Yankees to pay $18.9 million competitive balance tax for 2012


The New York Yankees were the only team in Major League Baseball to be levied a competitive balance tax for the 2012 season. They’ll be forking over $18.9 million to the commissioner’s office by Jan. 21. If they stick to the current plan, they’ll pay just one more time in 2013 as they strive to get under the threshold by the time the 2014 season rolls around.

New York Yankees general manager Brian Cashman has had to consider tax ramifications for the 2014 season with each of his 2013 signings. (Image: Tim Fuller-USA TODAY Sports)

The Yankees payroll, for the purposes of the tax, was $222.5 million. The figures are derived from the following line items: average annual values of contracts for players on the 40-man roster, any earned bonuses and escalators, adjustments for cash in trades and $10.8 million for benefits.

The Yankees, who paid a $13.9 million tax for the 2011 season, have accumulated $224.2 million in taxes since 2003 according to The Associated Press.

There were a few teams which finished just below the $178 million threshold. The Boston Red Sox came in within $47,177 of the mark after pushing salary to the Los Angeles Dodgers. The Los Angeles Angels finished at $176.7 million and the Philadelphia Phillies clocked in at $174.5 million.

The Dodgers will be paying up next season after the Boston trade and their spending spree this winter. They signed pitchers Zack Greinke for six-years, $147 million and Ryu Hyun-jin for $36 million over six seasons. They have 21 players under contract for 2013 and their payroll already sits at $207.9 million.

Once the Yankees finalize their deal with Ichiro Suzuki, they’ll have 15 players under contract with a total salary of $188.5 million (assuming Ichiro’s average annual salary is $6.5 for the reported two seasons). The threshold for 2013 is once again $178 million so the Yankees figured to blow by the mark.

In 2012, the Yankees tax rate was 42.5 percent and will rise to 50 percent for 2013. Should the Yankees come in under the threshold in 2014 ($189 million), their tax rate gets reset for the subsequent time they eclipse the mark. It would be just 17.5 percent if they overshoot the threshold should they be able to reset the rate.

The Yankees have been making each of their 2013 roster decisions with the objective of staying below the threshold in 2014. So far this offseason they’ve signed each player (except Suzuki) with a new contract to lofty one-year deals — Hiroki Kuroda ($15 million), Andy Pettitte ($12 million), Mariano Rivera ($10 million) and Kevin Youkilis ($12 million). They’ve avoided paying Russell Martin for a multiyear contract (he received $17.5 million from the Pittsburgh Pirates for two years) and have stayed out of negotiations for players such as Greinke and Josh Hamilton.

The Yankees will have some interesting choices for the 2014 season as Derek Jeter holds a player option worth $9.5 million (he increased it from $8 million after winning the Silver Slugger award in 2012), plus Robinson Cano, Curtis Granderson and Phil Hughes all become free agents set to make serious money based on the current market settings. Cano has said through his agent Scott Boras that a hometown discount is not in the offing, Granderson figures to be allowed to walk and Hughes will be a tough choice. Should Hughes have a very good 2013 season, he could pursue a contract in the range of Anibal Sanchez‘s five-year, $80 million he just signed with the Detroit Tigers.

Yankees general manager Brian Cashman notes where the Yankees land on the payroll list is of no interest to him, but winning the World Series remains the goal.

"“You don’t get a trophy for having the highest payroll,” Cashman said. “I’m not going to feel weird either way, if we’re the highest or we’re not the highest. That’s not the issue. Just want to be the best.”"