Sun, Dec 24, 2006 - Page 24 News List

Yankees' payroll tax drops to a `mere' US$26 million


New York Yankees star pitcher Wang Chien-ming teaches 10-year-old Wang Jie-yi how to pitch during a charity event on Dec. 3 in Taipei. The Yankees learned on Friday that their payroll tax had been cut nearly US$8 million from last year's level.


At US$26 million, it's a bargain, and next year, the tax the Yankees will have to pay on their payroll will be even less. Life is beautiful.

Where else could a tax bill for US$26 million possibly induce everybody in the office to exchange high-fives? The Yankees' group celebration will have to be postponed because everybody had left for holiday vacations by the time the tax bill arrived at Yankee Stadium.

The contract specialists in the commissioner's office completed their computations of this year's payrolls on Friday and sent tax bills to the Yankees and the Red Sox, the only teams that exceeded the US$136.5 million threshold. Boston barely went over the threshold and need to pay only US$497,549.

Last year, the Yankees paid US$33.9 million, while the Red Sox paid US$4.1 million. Both are assessed at a 40 percent rate of the amount over the threshold because they have exceeded the threshold at least twice. Under the new five-year labor agreement, both teams will continue to pay at 40 percent.

"The luxury tax clearly has an impact on the way we are spending," Randy Levine, the Yankees' president, said in a telephone interview on Friday. "But the number itself also represents George Steinbrenner's philosophy: If there's a difference-maker, we go out and get him."

Steinbrenner's only complaint is that the Yankees haven't found enough difference-makers in recent years -- the last six years, in fact -- to win the World Series.

Change in payroll matters, if not in the outcome of the World Series, in coming next year. The tax threshold in the first year of the new agreement will rise to US$148 million. If that had been the threshold this year, the Yankees' tax would have been US$21.4 million. But besides the threshold being lower next year, the Yankees expect their payroll to be lower.

Now, skeptics may chuckle over that prospect, but the Yankees are intent on lowering their payroll. After all, if a US$200 million payroll can't produce a World Series championship, why spend all that money?

Their payroll for luxury tax purposes this year was US$201.5 million. That figure, covering the 40-man roster, not just the major league roster, included US$8.5 million that each team spent on benefits. Next year, the Yankees hope to be no higher than US$180 million, including benefits. At that total, the tax would be US$12.8 million.

This year, the Bronx Bombers had seven players who earned more than that tax amount. In fact, they had the four highest-paid players in the majors this year and five of the nine who earned US$15 million or more.

Alex Rodriguez, Derek Jeter and Jason Giambi were the only players on the US$20 million plateau. Mike Mussina was just under that level at US$19 million. Randy Johnson was at the relative pauper level with a salary a little over US$15.5 million.

Barry Bonds, Manny Rammrez, Todd Helton and Andy Pettitte were the only players between Mussina and Johnson. Pettitte will be up there again next year, but with the Yankees. Bonds will be right there with Pettitte at US$16 million if he and the Giants put the finishing touches on his contract.

Many people on baseball's executive level probably hope any final hitches over the language in that deal aren't ironed out because they would like to see Bonds fail at his effort to break Henry Aaron's career home run record.

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