Update: Yankees hit with $28.1M luxury tax bill

Tuesday Night Open Thread
Thoughts following the Roberts and Thornton pickups

Dec. 17th: According to Ronald Blum, the Yankees were hit with a $28,113,945 luxury tax bill for the 2013 season. They finished the year with a $237,018,889 payroll, the highest in baseball history. (The Dodgers were only $146,647 behind New York.) Checks are due January 21st. Oh, and by the way, Maury Brown reports MLB’s annual revenues topped $8 billion for the first time in 2013. The game is healthier and teams are wealthier than ever before.

Sept. 11th: Via Bob Nightengale: The Yankees are currently looking at a record $29.1M luxury tax bill after the season. That is based off a $236.2M payroll and is not yet final. The luxury tax is officially calculated after the season and team payroll could still go up or down depending on trades (Brendan Ryan!) and call-ups and whatnot these next two weeks. The Dodgers ($9.9M) are the only other team facing the luxury tax this year.

The Yankees are taxed 50% on every dollar over the $178M threshold, which climbs to $189M next year. As you know, the team is trying like hell to get under that number and save both luxury tax and revenue sharing money down the road. Assuming that $29.1M number doesn’t change much, the Yankees will have paid over $253M in tax since the system was implemented in 2003. The rest of baseball will have paid just $32M or so. The Steinbrenners have shelled out $19.3M, $13.9M, $18M, and $25.7M in luxury tax in the three previous seasons.

Tuesday Night Open Thread
Thoughts following the Roberts and Thornton pickups
  • https://twitter.com/KramerIndustry Kramerica Industries
  • Darren

    Such a stupid system. Yankees get penalized for trying to win, even in a down year due to injuries, while every other team is content to pocket the profits and rebuild. The Yankees are good for baseball. They should be the only team EXEMPT from the luxury tax, no matter how much they spend.

    • radnom

      Seems like its working to me.

      Yankees are handicapped by bad contracts, and can’t spend their way out of it. Young players are being locked up by extensions across the league, shifting the burden of fielding a strong team back towards player development. The Pirates are in the playoffs, KC is going to finish with a winning season and SD is challenging Texas out west.

    • Bob Buttons

      I’ll take this over the bloody stupid hard cap any day of the week and twice during Sunday Night Baseball.

    • http://uMTE6meMzrdY gs3369

      even in a down year due to injuries

      If you think the Yankees had a down year because of injuries, you’re clueless. The Yankees had a bad year because the roster was poorly constructed and old. Our thousand year old shortstop who was already hurt gets hurt trying to come back? Shocking!

      I cringe every time I hear the injury excuse. Yeah, injuries happen. Part of the game. Take every injury away from last years Yankee team and they still suck.

      Stop with this nonsense.

      • Jim Is A (Bored) Peckerhead

        “Take every injury away from last years Yankee team and they still suck.”

        Are you in first grade?

      • BFDeal


    • Caballo Sin Nombre

      “The Yankees are good for baseball” compared to, say, the Pittsburgh Pirates because…. why, exactly?

      • Improbable Island’s Dirty Midget Whores (formerly RRR)

        Because they’re the most popular sports franchise, arguably, in the world, and by FAR the most popular MLB team.

  • Frank

    Here’s the part that I want to understand…

    They get hit with a 29MM tax bill this season largely b/c they absorbed big 2013 hits to avoid 2014 hits

    Next year they drop below 189MM and it basically resets the tax…so they get taxed at 17% or something, I forget, moving forward + have access to revenue sharing IIRC.

    But, what if they just stayed at about 200MM per year like they’ve been. So this year they would have been taxes at about 11MM ((200-178)/2), next year (200-189)*.75 (I think) so about 8MM. And so on. They will see long term CF savings but this year eats into A LOT of it. Doesn’t make the plan seem so brilliant based on a time value of money, but again, I don’ tknow the particulars.

    • RetroRob

      I am not sure I fully understand your question, but maybe I do. It seemed clear to me that the Yankees were holding the line on their topline payroll for year, and thus were paying less in luxury tax every year as the threshold crept closer to what they were paying. They were still spening in the $205-$220 range yearly, but they were paying less of a penalty as the tax threshold kept increasing, inching toward their payroll.

      I believe that was the current Steinbrenner’s strategy to get under the tax eventually. Simply let the threshold creep closer until they were under. No need for cuts, just maintain within a range.

      All that changed with the new CBA, which suddenly ends the threshold, capping it at 189. That means in order for the Yankees to get under it they have to cut. MLB also seemed to add some additional incentives if they do get under.

      Yet the question remains. Are they saving anything? Their strategy of picking up older parts to blend in with their already older parts has led to increased injuries, which means the addition of more talent to offset the injuries, driving up their costs.

      All I know is they’re going to have to cut about $50M from their yearend payroll, and that’s a lot. I think it’s a questionable strategy for what they’re going to gain. The team is ageing and they have not brought in a new round of free agents to supplement the older, declinging free agents. It’s okay to sign Teixeira and CC to longterm deals with the understanding the outer years they will be in decline. To supplement that decline, a new group needs to be brought in, or a strong farm system is needed. Really a combination of both.

      Right now I don’t see either, and that is going to lead to a continual erosion in attendance, as well as related sales, ratings, etc. Worse team equals less revenue. All to gain what?

    • Need Pitching & Hitting & Defense & Baserunning

      They haven’t been at $200M in luxury tax payroll for some time.
      Last year, it was about $223M. The hits this year were basically just the structure of Wells deal, and possibly Youkilis, but likely didn’t impact this year’s luxury tax bill by more than around $5M.
      Wells only counted for about $6.6M in luxury tax payroll this year. Even if they never traded for him, they would have only saved slighly over $3M in luxury tax. If they hadn’t signed Youkilis, they likely would have spent most/all of that money anyways, so there probably wouldn’t be any savings there.


    Collectively the Steinbrenners are billionaires.

    The Yankees are worth almost $2 billion.

    MLB brings in $8 billion annually.

    The owners want player salaries to be no more than half revenues.

    The owners want to eliminate pensions for non-player personnel.

    The “luxurity tax” and the “austerity budget” are about profits, not reality, and not “parity.” The luxurity tax should not exist. The only people who care about it are the owners, who use it to artificially control salaries.

    • Wolfgang’s Fault

      Perhaps this is so now, but it wasn’t always thus. The regular Joe Blow fan viewed baseball as his, & in some cases her, cheap entertainment, to be listened to on the radio, seen free on TV, & sometimes even, viewed at the ballpark, either in the “cheap” nosebleed or bleacher seats, blue collar reserves, or I must be in the front row high brow boxes. Those days are done. The game, particularly for Yankee fans of a certain age & generation, belongs to our corporate masters & their hired guns. The economics may add up for all the owners, players, & hangers in this “business,” but for a certain type of fan, they’ve been priced out & the illusion that they count is now beyond naive & ridiculous. A pox on all their houses.

    • Tisha

      incorrect. The Yankees are worth closer to 4 billion , not 2 billion.

  • Ed

    So basically if they get under the cap next year, expenses go down about $76M just from payroll & luxury tax. There’s also the possible revenue sharing bonuses, and the resetting of the luxury tax percentage for future years.

    If they pull this off, in the end I guess they end up saving half a season’s worth of payroll – probably more than the majority of teams spend in a season.

    It adds up… then again, this year’s payroll and luxury tax bill are bloated due to all the effort to keep next year’s payroll down.

  • Need Pitching & Hitting & Defense & Baserunning

    fwiw, I don’t it doesn’t appear $29.1M would be a luxury tax record.
    The Yankees paid $34M for 2005.

  • Chris

    These figures are why I have no problem with them getting under $189 million next year.

    • The Big City of Dreams

      How anyone can get behinds that plan is still something I don’t get but to each his own.

      • Chris

        Part of my reasoning is that small market teams get revenue sharing money that they are now using to lock up their young core players before they get remotely close to arbitration or free agency. This leaves the Yankees in the position of having to overpay for the FA’s and agents and other teams driving up the price as well. Which then leaves them paying top dollar for average players. Youk for 13 million is the latest example. Hopefully they can start bringing up players in the next few years that they have developed to avoid this becoming a long term issue. But that is another story.

        • The Big City of Dreams

          I understand that but they are limiting their one advantage when they aren’t ready to do so.

          • Havok9120

            It isn’t a matter of wanting them to do it. It’s a matter of understanding why they want to do it and not getting pissed about a game.

            There’s a drastic difference.

  • Robinson Tilapia

    I’m so done with this.

    If there’s really players out there this off-season that make sense on this team and flat-out improve it, pay the motherfucking tax.

  • Endlesjose

    Yet the Yankees shouldn’t complain.They saved at least $30 million from Teixeira and A-Rods contract.

  • Need Pitching & Hitting

    I think the $237M+ figure was for regular payroll.
    Given that luxury tax figure, the luxury tax payroll would have been about $234.23M, fwliw.

  • Fin

    The Stiens better get ready to keep writing those checks. The checks will just be larger and larger as they go further and further over the tax. That minor league system isn’t producing shit and filling out an entire team of 30+ year old FA’s is expensive and in constant need of more FA’s to make up for the decline of aging previous FA’s. Not having any young players, let alone young cost controlled players is going to be crazy expensive if the Yankees want to continue to compete.

    • Stan the Man

      The minor league system isn’t producing anything because the Yankees and their fans believe great players just fall out of the sky and start producing the minute they put on the pinstripes and when this doesn’t happen they trade away top prospects for avg veterans who command bigger salaries which keep the payroll up above the luxury tax. There is no reason why the Yanks can’t have a core group of veterans mixed in with younger players and if they miss the playoffs once every 5 yrs, so what? They are a much more dangerous organization when they have money to spend as opposed to holding back to avoid paying luxury tax money which is literally wasted money.

  • ropeadope

    Drop in a bucket.

    • Mandy Stankiewicz

      Does anyone else here find it strange how media and readers/fans around the Yannkees are obsessed with crunching the numbers that affect a billion dollar franchise, and their (very rich) owners? We saw missing the post season costs more than paying this tax. Boom. Done. Sign more checks. Gamble on strengthening your brand and making 60 million, than playing small and safe with saving 28 million. This doesn’t affect our payroll directly, this affects the pockets and profits of the very well heeled owners. People love to talk about other people’s money, I guess.

  • TWTR

    I love that they spend. I just wish they would spend more wisely. As I have said, this off-season is much better than last season, when they set money on fire.

  • RetroRob

    …and despite the tax bill, the Yankees payroll as a percent of revenue is its smallest since the 1990s.

    All teams are richer, including — especially — the Yankees.


  • Mike

    If we can spend that much this year, we will win the WS for sure.

  • Jack
    • TWTR

      It’s time to stockpile projectable young talent.

    • http://www.draftstreet.com/register.aspx?r=Jedile Jedile

      I think they should get him to play 2B (Cause it says he can)!

      if he can put up 10Hrs 300Avg and swipe 30 bags he’d be awesome.

      • Rick

        If he can’t, oh well. We watched Soriano there for years. He couldn’t really play second either!

  • Steinbrenner’s Ghost

    So to whom does the league distribute the luxury tax revenue?

  • JB Early

    I agree in principle. Most of MLB suits have an anti-NYY bias. Anyone who thinks otherwise, doesn’t care to see it, and their mind can’t be changed. Hypothetically take away the Yankees revenue stream from MLB, and watch the league collapse. If the Yankees were to field a losing team of 4A players for 5 consecutive years, like some others, the rest would see a marked loss in attendance, one they could not make up elsewhere. Not to mention the teams benefiting from the penalties. Let those bozos have parity & imagine it’s what fans want. Fans want the team we root for to win the World Series as often as possible before we die. For most here, that’s the New York Yankees. End of story.

    • Rick

      Yes, they’re so anti-NY that they put their league office there. (Boom, successfully used all variations of the word in a single sentence – be pround English teacher, be proud).

  • Cookiemilk

    If Tanaka isn’t posted could the Yankees file a collusion charge against MLB, NPB, the Boston Red Sox, and the Texas Rangers?

    The charge would be threefold:

    1. The NPB doesn’t want to give Tanaka a chance to sign with the Yankees who have been the team most tied to his name. The Yankees could present I’d say at least 100 print and online articles about Tanaka with their name included in the story as the lead pursuer of Tanaka.

    2. The NPB and MLB changed the posting system so the Yankees have to pay more in salary thus more luxury tax thus more money to the small market teams including ones who pocket the money to sign Tanaka.

    3. Boston and Texas got their star Japanese pitchers and don’t want the Yankees to get theirs. They urged MLB to change the posting system to make it harder / as hard as possible for the Yankees to get Tanaka with more teams in on the bidding for Tanaka which lessens the chance of the Yankees getting a star Japanese pitcher.

    Seriously, of all the times NPB and MLB change the posting system and a Japanese team is balking at posting a player it’s when the Yankees want that player the most and neither Boston nor Texas is interested in that player.

    They pull this flat $20M posting fee shit when the Yankees want to lower payroll.

    Think about it, folks: Why would MLB want the Yankees to lower payroll? If the Yankees did that, it’d mean less luxury tax money to the small market teams. One solution: make the posting fee $20M so the Yankees pay more in salary for Tanaka and to the small market teams.

    • Cookiemilk

      Here’s why they don’t want the Yankees to sign Tanaka:

      The Yankees took Hideki Matsui from them.

      They think the Yankees have disrespected Ichiro by signing Ellsbury and Beltran which barring injury makes Ichiro a super/overpaid/glorified fourth outfielder which hurts the NPB brand.

      They wanted Darvish to go to the Yankees not a team in a racist, xenophobic, anti-immigrant, anti-Asian state like Texas with a like thankfully former Rangers CEO in Nolan Ryan hands down the biggest asshole among all MLB CEOs.

    • Jorge Steinbrenner

      Tell me, when did you start believing everyone was staring at you?

      *writes Abilify scrip*

    • Rick

      Why couldn’t the agents have just changed the system to make sure the money goes to the player as opposed to the team? F these fair systems! F them all.

      • Cookiemilk

        I don’t have a problem with a team getting posting money as that compensates them from having one less star player and allows them to give more money to remaining stars and players in general, so acutally, it helps NPB players. That $20M Rakuten receives will be distributed elsewhere.

        My problem is of all the years to change the posting system it’s the one the Yankees want a star Japanese player the most and the posting fee is so low the Yanks will be forced into an artificial bidding war thus pay more salary thus luxury tax this more money to cheapskate teams (Marlins) or to fund some who have stopped being that (Royals, Twins.)

        The luxury tax hurts the Yankees the most therefore it is collusion against the Yankees. The Royals can thank the Yankees for Infante because they put Yankee money in their cookiejar for years and only recently have they finally spent it starting with last year.

        The $20M posting fee hurts the Yankees because by being so low as many as ten teams could be in on the bidding, it artifically drives up the price on the player and whichever team the player chooses is socked with a huge luxury tax bill. That team will more often than not be the Yankees. The player will either use the Yankees to drive up his price to land elsewhere or pick the Yankees who will then be socked with a huge luxury tax bill. In the end the Yankees are getting fucked over.

  • Cookiemilk

    Baseball in general is conspiring to destroy the Yankees like this:

    1. Making the posting fee for NPB players a flat $20M. That artificially drives up the Yankees offer and everyone lets the Yankees have the guy because hey, more luxury tax money thus more money to buy another yacht for the Royals’ owner.

    2. Asking ridiculous returns from the Yankees in trades yet handing Boston ace and former Cy Young Award winning pitchers for mostly marginal talent e.g. Armas Jr. and Pavano for Pedro, Fossum and a bag of balls for Schilling, half of what Boston gave up for Beckett, whoever the hell Boston gave up for Peavy. Hanley Ramirez and Anibal Sanchez were the ONLY significant talent they had to give up for these four guys. The Yankees? If Max Scherzer was on the trading block Detroit would want Sanchez, Gardner, Nova, and Heathcott to start. Fucking bullshit. Boston? Far less I bet.

    3. The Sunday night ESPN games where the Yankees don’t have a travel day the next day so they could rest from playing until 11pm or later.

    4. The Saturday games at 4:05pm just before it’s hardest for the Yankees to pick up the ball.

    5. Taking as long as possible to rule on A-Rod so it’s less likely they’ll get the very best thirdbaseman they can put on the field for 2014.

    6. The luxury tax which was created so cheapskate teams could leech off the Yankees.

    • Mike

      You make some very valid points.

      I would add changing the draft so that we are no longer able to offer large contracts to top prospects and restocking our farm.

    • Rick

      Shhh, the bad people are standing right behind you. They’re all around!!

  • Dr. Grenaldine

    “It’s not my fault you bought the Minnesota Twins, I bought the New York Yankees.” – George Steinbrenner

  • mitch

    There should at least be some festivities when the money is due. Hal should get to choke out Jeffrey Loria and stuff the money in his mouth Ted DiBiase style.

  • hey now

    Well, time to head to the Yankee Stadium basement and print out some more money.

  • Improbable Island’s Dirty Midget Whores (formerly RRR)

    One thing to keep in mind: It’s well and good to say “Just pay the damn tax”, but this isn’t our money.