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Home MLB News Yankees, Red Sox Pay Luxury Tax in 2010

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Yankees, Red Sox Pay Luxury Tax in 2010 PDF Print E-mail
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Written by Maury Brown   
Tuesday, 21 December 2010 23:39

It was the same old, same old for the Yankees, and the Red Sox did it for the first time since 2007. Major League Baseball, through its soft cap known as the Competitive Balance Tax (CBT) or as it’s more commonly known as the Luxury Tax hit the Yankees for a bill of $18,029,654 while the Red Sox saw far less in penalties paying out $1,487,149. The amount doled out by the Yankees was the “smallest” taxed amount for the Bronx Bombers since the first year that the tax was implemented and they paid $11,798,357.

The CBT is the average annual value of salaries (AAV) plus benefits plus extended benefits, according to the CBA. End of Year salary (EOY) is the more common salary, prorated shares of signing bonuses, and credits and debits for cash paid by teams to traded players and cash received from teams for acquired players. The CBT payroll for the Yankees was $215,074,134 while the Red Sox saw CBT payroll of $176,609,550.

The Yankees paid a tax rate of 40 percent while the Red Sox paid a rate of 22.5 percent. The higher rate for the Yankees was due to breaking the Luxury Tax threshold for more than three consecutive years. This year, the tax threshold was $170 million. Should the Red Sox break the 2011 threshold  of $178 million they would be taxed at a 30 percent rate by going two consecutive years breaking the CBT ceiling.

Since 2003, the first year that the Luxury Tax was implemented, the Yankees have paid $192,213,073 or a staggering 92 percent of all Competitive Balance Tax paid.

The only other teams to pay the Luxury Tax are the Angels (2004) and the Tigers (2008).

The Competitive Balance Tax is not part of revenue –sharing. A large portion of the money paid by clubs that break the Luxury Tax threshold go back to the players in the form of benefits.

THE INFORMATION BELOW IS NOW AVAILABLE AT ANY TIME FROM ANY PAGE OF THE BIZ OF BASEBALL BY SELECTING MLB Luxury Tax Totals FROM UNDER “RESOURCES” IN THE LOWER LEFT NAVIGATION PANE

The following is Competitive Balance Tax (CBT), or as it is more commonly known as Luxury Tax payments by club and year since the "soft cap" was put in place as part of the 2002 MLB Collective Bargaining Agreement.

Year Yankees Red Sox Angels Tigers TOTALS
2010 $18,029,654 $1,487,149 $19,516,803
2009 $25,689,173 $25,689,173
2008 $26,862,702 $1,305,220 $28,167,922
2007 $23,881,386 $6,064,287 $29,945,673
2006 $26,009,039 $497,549 $26,506,588
2005 $33,978,702 $4,148,981 $38,127,683
2004 $25,964,060 $3,148,962 $927,057 $30,040,079
2003 $11,798,357


$11,798,357
TOTALS $192,213,073 $15,346,928 $927,057 $1,305,220 $209,792,278

Source: The Associated Press

Competitive Balance Tax


Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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