For Yankees, Dodgers, the check is in the mail
The Dodgers are set to pay $25.1M, the Yankees just under $9M in luxury tax. For the Yankees, that's under the $27.4M from last year heading into a year with top talent headed into free agency.
The Los Angeles Dodgers and New York Yankees are cutting payroll and their luxury tax bills — just as Bryce Harper, Manny Machado and perhaps Clayton Kershaw near the free-agent market after the 2018 season. The Dodgers are on track to slice their tax bill by about a quarter this year and the Yankees by twothirds. The San Francisco Giants also are set to slice their payment in the first season of baseball’s new collective bargaining agreement, but the Detroit Tigers are slated to pay more despite saying they want to reduce payroll. If a team doesn’t pay tax in 2018, its tax rate would drop to 20 percent in 2019 — allowing perennially high-spending clubs to sign stars at a lower cost. “What the market produces is what the market’s going to produce,” baseball Commissioner Rob Manfred said. The Dodgers are forecast to pay a $25.1 million competitive balance tax this year, according to opening- day calculations by the commissioner’s office obtained by The Associated Press, down from $43.6 million in 2015 and $31.8 million last year. The Yankees’ bill is slated to be just under $9 million, their lowest since the tax began in 2003 and less than one-third of the $27.4 million they owed last season.
“The new CBA has had no influence on my belief that you don’t need a 200plus million dollar payroll to win championships,” Yankees owner Hal Steinbrenner said in an email to the AP.
The tax threshold increased from $189 million to $195 million under the new labor contract, and rates were simplified to three levels: 20 percent for first-time payers, 30 percent for those owing for a second straight season and 50 per- cent for clubs paying three times in a row or more.
A pair of surtaxes were added to discourage high rollers: 12 percent on the amount from $215 million to $235 million this year and a 42.5 percent and 45 percent above that, depending on how many consecutive years a team is paying.
Another change calls for a team more than $40 million above next year’s tax threshold of $197 million to have its top draft pick moved back 10 places — with an exception that if a club has a pick among the top six, that would be protected and its second pick would be moved back 10 slots.
The Yankees appear to be trying to get below the threshold in 2018 to reset their tax rate in anticipation of that fall’s free-agent class.
“I think it’s too early to make a judgment about the success of the new CBA,” Manfred said. “I also think that while there’s a lot of change in the CBT area in terms of the structure and rates and whatnot, there has been a certain cyclical nature to the CBA over time, irrespective of the change, right? Clubs get to a certain point, they step to go younger, they come down.”
The Dodgers have a major league-high $238 million payroll for purposes of the tax, which uses the average annual values of contracts for players on 40man rosters and includes $13.96 million per team in benefit costs.
Actual tax is assessed on season- ending payrolls in December.
Los Angeles is projected to pay both new surtaxes. Under transition rules for 2017, the Dodgers’ projected tax is at the midpoint of what they would pay under the new rules ($25.58 million) and old ($24.68 million).
Dodgers president Stan Kasten declined comment on the team’s payroll and the tax.