Thursday, April 21, 2005

Yankees getting "soxed" by luxury tax

Yankees will pay record luxury tax
The struggling New York Yankees will be hit with a record luxury tax this year. Initial projections by the commissioner's office based on opening-day rosters have the Yankees owing $30,637,531, according to information obtained this week by The Associated Press.

The only other team projected to owe a tax is the World Series champion Boston Red Sox, who would pay $969,177.

Going into Wednesday night, the Yankees were just 5-9, tied with Tampa Bay for last place in the American League East.

For the luxury tax, payrolls are based on the average annual values of contracts for all players on the 40-man roster and include benefits. Under that formula, the Yankees opened with a payroll of $204.6 million, followed by Boston ($131.2 million), the New York Mets ($116.4 million), the Los Angeles Angels ($111.2 million) and Seattle ($109.3 million).

Teams with payrolls above $128 million owe tax this year. The Yankees pay at a rate of 40 percent for the amount they are over because they will be exceeding the threshold for the third time under the labor contract that began in 2003. The Red Sox, projected to be over for the second time, pay at a 30 percent rate.

Baseball will send the bills in late December based on end-of-season figures.
Too bad the "luxury tax" is going to major league baseball, and not to NYC, which will spend $300 million on improvements to facilitate the Yankees' upcoming new stadium.

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