOL

    • Ari Collins - Dec 23, 2011 at 1:58 PM

      Yeah, they only bested the Yankees 3/5 years. But it still marks (to me) the era of the Sox doing at least as good and often quite a lot better in the postseason. From ’04-’08, Boston went 28-14 in the playoffs, while the Yankees went 11-17. And if you want to be truly cruel and mark the start of Boston’s postseason dominance after the Yankees went up 3-0 in the playoffs, then the Yankees, beginning with their collapse in the ALCS, went 5-16, while Boston went 25-11.

      Of course, that’s only the postseason; Yankees still beat them in the regular season three out of those five years. And in the three years since that era of Boston postseason dominance, the Yankees have won a World Series while Boston hasn’t won a postseason game.

      Which was my point. It’s cyclical. Sometimes you’re the windshield, and sometimes you’re the bug, eh?

      • uyf1950 - Dec 23, 2011 at 2:35 PM

        Ari, that’s true. But I always find it interesting how fans “cherry” pick dates to conveniently make a point. I’m not sure why you insist on says 04/08. When in reality it’s 2004, 2007 and and 2008. In 2005 Boston got shut out in the ALDS and as I mentioned previously they missed the post season entirely in 2006. I’ll be happy to admit for all to read that in those 3 years that Red Sox were certainly better than the Yankees. I have no problem acknowledging/admitting the obvious.

        However I will say the records/statistics of both the Yankees and the Red Sox speak for themselves at least that’s my opinion. I’m not sure any bias interpretation by either side is necessary.

  8. jwbiii - Dec 23, 2011 at 10:04 PM

    Here’s a picture
    http://bizofbaseball.com/images/LuxuryTaxALLTIME.jpg

    and here’s the accompanying article
    http://bizofbaseball.com/index.php?option=com_content&view=article&id=4971&Itemid=194

    Neither includes the 2011 Competitive Balance Tax. Don’t call it a luxury tax. Players are not luxuries, they’re the product.

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