Monday, December 27, 2004
Yankees' contribution will be over $25M
NEW YORK -- The Boston Red Sox got an extra bill after winning the World Series.
Boston and Anaheim must pay baseball's luxury tax along with the
New York Yankees, according to final figures compiled by the
The Yankees are required to pay $25,026,352, according to a Dec.
21 memorandum that was sent to all major league teams. Boston owes
$3,155,234 for exceeding the payroll threshold of $120.5 million
and Anaheim got a bill for $927,059.
Checks for the competitive-balance tax, as it is formally known,
are due at the commissioner's office by Jan. 31.
"The CBT is now an important part of baseball's economic landscape," Red Sox owner John Henry said in an e-mail Monday. "From my perspective, even though it costs us, the stronger the
CBT is in the future, the stronger the sport is going to be. It is
a much more productive form of taxation than that of strictly
revenue taxation because the economic incentives for teams are not
In 2003, the first year of the new luxury tax, the Yankees were
the only team to pay, owing $11,798,357, according to the team's
latest revised bill. Because they exceeded the threshold a second
time, the Yankees were taxed at a rate of 30 percent for the amount
they were over. Boston and Anaheim were taxed at a 22.5 percent rate.
If the Yankees go over the 2005 threshold of $128 million, which
appears certain, they would be taxed at a 40 percent rate.
New York also estimates it will give up about $60 million as
part of baseball's revenue-sharing plan this season, meaning the
Yankees will send the commissioner's office about $85 million of
their estimated $315 million revenue in 2004. Boston's
revenue-sharing payment is estimated at approximately $42 million
on revenue of at least $220 million.
The Yankees easily finished ahead of other teams in the regular
payrolls figures for the sixth straight season, winding up at a
record $187.9 million, $18 million above the previous mark they set
Boston, which overcame a 3-0 deficit against the Yankees in the
AL Championship Series and won the World Series for the first time
since 1918, was second at $130.4 million.
Anaheim, defeated by the Red Sox in the first round of the
playoffs, was third at $115.6 million, followed by the Mets ($103.2 million), Los Angeles ($101.7 million), the Cubs ($100.7 million) and Philadelphia ($97.4 million).
St. Louis, swept by Boston in the World Series, was eighth at
At the other end, Tampa Bay finished with the lowest payroll for
the third straight season. At $24.4 million, the Devil Rays had the
lowest figure for any team since 2000.
Milwaukee was 29th at $29.6 million, down from $43.3 million,
and Pittsburgh was 28th at $32.5 million, down from $53.3 million.
Texas fell from fifth at $103.3 million to 13th at $79.2
million, Atlanta went from sixth at $98 million to 12th at $79.4
million, Seattle dropped from seventh at $97.7 million to 11th at
$81.8 million and Arizona declined from 11th at $83.8 million to
15th at $68.4 million.
Anaheim rose from 12th at $80 million to third, the Cubs
increased from 10th at $84 million to sixth and Philadelphia went
up from 15th at $71.5 million to seventh.
Payrolls include salaries, prorated shares of signing bonuses,
earned bonuses, buyouts of 2004 options and cash transactions.
For the luxury tax, which is based on 40-man rosters, the
average annual values of contracts and includes benefits, the
Yankees finished with a payroll of $203.9 million, while Boston was
at $134.5 million and Anaheim at $124.6 million.
Many midlevel teams appear to be spending money on free agents
this offseason, possibly because of the shift in economics created
by increased revenue sharing. That could push the average salary
higher next season.
According to the players' association, the average dropped 2.5
percent this year to $2,313,535 from $2,372,189, the first decrease
since 1995 and only the third since record-keeping began in 1967.