MLB Update: What a Difference a Day Makes Tax Wise
by Terri Eyden on
By Teresa Ambord
At least one Major League Baseball player has succeeded in getting his next contract signed, sealed, and the ink dried before the 2013 tax hikes kick in. B. J. Upton just signed a five-year, $75.25 million contract with the Atlanta Braves.
His contract includes a $3 million signing bonus to be paid no later than December 31, 2012. Front-loading his deal and beating the tax increases that are likely to hit on January 1, 2013, should save Upton at least $120,000. Some sources put his savings at closer to $167,000.
Red Sox first baseman Mike Napoli and his agent, Brian Grieper, are currently eyeballing his $39 million offer from the Red Sox, also hoping to trim the tax bite. Grieper told reporters "We always take taxes into consideration when it comes to negotiating contracts. Any good agent is doing the same."
But Red Sox General Manager Ben Cherington downplayed the influence of the tax hikes in contract negotiations. "I don't think it [the fiscal cliff] has affected anything we've done. But that has come up in conversations, the uncertainty around that."
And Tampa Bay Rays third baseman Evan Longoria took a pay cut in his $100 million, six-year contract extension in order to receive a $1 million bonus by December 15. Longoria's agent, Paul Cohen, said the move wasn't a response to the fiscal cliff specifically, but it just makes sense to take advantage of the lower 2012 rates.
Highly paid athletes aren't the only ones trying to duck before the tax ax swings. Boston.com reports that more than 100 public companies have announced they plan to pay special dividends this quarter in advance of the surge in tax rates on dividends that's possible for 2013.