Happy Bobby Bonilla Day

[Casey2296]

Originally Posted by jayshum

I think that the average annual value (AAV) of the contract is what is used for calculating a team's salary for purposes of the luxury tax tiers so a 5 year contract for $100 million counts as $20 million toward the team's salary total for the year regardless of how many years money is deferred over. The deferred payment just helps give teams some cash flow flexibility along with some of the other tax benefits others have listed.

Thanks for the clarification Jay. I'm wondering where the salary tax penalty goes, does it sit in mlbs governing body bank account? When a team pays 80 cents of every dollar over 290 mil it adds up fast.