Yankees Hit With $26 million Luxury Tax

zippyjuan · 12-22-2006, 06:19 PM

http://www.sportsline.com/mlb/story/9887362

Quote:

NEW YORK -- The Yankees got the bill Friday for their sorry season.

The Yankees were slapped with a $26 million luxury tax by the commissioner's office, raising New York's total to $97.75 million over the last four years.

Boston, which missed the playoffs, was the only other team over the tax threshold and will pay $497,549.

New York hasn't won the World Series since 2000, and was knocked out in the first round of the playoffs for the second straight year. The Yankees paid tax in all four seasons of the just-expired collective-bargaining agreement: $11.8 million in 2003, $26 million in 2004 and $34 million for last year.

While the Yankees' spending on players may have decreased because of the tax, the team says any dip was slight.

"I would say it has an effect," Yankees president Randy Levine said. "But at the end of the day, it's always been George Steinbrenner's philosophy to win. If a difference-maker is attainable, the Boss goes and gets him."

At the center of labor negotiations in 2002, the luxury tax was paid by only three teams over the four seasons, with the Red Sox owing $7.8 million and the Anaheim/Los Angeles Angels $927,057.

Payments are due at the commissioner's office by Jan. 31. Commissioner Bud Selig concluded the tax achieved the result management wanted.

"I think it did. I really think, frankly, everything that we did pretty well came out to its projection," he said.

New York's bill decreased this year because its payroll, as calculated for the tax, declined from $212.9 million to $201.5 million and the threshold for where the tax began increased from $128 million to $136.5 million. Under the new labor contract, the threshold for the tax rises to $148 million next year.

For luxury tax purposes, the average annual values of contracts are used and benefits are included.

"The luxury tax is not the something the players are in love with because its purpose is to cause people to have an extra cost when they sign a player," union head Donald Fehr said. "Obviously we were prepared to live with it during the term of the last agreement and we got what we expect will be appropriate modifications this time.

"We didn't really envision specific numbers. What we were hoping was that we would see a circumstance in which it did not have a meaningful adverse effect on the player market, and obviously you have to judge that year by year."

Using the regular method of accounting, the Yankees finished with a $207.5 million payroll for their 40-man roster, according to final figures released Friday by the commissioner's office, up from $206.6 million in 2005.

Boston was a distant second this year at $137.5 million, followed by the New York Mets ($116.6 million), Houston ($107.7 million), the Los Angeles Dodgers ($107.2 million) and the Los Angeles Angels ($104 million).

The World Series champion St. Louis Cardinals were 10th at $96.1 million, and the AL champion Detroit Tigers were 14th at $89.8 million.

Florida, last at $21.1 million, had less than half the payroll of Pittsburgh, 28th at $43.4 million. Tampa Bay was in between them at $36.4 million.

Management calculated the average salary at $2,642,915. The players' association, whose calculation method differs slightly, had the average at $2,699,292 in its annual report this week.

AP NEWS
The Associated Press News Service

Napoleon54 · 12-22-2006, 09:29 PM

Yikes, I knew the Yankees spent a lot but didn't know the extent of the margin. Their payroll is nearly 10x Florida's! That's ridiculous... just like government, their philosophy appears to be "throw money at the problem", rather than a logical and fiscally efficient plan.

Sirrich3 · 12-22-2006, 10:44 PM

They get taxed hard each year....

MikeD · 12-23-2006, 06:38 AM

I wish Nickel was still around.

VTGreg · 12-24-2006, 09:40 AM

That is a lot of money. However, just think about how much money they make by being a perennial favorite to win the World Series. I don't know specifics, but their television contract alone is ridiculous. In addition to that, they have all of the advertising revenue they generate from the team.

It seems ridiculous for them to consistently spend that much money, but they always contend and are never in the position of some of the other teams that spend money and never win. Look at the Mets for the perfect example of that scenario.

DarkFury · 12-24-2006, 10:05 AM

Quote:

Originally Posted by Sirrich3

They get taxed hard each year....

Well.. thats the cost of trying to buy a Championship each year.

Honestly, buying up all the talent just doesn't seem very "sporting", but it sure makes them look bad when they lose.

Napoleon54 · 12-28-2006, 01:43 AM

Quote:

Originally Posted by DarkFury

Well.. thats the cost of trying to buy a Championship each year.

Honestly, buying up all the talent just doesn't seem very "sporting", but it sure makes them look bad when they lose.

That's exactly how I feel. I'm all for a free market, more power to them and that'll never change, but sheesh... this ridiculous. Seems like they view $$$ as the solution to everything. I'm glad they haven't done all that well lately and am annoyed by the fan base they've been able to purchase (including several of my own family).

12-22-2006, 09:29 PM	#2
Napoleon54 Vice Admiral Join Date: Aug 2001 Location: floating inside of a giant egg made of stars Posts: 4,861	Yikes, I knew the Yankees spent a lot but didn't know the extent of the margin. Their payroll is nearly 10x Florida's! That's ridiculous... just like government, their philosophy appears to be "throw money at the problem", rather than a logical and fiscally efficient plan. __________________ There is all the difference in the world between treating people equally and attempting to make them equal. - Friedrich Hayek

12-22-2006, 10:44 PM	#3
Sirrich3 Rear Admiral Upper Half Join Date: Aug 2005 Location: In Sunny Southern California Posts: 3,950	They get taxed hard each year.... __________________

12-23-2006, 06:38 AM	#4
MikeD President, Cowboys Nation Join Date: Dec 2004 Location: In the 'burbs, west of D.C. Posts: 5,139	I wish Nickel was still around. __________________

12-24-2006, 09:40 AM	#5
VTGreg Rear Admiral Lower Half Join Date: Jun 2002 Location: Charlotte, NC Posts: 2,533	That is a lot of money. However, just think about how much money they make by being a perennial favorite to win the World Series. I don't know specifics, but their television contract alone is ridiculous. In addition to that, they have all of the advertising revenue they generate from the team. It seems ridiculous for them to consistently spend that much money, but they always contend and are never in the position of some of the other teams that spend money and never win. Look at the Mets for the perfect example of that scenario. __________________ It only ends once... Anything that happens before that is just progress. Courage is not the absence of fear but rather the judgment that something else is more important than fear.

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