Yankees hit with $26 million luxury tax

[1998 Yankees]

Here, Yankee bashers, live it up:

http://news.yahoo.com/s/ap/20061223/...o_luxury_tax_4

Enjoy!

[Luis_Rivera]

Originally Posted by 1998 Yankees

Here, Yankee bashers, live it up:

http://news.yahoo.com/s/ap/20061223/...o_luxury_tax_4

Enjoy!

I don't get it. Do you not think they should be subject to the luxury tax?

[BlackHatCowboy]

CH-CHING.

What was that?

Oh, Steinbrenner just paid that with this pocket change.

[mlyons]

How do they calculate payroll for luxury tax purposes, anyway? Those figures they give for the Yankee payroll are higher than I've seen elsewhere.

[Joshv02]

It is Art. XXIII of the CBA.

[Joshv02]

Here: this is what I wrote elsewhere:

To add to that, for our purposes, AAV (which for purposes of the lux tax, we are using [incorrectly, but I do it too] as a synonym for "salary" under Art. XXIII) is a number of things. Art XXIII, section E, subsection (2) defines it:

A Uniform Player’s Contract with a term of more than one (1) championship season (“Multi-Year Contract”) shall be deemed to have a Salary in each Guaranteed Year equal to the “Average Annual Value” of the Contract (plus any bonuses subsequently included by operation of Section E(4) below). “Average Annual Value” shall be calculated as follows: the sum of

(a) the Base Salary in each Guaranteed Year plus

(b) any portion of a Signing Bonus (or anyother payment that this Article deems to be a Signing Bonus) attributed to a Guaranteed Year in accordance with Section E(3) below plus

(c) any deferred compensation or annuity compensation costs attributed to a Guaranteed Year in accordance with Section E(6) below shall be divided by the number of Guaranteed Years.



So, you are correct when you write that AAV is "total amount of the contract divided by the length of the contract in years." However, you also have to back in signing bonus and deferred comp (something that keeps coming up when discussing Manny's AAV). And, as the lead-in makes clear, you have to then jump to E4 to add in performance bonuses.

In addition, Article XXIII, section E, subsection 4, sub (a) adds in performance bonuses.

Any amounts that are actually earned by a Player as Performance Bonuses, Award Bonuses or any other bonuses properly included in a Uniform Player’s Contract shall be included as part of the Player’s Salary in the Contract Year in which the service or performance giving rise to the Bonus was provided. Potential bonuses shall not be included in the Average Annual Value calculation made pursuant to Section E(2) above.



So, going back to the example in post 55:


2007: $400K + $15M for 1 PA
2008: $400K + $15M for 1 PA
2009: $400K + $15M for 1 PA
2010: $400K + $15M for 1 PA

Add up the base salary (what I assume the "$400k" represents). Add in the signing bonus (which this example assumes is zero). Add in the deferred comp (which this example assumes is zero). Divide by number of years (4). That is the base AAV: $400k.

Then, go to Art XXIII(E)(4)(a), and add in the performance bonus. As soon as "the service or performance giving rise to the Bonus was provided", we add that performance bonus in that that year - "the Contract Year in which the service or performance giving rise to the Bonus was provided." We ignore future potential bonuses. (This contract is simple b/c it is uniform across years. Change these assumptions and we'd see something different.) We get a total of $15.4 for the salary under Art XXIII for lux tax purposes (what we've called AAV).

The harder part is what happens when a performance bonus triggering event then triggers a change in future base pay. This would mean that the AAV in past years changes, because base pay is included in the standard (E)(2) calculation. This potentiality is covered by XXXIII(E)(4)(b), which may require the use of an arbitration panel, etc, and is a pita to look at. That could be a real source of gaming the system, but the parties already recognized that and built in some safeguards.

That all said, the old CBA goes out the window after today, I believe, and the new on is not on-line, I don't think.

[mlyons]

That's weird. Why would they use an average annual value rather than the actual value?

I'm also wondering how they count salary paid by another team, e.g. the Rangers paying 1/3 of Alex Rodriguez's salary.

[Syd Thrift]

Originally Posted by mlyons

That's weird. Why would they use an average annual value rather than the actual value?

To keep teams from backloading contracts outside of the CBA and then voting against the next one.

[Joshv02]

Originally Posted by mlyons

That's weird. Why would they use an average annual value rather than the actual value?

I'm also wondering how they count salary paid by another team, e.g. the Rangers paying 1/3 of Alex Rodriguez's salary.

IT IS IN ARTICLE XXIII!!!!! (It is part of the paying team's "salary obligation" for lux tax purposes in the year the payment is made.) This creates some oddities when a paying team pays all, or more than all, of a players AAV, but not the entire salary. See Eric Hinske.

[1998 Yankees]

[thehatfield]

Originally Posted by 1998 Yankees

Well, as a Red Sox fan, it's impossible now to pile on the Yankees for over-spending especially when they only really went out and spent money on a couple of pitchers this year.

In a completely irrelevant side note - Andy Pettitte and I share the same birthday (although a couple of years apart).

[1998 Yankees]

Originally Posted by Purple Cowboy

Well, as a Red Sox fan, it's impossible now to pile on the Yankees for over-spending especially when they only really went out and spent money on a couple of pitchers this year.

In a completely irrelevant side note - Andy Pettitte and I share the same birthday (although a couple of years apart).

Thanks, Purple Cowboy. It so happens that June 15th is Amateur Draft date in my OOTPB league, so I will wish you and Andy many happy returns of the day each time I expend my draft picks.

BTW, I purposely provided an arena for the purpose of Yankees bashing, and I must say that I am disappointed in the results. I expected this thread to be multiple pages by now.

Perhaps it's the wrong time of the year for such a festivity. Or maybe people are realizing that other teams are now indulging in some of the same futile overspending that they would dump on the Yankees for, and rightly so.

Now, however, I see signs of the Yankees returning to the management style that produced the team for which I am named and I see other teams offering ridiculous amounts of money for negotiation fees and player contracts. It seems that these other teams, rather than learn lessons from the Yankees' evil ways, now want to repeat them.

I welcome both trends and I hope they continue.

[Terpripken]

Originally Posted by 1998 Yankees

Here, Yankee bashers, live it up:

http://news.yahoo.com/s/ap/20061223/...o_luxury_tax_4

Enjoy!

Now...if the Rays will just take their cut...and sign a pitcher or something.

[1998 Yankees]

Originally Posted by Terpripken

Now...if the Rays will just take their cut...and sign a pitcher or something.

You got that Japanese third baseman, didn't you? What more do you want?

Seriously, the Devil Rays need to spend more and there is no reason why a market like the one that you are in could not support that. Maybe it's the old chicken and egg thing (which comes first, fan interest and more revenue or investing in good players to generate them?), but your management does not seem to want to part with $$$. Aubrey Huff going to the Orioles must have been a kick in the teeth to fans down there (I am assuming that his mid-season trade to Houston was an "impending free agent" move resulting from realizing that there was no way he was re-signing with Tampa Bay).

Notice, by the way, that I do not advocate no free agent spending in my ideal team management strategy. Just judicious FA acquisitions balanced by a strong farm system and smart trades. Having a good baseball team costs lots of money, and owners vary as to how much they want to invest and how much they want to profit, all conditional on market size of course. As long as your Rays are making a profit for the owner, I don't see any change in your team strategy. Do you?

[Terpripken]

[quote=1998 Yankees;1992591]You got that Japanese third baseman, didn't you? What more do you want?
/quote]

Iwamura...yeah I like him. The Boys in charge said they wanted to shore up the D. I saw him briefly in WBC....he looks like a good player.

Is his mitt Gold Glove caliber like they claim? Who knows? But to be honest any upgrade over Upton/Cantu (he will play 2B/3B) is good imo. he can't be any worse than them defensively.

I think his bat won't have the pop that it did in Japan...but gappers are just as good as HR's imo.

[Terpripken]

Originally Posted by 1998 Yankees

You got that Japanese third baseman, didn't you? What more do you want?

Seriously, the Devil Rays need to spend more and there is no reason why a market like the one that you are in could not support that. Maybe it's the old chicken and egg thing (which comes first, fan interest and more revenue or investing in good players to generate them?), but your management does not seem to want to part with $$$. Aubrey Huff going to the Orioles must have been a kick in the teeth to fans down there (I am assuming that his mid-season trade to Houston was an "impending free agent" move resulting from realizing that there was no way he was re-signing with Tampa Bay).

Notice, by the way, that I do not advocate no free agent spending in my ideal team management strategy. Just judicious FA acquisitions balanced by a strong farm system and smart trades. Having a good baseball team costs lots of money, and owners vary as to how much they want to invest and how much they want to profit, all conditional on market size of course. As long as your Rays are making a profit for the owner, I don't see any change in your team strategy. Do you?

It's slightly more complicated than that.

Remember...the Rays are under new ownership as of last season. The travesty that was Vince Namoli/Chuck Lamar is history. There is no doubting that their 10 year tenure was a joke.

I have high hopes for the new hosses though.

They sold me right away. Free parking all last season at Trop (this season too), over 250 flat screens all around stadium. They basically gave the place a face-lift...made it more fan-friendly. Also...you can even bring outside bottled water and snacks. (they have to be packaged a certain way) but still...pretty cool.

Now...they have had a year....we'll see. But...step one was bringing fans back. They accomplished that. Attendence was up 26% from 2005. That is huge. they did it without really making any major improvements to squad...buty by marketing and being more friendly to fans.

I have been a tix holder for awhile...and last year was by far the most enjoyable season ever....staff was better...attitude was better...the whole nine.

These guys are Wall Street investor's...so who knows how there baseball acumen is...that will be shown soon.

But...they ARE good businesman.

They have marketed Rays baseball well, and I am seeing that just by walking around the area.



Huff...well...my feelings on him are well documented. Trust me. You are gving him too much credit as a player. He is without a doubt the laziest, most diferntial ballplayer I've ever seen.

Chalk it up to being on losing team if you want. I think he is slug. And I will heckle unmerciously everytime he is town (as I did when he was a Ray).

IMHO...the orioles made another silly signing. But...my opiions on O's will be for another thread.

[Syd Thrift]

Generally speaking, the vast majority of FAs are players in their prime or in the post-prime section of their careers, meaning that when teams give them huge contracts they're essentially paying for what they've already done rather than what they're going to be doing over the life of the contract. A team like the Yankees can survive this by just going out and signing another crop of FAs to fill the holes that come when a post-prime player craps out. A team like the D-Rays really, really should not be doing that or they'll become the Mariners. Actually they'll become something worse than the M's because the M's at least can support all the payroll they had in '04 and '05.

There is a long-standing but still horribly wrong fallacy that says that in baseball you have to spend money to make money. True, many good teams are also high-payroll teams, but that's an after-the-fact thing. You get the first 6 years of a player's career virtually free. If you can build around a superstar during that time, you're going to be able to afford a sizeable payroll increase to keep your guys where they are and to plug holes where they occur. If the guys you drafted just aren't good enough, you let them sign for too much money elsewhere (see Meche, Gil) and you reload. That's the way to (eventually) build a good team if you don't have unlimited resources. Signing vets just gets in the way of that unless you have a good reason for signing them.

[1998 Yankees]

Well, this is all good news that I am glad to hear, for your sake. Particularly, which I was unaware of,:

Originally Posted by Terpripken

...the Rays are under new ownership as of last season. The travesty that was Vince Namoli/Chuck Lamar is history. There is no doubting that their 10 year tenure was a joke.

I have high hopes for the new hosses though . . . Attendence was up 26% from 2005. That is huge. they did it without really making any major improvements to squad...buty by marketing and being more friendly to fans.

I have never understood why major league baseball in central and south Florida suffers. You would think that baseball would flourish there, as it does even further south. It's got to be team ownership, not the lack of potential baseball fans. Good luck; I wish you a second place finish and the wild card spot, losing only to the Yankees in the ALCS (I can't do any better than that, sorry).

Originally Posted by Terpripken

Huff...well...my feelings on him are well documented. Trust me. You are gving him too much credit as a player. He is without a doubt the laziest, most diferntial ballplayer I've ever seen.

Wow. I thought he was a popular Ray. I was mistaken if your opinion is representative. It doesn't sound like he is missed in Tampa, if so!

[Terpripken]

Originally Posted by Syd Thrift

Generally speaking, the vast majority of FAs are players in their prime or in the post-prime section of their careers, meaning that when teams give them huge contracts they're essentially paying for what they've already done rather than what they're going to be doing over the life of the contract. A team like the Yankees can survive this by just going out and signing another crop of FAs to fill the holes that come when a post-prime player craps out. A team like the D-Rays really, really should not be doing that or they'll become the Mariners. Actually they'll become something worse than the M's because the M's at least can support all the payroll they had in '04 and '05.

There is a long-standing but still horribly wrong fallacy that says that in baseball you have to spend money to make money. True, many good teams are also high-payroll teams, but that's an after-the-fact thing. You get the first 6 years of a player's career virtually free. If you can build around a superstar during that time, you're going to be able to afford a sizeable payroll increase to keep your guys where they are and to plug holes where they occur. If the guys you drafted just aren't good enough, you let them sign for too much money elsewhere (see Meche, Gil) and you reload. That's the way to (eventually) build a good team if you don't have unlimited resources. Signing vets just gets in the way of that unless you have a good reason for signing them.

Your absolutley right Thrift.

The smartest thing the Rays did last year was tradinng Huff. they got a decent return (Meh...we'll se about Zobrist). They stole Guzman from the Dodgers and also got a Legit Catcher (hopefully) in Navarro in another trade. For who?

Mark Hendrickson? Aubrey huff? Toby Hall? Julio Lugo?

solid players all...but given this years market...well they were ahead of and on top of the trend.

In fact...everyone is drooling over Crawford/Baldelli because of their cheap long-term deals and there ever-growing potential.

The Rays are on the right track. They are locking up and or holding onto their young talent. No more Jose Canseco, Vinny Castilla, nonsense.

Would i like them to spend a little money in FA...sure.

and they will...but I am glad they stayed out of this market.

Guys like Gil Meche were on their radar...but sometimes ur smart by lying low.

[Terpripken]

Originally Posted by 1998 Yankees

Well, this is all good news that I am glad to hear, for your sake. Particularly, which I was unaware of,:

I have never understood why major league baseball in central and south Florida suffers. You would think that baseball would flourish there, as it does even further south. It's got to be team ownership, not the lack of potential baseball fans. Good luck; I wish you a second place finish and the wild card spot, losing only to the Yankees in the ALCS (I can't do any better than that, sorry).
Wow. I thought he was a popular Ray. I was mistaken if your opinion is representative. It doesn't sound like he is missed in Tampa, if so!

well...its partially due to you guys.

I mean ST for yanks is in tampa.

Furthermore...there are alot of retirees here from up north. Their baseball loyalties are well established. They will come to trop to see their team. But...fortunately...because of new ownership and exciting players like Crawford, Gomes, etc. people are coming around.