Tag Archive | "luxury tax"

Selig vs A-Rod and the Yankees Bailout

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Selig vs A-Rod and the Yankees Bailout

Posted on 05 August 2013 by Thyrl Nelson

If Bud Selig is indeed on his way out, and there are still plenty of reasons to doubt that, he’s doing it with guns blazing. On Monday, at long last the speculation regarding Biogenesis will end and the punishments will be doled out…maybe.

It seems that over the weekend MLB, and Selig’s office specifically, have let go of their willingness to negotiate with Alex Rodriguez, and at the same time may be backing off of their plans to try and ban Rodriguez for life while hitting him with 3 strikes at once under MLB’s PED policy.

In the process of attempting to to drop the hammer on A-Rod, Selig may be creating an empathetic figure out of a guy whose actions would and should have left him beyond redemption already, Selig has shown himself for the petty bully that he has been throughout his tenure as commissioner, and gave birth to a wave of new conspiracy theories regarding baseball’s favoritism of the Yankees.

First, it’s seems all but clear that there’s no coincidence that at the heart of baseball’s desire to punish everyone involved in the Biogenesis fiasco, is an underlying mission on the part of the commissioner to exact revenge on the 2 guys who have made Selig look dumb in baseball’s “post-steroid era”. There’s Ryan Braun, who long before he tested positive for PEDs and had that violation overturned was routinely lauded by the commissioner, along with Troy Tulowitzki, as proof of baseball’s ability to continue to churn out stars in an era where testing has again “leveled the playing field”. And there’s Alex Rodriguez for whom baseball implemented instant replay to insure that their “fair haired boy” wouldn’t be cost a single opportunity to chase down Barry Bonds and rescue the record book. Neither guy asked to be Selig’s poster boy for post-steroid baseball, but both made the commissioner look silly when placed in that spot and were ultimately found out to be cheating.

Both deserve to be punished, but for cheating, not for leaving egg on the face of baseball and those who run it. And both will be (or are being) punished. But Selig’s attempt to punish Braun amounts to little more than an inconvenience to a player and a team that were already cashing in their chips for 2013. And if reports of what he’s trying to do to A-Rod are true, it seems like little more than a transparent attempt to help the Yankees achieve their stated goal of getting below the luxury tax threshold for 2014 and resetting them from a payroll, and tax standpoint.

It’s hard to believe that the rest of baseball’s owners would be on board with this, considering that they’re the ones who divide and share the payroll taxes that the Yankees have to pay. But if everyone stands to earn more when the Yankees are successful, it may be an indication of where everyone’s priorities lie.

How else can baseball explain the creation of a 214 game penalty? It’s just convenient enough to excuse the Yankees from accounting for A-Rod’s preclusive salary next year without MLB actually accepting the burden of trying to prove 3 seperate violations of the PED policy for a guy who didn’t even test positive for PEDs.

Baseball said Rodriguez lied to investigators, everyone lies to investigators. In Braun’s case that got him an extra 15 games. Baseball says that Rodriguez attempted to destroy evidence. Melky Cabrera created his own evidence and presented it to MLB, for that he got no additional penalty. And baseball accuses Rodriguez of recruiting for Biogenesis, as opposed to everyone just finding their way to Kirk Radomski or Dr. Gallea once upon a time. Maybe the evidence they have will trump these other instances by comparison and maybe we’ll get to see it. I won’t be holding my breath.

MLB ought to take what they can get when they go after Rodriguez or what they’re likely to get is embarrassed…again. That would be a fitting legacy for Bud Selig to leave behind.

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Pay-Rod, Payroll & a Yankees Bailout

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Pay-Rod, Payroll & a Yankees Bailout

Posted on 18 October 2012 by Thyrl Nelson

When assessing the 20 questions that the Orioles must answer as they formulate their own plan for 2013 and beyond, one of the questions I posed was whether the top end of the AL East was leveling a bit or coming back to the pack. It seems a question worth asking, as the Red Sox, fresh off the heels of their 2011 season ending meltdown followed it up with an even more disappointing season in 2012. As a result of their misfortunes the Sox were willing and able to dump over $100 million worth of future payroll commitments on the suddenly viable Dodgers. In freeing themselves of those contracts, Boston was also forced to part company with a debatable (or arguable) amount of elite talent. It seemingly stands to reason that the Red Sox would be willing and able to put that now freed up money back to use, if and when the situation calls for it; but considering the numbers of prospects that the Sox dealt to bring some of that highly priced talent into the fold in the first place, it might be quite a while before they’re able to put back together a nucleus that a few big splash signings might successfully compliment.

The case of the Yankees was more curious still, because of the lingering and long-term commitments that they already have assigned to aging stars moving forward. The Yankees, having paid better than 90% of all luxury tax payments in the history of MLB’s luxury tax era, have stated a commitment (or at the very least a concerted desire) to get themselves below the echelon of having to pay luxury taxes in the years to come. It seemed like a difficult position to believe, considering the decisions they’ll have to make on stars whose contracts are expiring in the next year or so, including Robinson Cano and Curtis Granderson. Despite Cano’s struggles this postseason, he remains one of the most prolific hitters in all of MLB and arguably the Yankees best offensive talent. Getting themselves below the luxury cap would seemingly suggest a need to allow Cano and others to walk by 2014.

 

Before we begin however, to celebrate the Yankees’ struggles and what appears to be their unceremonious demise, before we can revel in the meltdown of Alex Rodriguez in these playoffs and the 5 years and $114 million plus commitment that the Yankees still have to him we’re already seemingly getting the signal that Rodriguez career in the Bronx might be coming to an end. Of course Rodriguez’ full no trade protection will be a factor in whether or not he’s traded this off-season, but speculation is already rampant that A-Rod may be set to follow the likes of LeBron James and take his talents to South Beach.

 

On the surface this would seem to be more Yankees folly worthy of celebration from fans elsewhere, but in reality it may be a glimpse into exactly what the Yankees mean when they talk about slashing salary.

 

The Yankees after all are baseball’s undisputed revenue kings. In stating their desire to avoid baseball’s luxury tax many of us may have been guilty of misreading their intentions. The Yankees’ desire to cut payroll seems less an effort to save themselves inordinate expenditures in an attempt to buy another decade or so worth of contention and more of an effort to avoid paying into a system that rewards the teams unable (or more aptly unwilling) to spend freely and an effort to stop padding the pockets of owners who never put their luxury tax earnings to work in actually trying to improve their clubs.

 

When the Red Sox signed Daisuke Matsuzaka after posting a record posting fee of over $51 million then coupling it with a $52 million contract, many looked at it as $103 million plus in expenditures (and they were right). But not all $103 million expenditures are created equally. The $51 million that Boston paid to post for Matsuzaka was money spent but not salary, Therefore only about half of the $103 million spent to land the gyro-baller was considered payroll and therefore subject to the luxury tax computations. Likewise if the Yankees ship A-Rod to the Marlins this off-season and even if they absorb as much as $100 million of his future earnings to do it, they’ll still have unburdened themselves from about $30 million per year of salary and as a result will have moved much closer to their stated goal of establishing a payroll below the luxury tax echelon, even if they take on Heath Bell and 2 years worth of his contract at $9 million or so per.

 

The long and short of it being that the Yankees will have the opportunity to shed “payroll” obligations and avoid luxury tax while still spending like the Yankees always have and perhaps more. One or two more of those types of trades (albeit on much more modest contracts) and the Yankees have the money at their disposal to re-up Cano and Granderson if they choose along with Raphael Soriano and could still make a splash in free agency while also accomplishing their goal of avoiding the luxury tax by 2014.

 

The other questions that both the Yankees and Red Sox will have to answer for themselves is which free agent players will be worth the price of poker in the coming free agent classes, and whether it’s still prudent to offer big money to aging free agents in the post steroid era of MLB. Figuring out the answers to those questions will be the biggest determining factor in whether the Yankees and Red Sox will be able to exert their financial dominance over the pack moving forward. But in the event that they choose to try, the means to do so are there, as are the financial means of both clubs despite rampant speculation to the contrary.

 

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