New York Yankees hit with $28M luxury tax
Dodgers only other team to exceed threshold
The New York Yankees were hit with a $28 million US 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 per cent 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 17.5 per cent for 2015 and get the Yankees some revenue-sharing refunds.
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 million for 15 players next year, when benefits are likely to total between $11 million and $12 million. 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 per cent rate and owe $11,415,959. They would pay at a 30 per cent rate if they exceed the threshold next year.
Checks to the commissioner's office are due by Jan. 21.
Houston, which lost more than 100 games for the third straight season, had a payroll less than one-eighth that of the Yankees and Dodgers. The Astros' finished at $29.3 million, the lowest total in the major leagues since the 2008 Florida Marlins and just $1.3 million more than Rodriguez made with the Yankees.
After trading many of their stars following an unsuccessful first season in their new downtown ballpark, the Marlins lowered their payroll to $42.3 million from $89.9 million in 2012. Minnesota dropped from $101 million to $76 million.
Toronto boosted spending from $92 million to nearly $126 million.
The average salary increased 7.1 per cent, to $3,326,645 from $3,105,093, according to MLB's calculations, the steepest rise since 2006. The players' association has not yet released its final figures for this year.