December 18, 2013

Yankees’ luxury tax total tops milestone

With $28 million due, New York has now been taxed over $250 million since the penalty began in 2003.

By Ronald Blum
The Associated Press

NEW YORK — The New York Yankees were hit with a $28 million luxury tax bill, pushing their total past the $250 million mark since the penalty began in 2003.

According to Major League Baseball calculations sent to teams Tuesday, the Los Angeles Dodgers were the only other team that exceeded the tax threshold this year and must pay $11.4 million. Boston finished just under for the second straight year, coming in $225,666 shy of the $178 million mark.

Figures include average annual values of contracts for players on 40-man rosters, earned bonuses and escalators, adjustments for cash in trades and $10.8 million per team in benefits.

Because the Yankees have been over the tax threshold at least four consecutive times, they pay at a 50 percent rate on the overage, and their $28,113,945 bill was second only to their $34.1 million payment following the 2005 season. The Yankees are responsible for $252.7 million of the $285.1 million in tax paid by all clubs over the past 11 years.

Yankees owner Hal Steinbrenner said he hopes to get under the threshold next year, when it rises to $189 million. That would reset the team’s tax rate to 12.5 percent for 2015.

But following agreements Tuesday on a $2 million, one-year deal with second baseman Brian Roberts and a $7 million, two-year contract with left-hander Matt Thornton, the Yankees are at $177.7. Their only hope to get below the threshold appears to be if an arbitrator upholds most of Alex Rodriguez’s 211-game suspension, relieving the team of a large percentage of the third baseman’s $25 million salary.

Tax money is used to fund player benefits and MLB’s Industry Growth Fund.

The Yankees finished with the highest regular payroll for the 15th consecutive year, winding up at a record $237,018,889. The Dodgers, in their first full season under new ownership, were just $146,647 behind after nearly doubling spending from $129.1 million. Regular payrolls include salaries, earned bonuses and pro-rated shares of signing bonuses.

Los Angeles had a higher payroll for the tax: $243 million to New York’s $234 million. But because the Dodgers didn’t exceed the threshold in 2012, they pay at a 17.5 percent rate and owe $11,415,959.

Checks to the commissioner’s office are due by Jan. 21.

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