The New York Yankees once again will be footing the highest luxury tax bill in baseball, this year at $29.1 million.
As reported by USA Today‘s Bob Nightengale, the luxury tax penalty is higher than the entire Houston Astros‘ payroll, which is just over $21 million, according to ESPN.com.
The Yankees currently have a $236.2 million payroll for purposes of the luxury tax, and must pay a 50% tax over the $178 million threshold as a repeat violator.
The Los Angeles Dodgers are the other team Major League team that will be required to pay a luxury tax this year. The Dodgers currently have a franchise-record $234.5 million payroll for its 40-man roster.
Yet, the Dodgers’ penalty will be much less of a financial hit than the Yankees since it’s their first offense. They will be taxed at 17.5%, paying a tax of about $9.9 million to MLB‘s central fund.
While the salary cap in baseball is a joke (literally), at least there is something in place for teams that open their checkbooks to every good player.
But does it really make a difference? With the name brand and television deals these two teams have, that kind of money is just chump change.
How can it be fixed?
The main issue you have with teams constantly going over the luxury-tax threshold is that is really isn’t that much money to them.
If they’re able to give out multiple $20 million/year contracts, then $29.1 million really means nothing to them, regardless of what they say on the record.
The fact remains they believe spending more money on players will bring in more dollars in ticket revenue, concessions, ad revenue, memorabilia, etc.
And if the Yankees are concerned and do get below the threshold for one year, the threshold would be reset to 17.5 percent. They wouldn’t be taxed at a 50-percent rate when they go over again, only reaching that point when they become repeat offenders again.
So, how can this be fixed?
First and foremost, instead of taxing the amount over by 50 percent, why not tax it at 100 percent? Or how about taxing the entire payroll at 50 percent? That would get teams to stop spending on these lavish contracts.
The NBA has a system in place where teams pay at least $1.50 for every dollar they go over the tax threshold. And if it’s a repeat offender, then that number is at least $2.50.
That would get some teams thinking.
Another thing they could do is a team would have to stay under the threshold for five years before the percentage would go back down to 17.5 percent.
If baseball really cared about the luxury tax, they would make it more stringent. Instead, they put something small into place that really means nothing.
What it means
In the end, this means nothing to the Yankees. In fact, it’s never meant anything to the Yankees.
They’ve always lived by the creed to win at all costs, as evident by the enormous contracts for players like Alex Rodriguez, Derek Jeter, Mark Teixeira and CC Sabathia.
The Yankees have never concerned themselves with it before and they won’t concern themselves with it now.
If they did concern themselves, then we won’t see them paying Robinson Cano at least $20 million a year to stay in New York. But as we saw with the contracts of the for mentioned above, the Yankees have always been about getting the best and it takes a lot of dollars to do that.
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