Yankees Already Flirting With Luxury Tax

On December 5, 2013, in Sporting News, by admin

Major League BaseballThe New York Yankees didn’t do so well last season. They didn’t even make the playoffs and Yankee fans are not going to stand for that once again next year. Neither is the ownership, the coaching staff or the players.

Even though spokesmen for the Yankee organization insisted all year long that the club had set a serious goal to stay under the $189,000,000 salary cap for 2014, it is already apparent that other factions within the group have other ideas.  One side wants to avoid the dreaded Luxury Tax… the other wants to win the pennant.

The Yankees just got off to a roaring start by signing outfielder Jacoby Ellsbury to a 7 year deal worth a healthy $189 Million, that’s almost 22 million bucks a year for one guy. Where do they go from here?

New York has already made a deal with catcher Brian McCann for $85 Million and they are still trying to come to terms with Robinson Cano who seems to want the entire budget all for himself. He’s very good, but come on.

The Yankees also have to find a good starting pitcher and bolster up the bull pen in general and that won’t be cheap. Ironically, they just passed up a genuine bargain in ace closer Brian Wilson because, he wouldn’t shave his beard!

There are pending offers on the table for Omar Infante, Carlos Beltran and Shin-Soo Choo… all of whom will be demanding a pretty penny.

In base ball lingo it’s known as the ‘competitive balance tax’, but that’s not very romantic sounding, is it?  So the press has dubbed it baseball’s ‘Luxury Tax’ and by that name it is generally known. The salary ceiling cap is currently set at $189,000,000 for each team and any team exceeding that figure is subject to be taxed on a sliding scale, depending in part on past performance history.

If a team goes over the mark for the first time, they are hit with a relatively light 17.5% of the difference. If they repeat the overage for a second year in a row, it goes up to 30%.  Now that starts to bite. But wait, exceed the limit 3 years in a row and you will be paying a 40% on the excess. Finally, for repeat violators, like the Yankees, the tax goes up to 50% and stays there.

The New York Yankees have been paying the 50% ‘competitive balance tax’ for several years now.  They are probably getting used to it!


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