Tuesday, December 21, 2010

Luxury Tax Casualties

According to the Peter Abraham of the Boston Globe, only two teams will be forced to pay the competitive balance (or as it's more commonly known, luxury) tax in 2010 for breaching the $170M payroll threshold.  Not surprisingly, the Yankees and Red Sox are the two teams in question.  The Yankees will pay $18M based on their $215M payroll, while the Red Sox will pay $1.5M based on their $170.65M payroll.

In 2011, the Major League Baseball Collective Bargaining Agreement has set the luxury tax threshold at $178M.  As it stands right now, both the Yankees and Red Sox are expected to pay the tax again next year.  The Phillies, who already have $158M in salary committed for 2011, could possibly join the AL East titans in this exclusive club.

To date, the Yankees are the only club to pay the luxury tax in all seven years of existence.  This is the third time the Red Sox have paid the tax, with the other two seasons being in 2004 and 2007.  The only other teams to pay the luxury tax are the Angels (2004) and the Tigers (2008).

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