The New York Yankees Receive $26 Million Luxury Tax Bill

New York Yankees have clinched their ninth straight American League East title, and for their troubles have received a $26 million luxury tax bill from Commissioner Bud Selig, according to the Associated Press. Their tax payment is due in the commissioner’s office by Jan. 31. Their four-year total now comes to $97.75 million.

The tax threshold also increased $8.5 million, to $136.5 million this year and only New York and Boston exceeded the threshold, according to the New York Times. Boston will pay only $497,549, while the exact figure for the Yankees is $26,009,039. The Associated Press reports that the threshold is supposed to rise to $148 million next year, under their new labor contract.

“The luxury tax is not something the players are in love with because its purpose is to cause people to have extra cost when they sign a player. Obviously we are prepared to live with it during the term of the last agreement and we got what we expect will be appropriate modifications this time,” union head Donald Fehr told the Associated Press.

The team’s 40-man roster finished the season with a $207.5 million payroll, using the regular method of accounting. The average Yankee salary was calculated to be $2,642,915 by management, while the player’s association’s calculations amounted to $2,699,292, according to the Associated Press.

For comparison, payroll numbers for other teams in the American League East included Toronto at $72.4 million, Boston at $137.5 million, Baltimore at $76.1 million and Tampa Bay at $36.4 million. The teams were placed in the order of their finish in the division. The World Series champion St. Louis Cardinals were at $96.1 million.

“We didn’t really envision specific numbers. What we were hoping was that we would see a circumstance in which it did not have a meaningful adverse effect on the player market, and obviously you have to judge that year by year,” continued Fehr, according to the Associated Press.

Randy Levine, speaking to the New York Times said, “the luxury tax clearly has an impact on the way we are spending, but the number itself also represents George Steinbrenner’s philosophy: If there’s a difference-maker, we go out and get him.”

Commissioner Bud Selig concluded that the luxury tax achieved the management results initially sought, according to the Associated Press. He said, “I think it did. I really think, frankly, everything that we did pretty well came out of its projection.”

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