The New York Yankees might be the World Series champions but there's a price to pay for being at the top. The Yankees were assessed a hefty luxury tax of nearly $25.69 million Monday. They must send the payment in full by January 31, 2010 and there is no installment plan. The New York Yankees are the only team to pay a tax for the 2009 season and has crossed the threshold in all seven years since the tax started. The good news? The bill is lower than last year's $26.86 million luxury tax.
According to the Associated Press, New York's payroll was $226.2 million for the purpose of the luxury tax and the Yankees pay at a 40 percent rate for the amount over $162 million. To compute the payroll, Major League Baseball uses the average annual values of contracts for players on 40-man rosters and adds benefits.
Since 2003, The Yankees have paid over $174 million in luxury tax bills. The Luxury Tax, or Competitive Balance Tax, as it is called in the MLB Collective Bargaining Agreement, has set thresholds by which teams that exceed the figure are then taxed. For 2009, that figure was $162 million. For 2010 the threshold will be $170 million.
Have any other clubs ever paid the luxury tax?
The only other clubs that have paid the tax include the Red Sox from 2004 - 2007, the Angels in 2004, and the Tigers in 2008.
Where does the money go?
The monies collected from the luxury tax is distributed in several areas. $5 Million dollars of the funds are held in reserve. Of the remaining funds, if any, 75% of those are “used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements.”
Tickets to a New York Yankees game are already expensive. This luxury tax bill might make the prices go even higher. Soon, it will be the rich man's game to attend.
Written by Cheryl Phillips
HULIQ.com
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