SBD/March 12, 2013/Franchises

Yankees Stick To Lower Payroll Plan To Avoid Luxury Tax In '14

With payroll under $189M, the Yankees could receive as much as $40M back in '14
The Yankees by moving under the $189M MLB luxury tax threshold would see their current luxury-tax payments “plummet to zero and work up from there,” according to a front-page piece by David Waldstein of the N.Y. TIMES. The franchise also would “become eligible for financial reimbursements worth millions of dollars.” The new, “restrained” strategy is “not a reflection of the team’s financial health.” Yankees Managing General Partner & co-Chair Hal Steinbrenner “seems intent on establishing a certain austerity because it makes financial sense to him.” The Yankees, always the “aristocrats of baseball,” now are “behaving as if they are decidedly middle-class.” The Yankees currently have a “luxury tax rate of 50 percent, meaning that for every dollar they spend over the 2013 payroll threshold” of $178M, they “must pay 50 cents” to MLB. The team “paid out” $19M in ’12, and the figure “could be” $15M in ’13. But if the Yankees “can get below the threshold for 2014, they will pay no luxury tax.” If they then exceed the $189M mark in ‘15, the luxury-tax rate “will still be a more friendly 17.5 percent, not the 50 percent they are paying now.” In addition, the new agreement also “includes a provision whereby high-income teams like the Yankees that annually make payments into a separate revenue-sharing pool will receive a substantial rebate from that pool if they keep the payroll” under $189M in ‘14. Teams that have contributed the most to the revenue-sharing pool over the years “stand to get the most money back.” It was originally thought the Yankees “could get back as much as” $40M in ’14, but some estimates are that figure “will be a more modest” $10-11M (N.Y. TIMES, 3/12).
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Franchises, New York Yankees, MLB

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