Happy Bobby Bonilla Day

[jayshum]

Originally Posted by Casey2296

I assume some of those were/are designed to avoid the luxury salary tax tiers.

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.

[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.

[jayshum]

Originally Posted by Casey2296

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.

From https://en.wikipedia.org/wiki/Major_...all_luxury_tax

Allocation of taxes paid
On December 2 in each contract year, the Commissioner's Office notifies every team that exceeded the tax threshold that they must pay their tax by January 21 of the following calendar year. The Commissioner's Office then redistributes this money in a standard manner. The first $13 million will be used to defray clubs' funding obligations under the MLB Players Benefits Agreements. Of the remaining sum, 50% of the remaining proceeds collected for each Contract Year, with accrued interest, will be used to fund player compensation as described in the MLB Players Benefits Plan Agreements and the other 50% shall be distributed to clubs that did not exceed the Base Tax Threshold in that Contract Year.

[Casey2296]

Originally Posted by jayshum

From https://en.wikipedia.org/wiki/Major_...all_luxury_tax

Allocation of taxes paid
On December 2 in each contract year, the Commissioner's Office notifies every team that exceeded the tax threshold that they must pay their tax by January 21 of the following calendar year. The Commissioner's Office then redistributes this money in a standard manner. The first $13 million will be used to defray clubs' funding obligations under the MLB Players Benefits Agreements. Of the remaining sum, 50% of the remaining proceeds collected for each Contract Year, with accrued interest, will be used to fund player compensation as described in the MLB Players Benefits Plan Agreements and the other 50% shall be distributed to clubs that did not exceed the Base Tax Threshold in that Contract Year.

Thanks again Jay, seems an equitable arrangement to keep parity in the league.

[irishdenny]

https://www.youtube.com/watch?v=3XGAmPRxV48