Closing of the gap in Luxury Tax

  1. You have chosen to ignore posts from jesseyeric. Show jesseyeric's posts

    Closing of the gap in Luxury Tax

    If I may indulge my friends here with a question please.

    The A.P. reported that the Yanks were just assessed a luxury tax bill of $13.9 million which was based on their end year payroll of $212.7 million. The Sox received a bill for $3.4 million based on an end year payroll of $189.4 million. So somehow the difference of $23.3 million in salary computes out to an additional $10.5 million dollars in tax assessment to NY.

    Since I am unsure of the calculation, does this sound about right? Also, when calculating the Sox L.T., is that before or after Gonzalez's $15 million raise took effect?

    Thanks and Merry Xmas to all.

     
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  3. You have chosen to ignore posts from jesseyeric. Show jesseyeric's posts

    Re: Closing of the gap in Luxury Tax

    So the more consecutive years you are over the threshold, the higher the rate?

    Thanks 2004. Still interested in knowing how Gonzalez's salary affected the Sox L.T. this past assessment?
     
  4. You have chosen to ignore posts from garyhow. Show garyhow's posts

    Re: Closing of the gap in Luxury Tax

    Explains why Yanks and RS have been quiet this off season. Also many teams thought this years salary cap was going to go up much more, but will not til 2013 under the new collective bargaining agreement and if not under the cap of 187mil for 2013 the RS will rise to the 50% tax bracket [will rise to 40% this year in all likelihood]. Many teams expected it to rise, and the fact it did not caught teams by surprise, when signing guys to long term deals they try to factor in what the expected cap will be.
     
  5. You have chosen to ignore posts from TheBabeinFL. Show TheBabeinFL's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    So the more consecutive years you are over the threshold, the higher the rate? Thanks 2004. Still interested in knowing how Gonzalez's salary affected the Sox L.T. this past assessment?
    Posted by jesseyeric

    I don't believe that agon has any affect, which is why they waited till after Opening Day to announce the extension so they could circumvent the tax impact for this past year.

     
  6. You have chosen to ignore posts from jesseyeric. Show jesseyeric's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    Explains why Yanks and RS have been quiet this off season. Also many teams thought this years salary cap was going to go up much more, but will not til 2013 under the new collective bargaining agreement and if not under the cap of 187mil for 2013 the RS will rise to the 50% tax bracket [will rise to 40% this year in all likelihood]. Many teams expected it to rise, and the fact it did not caught teams by surprise, when signing guys to long term deals they try to factor in what the expected cap will be.
    Posted by garyhow


    I think Boston and NY have been quiet this offseason because of their particular needs and what was out there. The two biggest F.A. positional players both play 1B. Obviously this doesn't fill a need for either team. There was no true ace pitcher out there, just 2nd & 3rd tier which NY and Boston are already filled with. Both teams have some serious long term contracts so I see them both dabbling after January 1 and only with players seeking 1 or 2 year deals.
     
  7. You have chosen to ignore posts from moonslav59. Show moonslav59's posts

    Re: Closing of the gap in Luxury Tax

    Jesse,

    AGon and Buch's extensions did not count against the 2011 AVV, but they will for 2012. The total raise will be abour $22M. That is why their is precious little more to spen this winter. It was, in effect, already spent in April. The arb of re-signs before the arb hearings will eat away a lot of what was left over to spend this winter. 

    With all due respect to 2004, I'm not sure he is right on this...

    If the Sox exceed the limit in 2012, which they almost certainly will, they would be taxed at a rate of 40 percent. The threshold will remain at $178 million for 2012 and 2013 under the terms of the new collective bargaining agreement.

    I think Ben may try to stay under the $178M number in order to bring down the tax amount for future years. It will be difficult to make us favorites to win it all and stay under $178M. We will have about $24M on the shelf with injuries for all or half of 2012 (Lackey and Dice-K). We kept Papi and Scutty, two questionable decisions in terms of them now limiting our ability to build up our pitching staff.
     
  8. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    So the more consecutive years you are over the threshold, the higher the rate? Thanks 2004. Still interested in knowing how Gonzalez's salary affected the Sox L.T. this past assessment?
    Posted by jesseyeric


    yes, you get dinged MORE (ie higher rate) based on the # of times you go over

    I'll see if I can find the documentation on this.  I had a link from a few years ago that spelled out how it works very nicely.  It may have been from USA Today.....
     
  9. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    wait - here it is - best explanation available IMO

    http://www.stevetheump.com/luxury_tax.htm
     
  10. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    Tax Rate (%)
     1st time2nd time3rd time4th time
    2003  17.5        
    2004  22.5  30      
    2005  22.5  30  40    
    2006  0  40  40  40  
     
  11. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    Wow check this out:

    "Payrolls calculated using average annual values of contracts of players on 40-man rosters, earned bonuses and $9 million per team for benefits. "

    Given that is the case, then the Sox actually have even less money than I thought to play with this year.

    Just sign John Garland and be done with it. 

    Give the kids a chance to play and you can reload in 2013 (lots of $ coming off the books after 2012).........
     
  12. You have chosen to ignore posts from Joebreidey. Show Joebreidey's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    Jesse, AGon and Buch's extensions did not count against the 2011 AVV, but they will for 2012. The total raise will be abour $22M. That is why their is precious little more to spen this winter. It was, in effect, already spent in April. The arb of re-signs before the arb hearings will eat away a lot of what was left over to spend this winter.  With all due respect to 2004, I'm not sure he is right on this... If the Sox exceed the limit in 2012, which they almost certainly will, they would be taxed at a rate of 40 percent. The threshold will remain at $178 million for 2012 and 2013 under the terms of the new collective bargaining agreement. I think Ben may try to stay under the $178M number in order to bring down the tax amount for future years. It will be difficult to make us favorites to win it all and stay under $178M. We will have about $24M on the shelf with injuries for all or half of 2012 (Lackey and Dice-K). We kept Papi and Scutty, two questionable decisions in terms of them now limiting our ability to build up our pitching staff.
    Posted by moonslav59


    Once Papi accepted, I think that was the final nail on the 2012 cap.  OPM, but if I were Henry, I'd have to concede passing the cap this year, try to win, and then focus on 2013 for cap purposes.  In 2013, Papi, Dice, Scutaro, and Jenks saves us ~ $35M.  At that point, we should be able to reset.
     
  13. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Closing of the gap in Luxury Tax:
    If I may indulge my friends here with a question please. The A.P. reported that the Yanks were just assessed a luxury tax bill of $13.9 million which was based on their end year payroll of $212.7 million. The Sox received a bill for $3.4 million based on an end year payroll of $189.4 million. So somehow the difference of $23.3 million in salary computes out to an additional $10.5 million dollars in tax assessment to NY. Since I am unsure of the calculation, does this sound about right? Also, when calculating the Sox L.T., is that before or after Gonzalez's $15 million raise took effect? Thanks and Merry Xmas to all.
    Posted by jesseyeric


    Gonzo's raise doesn't count for 2011, it begins in 2012 based on the fact the extension was signed after opening day; the cut-off point for doing the average salary calculation
     
  14. You have chosen to ignore posts from GoUconn13. Show GoUconn13's posts

    Re: Closing of the gap in Luxury Tax

    I could be wrong on this one, but I think that the reason they are over the luxury tax limit is because of the injuries where Boston forced to call up alot of minor leaguers to play for Boston such as Iggy, Reddick, Lavarnway, Doubront, etc.  IF that is the case, these minor leaguers pay are pro-rated from minor league contract to major league contract. Plus some players have have bonus such as to play certain amount of games, innings, AB,etc where that would add more $$$ to payroll.



     
  15. You have chosen to ignore posts from mjnmjn. Show mjnmjn's posts

    Re: Closing of the gap in Luxury Tax

    Who cares what the payroll tax is. I went to 5 games last year and spent almost $13.9 million on hats, Fenway franks, and beer. The Sox can afford it. Can they afford the decreased revenue from game days, ancillary revenues, and NESN declines by fielding a less tahn competitive team? Thus far (and I realize there is a way to go until March, but the options are fading fast) they have hired a questionable coach, made the worst 3rd base coach in history the bench coach, believe that Bob McClure is the answer for Pitching Coach, let the closer walk without a replacement, have no 3rd or 4th starter, no legit major league right fielder, have a left fielder coming off his worst season ever who will not even talk to the new manager, and have made only cosmetic/bandaid fixes to an underperforming team.
    I'd say the least of the Red Sox worries at this juncture is a little over-cap tax money.
     
  16. You have chosen to ignore posts from UticaClub. Show UticaClub's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    Who cares what the payroll tax is. I went to 5 games last year and spent almost $13.9 million on hats, Fenway franks, and beer. The Sox can afford it. Can they afford the decreased revenue from game days, ancillary revenues, and NESN declines by fielding a less tahn competitive team? Thus far (and I realize there is a way to go until March, but the options are fading fast) they have hired a questionable coach, made the worst 3rd base coach in history the bench coach, believe that Bob McClure is the answer for Pitching Coach, let the closer walk without a replacement, have no 3rd or 4th starter, no legit major league right fielder, have a left fielder coming off his worst season ever who will not even talk to the new manager, and have made only cosmetic/bandaid fixes to an underperforming team. I'd say the least of the Red Sox worries at this juncture is a little over-cap tax money.


    Posted by mjnmjn

     
  17. You have chosen to ignore posts from andrewmitch. Show andrewmitch's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    I could be wrong on this one, but I think that the reason they are over the luxury tax limit is because of the injuries where Boston forced to call up alot of minor leaguers to play for Boston such as Iggy, Reddick, Lavarnway, Doubront, etc.  IF that is the case, these minor leaguers pay are pro-rated from minor league contract to major league contract. Plus some players have have bonus such as to play certain amount of games, innings, AB,etc where that would add more $$$ to payroll.
    Posted by GoUconn13


    I don't think so....The Tax is based on the 40 man roster.  Therefore, the guys who were called up were already counted.  and even if there are roster moves to the 40 man, the salaries should be pro-rated.

    anyways, the Sox have enough money to sign John Garland and then they are reduced to minor leaguers and guys looking for 1 million dollar deals (Hence, the Shoppachs and Puntos)........
     
  18. You have chosen to ignore posts from jesseyeric. Show jesseyeric's posts

    Re: Closing of the gap in Luxury Tax

    Everyone - thank you and have a wonderful Festivus.
     
  19. You have chosen to ignore posts from moonslav59. Show moonslav59's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    In Response to Closing of the gap in Luxury Tax : Gonzo's raise doesn't count for 2011, it begins in 2012 based on the fact the extension was signed after opening day; the cut-off point for doing the average salary calculation
    Posted by andrewmitch

    Also, Buch was extended in April, so his raise starts to count on the luxury tax limit in 2012 as well.

     
  20. You have chosen to ignore posts from moonslav59. Show moonslav59's posts

    Re: Closing of the gap in Luxury Tax

    In Response to Re: Closing of the gap in Luxury Tax:
    Wow check this out: "Payrolls calculated using average annual values of contracts of players on 40-man rosters, earned bonuses and $9 million per team for benefits. " Given that is the case, then the Sox actually have even less money than I thought to play with this year. Just sign John Garland and be done with it.  Give the kids a chance to play and you can reload in 2013 (lots of $ coming off the books after 2012).........
    Posted by andrewmitch

    I thought the player benefits were about $9-10M, but softy insisted it was only $2M. Do you have a link to that plater benefit number?

     
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