Red Sox Pay Luxury Tax For 2010
by Ben Buchanan on Dec 21, 2010 7:25 PM EST
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To nobody's great surprise, the Red Sox joined the Yankees as the only teams paying luxury tax for the 2010 season. According to the Associated Press, the Sox had to shell out an additional $1.5 million for going over the CBT threshold, set at $170,000,000 last year.
The Sox last went over the Salary cap in 2007, leaving them with only a 22.5% tax rate, suggesting that the Red Sox were nearly $7 million over last year's limit. The team had set the threshold as an approximate limit for spending, but were pushed over by big signings like John Lackey along with a number of dead weight contracts and small acquisitions during the season.
What this figure really illustrates, though, is how the Red Sox don't need to worry about incurring the CBT as much as they need to worry about drastically exceeding it. $1.5 million isn't going to make much of a difference for the Sox, nor will a small bump in their tax rate so long as they stick near the limit without going too far above. It's only when things get into Yankees territory--the Bronx Bombers will be hit with an $18 million bill for 2010--that things get restrictive.
The Red Sox seem to have again set the CBT threshold as their general limit, and with their team all-but-complete, do not seem to be in danger of exceeding it by much more than they did last year thanks to delaying the signing of a contract extension with Adrian Gonzalez until after the season. The team will be taxed 30% of every dollar spent over $178,000,000 this year.
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not stupid, it's slightly unusual
here’s my basic synopsis:
It’s based on the average annual value of contracts- so if Player A is signed to a 2-year contract that pays him $1 million in 2011 and $9 million in 2012, he counts as costing $5 million each of those years for luxury tax. All guaranteed money is counted, so signing bonuses, option buyouts, etc.
The tax rates are escalating
If a team hasn’t crossed the threshold before and does, the rate is 22.5% over the threshold.
If a team pays one year, if they go over again the next year, the rate is 30%
If they go over a third time, the rate is 40%- this is the maximum (aka the Yankee rate)
Going down is a little different. If a team pays the 40% rate in 2007 and doesn’t go over in 2008, the rate if they go over in 2009 is 30%. If they don’t in 2009, the rate in 2010 would be 30% again (it stays at 30% for two years). If they didn’t in 2010, then the rate would go back down to 22.5% for 2011.
It’s a little convoluted, but does that make sense?
Here's a good breakdown of this year's payroll
By WEEI’s Alex Speier.
I gotta go 'cause I'm probably definitely gonna nod out again.
by Drugs Delaney on Dec 22, 2010 10:16 AM EST up reply actions
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by nuthinboutnuthin on Dec 21, 2010 9:20 PM EST up reply actions 1 recs
I was done by this point, actually.
7:45 AM is an awful time for an exam, but at least it gets it over with.
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by Ben Buchanan on Dec 22, 2010 10:51 AM EST via mobile up reply actions
i read this on luxury tax on espn this morning
Since the current tax began in 2003, the Yankees have run up a bill of $192.2 million. The only other teams to pay are Boston ($15.34 million), Detroit ($1.3 million) and the Los Angeles Angels ($927,000). That is a huge difference in tax paid since its inception.
How is this split up in terms of revenue sharing?
Do all of the other 28 teams split it evenly, or is there some distribution break down?
Someone at SoSH made this study:
The MFY spent $94M more per season than the Red Sox in payroll and luxury tax 2003-2009
Here’s the spreadsheet graph:
Frightening!
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