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  1. #1
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    Could someone please explain to me all the ramifications of $189 million in 2014?

    Is it true that after the 2014 season ends, for the 2015 season the Yankees can get back into the business of large spending at lower luxury tax rates? Will they have to do the $189 million thing again every few years? what exactly is their financial plan?
    Contrary to popular belief Eternity is not unending endlessness, it's repetitive.

  2. #2

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by bardos View Post
    Is it true that after the 2014 season ends, for the 2015 season the Yankees can get back into the business of large spending at lower luxury tax rates? Will they have to do the $189 million thing again every few years? what exactly is their financial plan?
    The Yankees will most likely be under 189 for 2014-2016.

    If they are under for 2014 they will pay 0 luxury tax, and reset the tax rate so that next time they go over its 17.5% (then 30,40,50%)

    They will get revenue sharing rebates from the top 15 market teams who also receive revenue sharing if they are under. If they are under they receive 100% of the rebate. If they are under for 2014 and go over in 2015 they will receive 50% in 2015 and 0% in 2016. If they are under for 2014-2015 they will receive 100% for 2014-2016.

    The revenue sharing rebates will most likely be 15% of the revenue sharing the yankees pay.

  3. #3
    Bazinga Hitman23's Avatar
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    I'm glad this question was asked, I had no idea how it worked either.

    So if they are getting rebates, how does that work? I assume they pay in order for other teams to spend, assuming those teams spend the money the way they are supposed to, who pays for the rebates?
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  4. #4
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Jerkface View Post
    The Yankees will most likely be under 189 for 2014-2016.
    Why the 3 years? I didn't follow
    Contrary to popular belief Eternity is not unending endlessness, it's repetitive.

  5. #5
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by bardos View Post
    Why the 3 years? I didn't follow
    It is what is defined in the Collective Bargaining Agreement.
    Forgive me for taking the Contrarian view

  6. #6
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by longtimeyankeefan View Post
    It is what is defined in the Collective Bargaining Agreement.
    Could you expand on that? Explain to me like i'm an idiot. (not far from the truth)
    Contrary to popular belief Eternity is not unending endlessness, it's repetitive.

  7. #7
    The gerbil lives Zimmers' Helmet's Avatar
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Jerkface View Post
    The Yankees will most likely be under 189 for 2014-2016.

    If they are under for 2014 they will pay 0 luxury tax, and reset the tax rate so that next time they go over its 17.5% (then 30,40,50%)

    They will get revenue sharing rebates from the top 15 market teams who also receive revenue sharing if they are under. If they are under they receive 100% of the rebate. If they are under for 2014 and go over in 2015 they will receive 50% in 2015 and 0% in 2016. If they are under for 2014-2015 they will receive 100% for 2014-2016.

    The revenue sharing rebates will most likely be 15% of the revenue sharing the yankees pay.
    Thanks so much for clarifying. My impression was that the stated sub-$189 million goal was for 2014 only, so they could reset the clock on the payroll tax. If their true intent is to stay below $189 million through 2016, then it can no longer be said that the Yankees prioritize winning over maximum profits.

    If that's their true end game, then I'd rather see the Sons Of Steiny sell the team.
    "Glory is fleeting, but obscurity is forever." - Napoleon Bonaparte (1769-1821)

  8. #8
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Zimmers' Helmet View Post
    Thanks so much for clarifying. My impression was that the stated sub-$189 million goal was for 2014 only, so the could reset the clock on the payroll tax. If their true intent is to stay below $189 million through 2016, then it can no longer be said that the Yankees prioritize winning over maximum profits.

    If that's their true end game, then I'd rather see the Sons Of Steiny sell the team.
    Agreed. I thought getting under $189 million by 2014 "reset the clock" as well. If this is what we can expect for the next four years then count me on the Mark Cuban bandwagon.
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  9. #9
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    found this from last year >>>>>>>>>>Under the new labor contract, the Yankees' rate would increase to 50 percent in 2013 if they continue to exceed the threshold,

    But if in any year a team goes under the threshold, its rate decreases to 17.5 percent the next time it pays the tax.

    As an added incentive for the high-spenders to decrease payroll, if they get under the threshold they will become eligible to get back some of the money they contribute in revenue sharing. The tax threshold stays at $178 million through 2013, then goes to $189 million in each of the following three years.http://espn.go.com/mlb/story/_/id/73...hit-luxury-tax

  10. #10

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by bardos View Post
    Why the 3 years? I didn't follow
    The CBA added a revenue sharing rebate program because some teams that are in large markets, specifically the braves, blue jays, nationals, and athletics are benefiting from revenue sharing. Baseball wants them to actually field teams and try to make money on their own so they are disallowing them from getting revenue sharing.

    Under this agreement these teams will forfeit 25% of RS received in 2013, 50% in 2014, 75% in 2015, and 100% in 2016. The money is paid back to anyone who is under the luxury tax limit, or depending on how long they are under they will get a portion. I was incorrect above. If the Yankees go under in 2014 and go over in 2015, they will get 100% in 2014, 50% in 2015, and 25% in 2016.

    The Athletics will not forfeit revenue sharing if they do not get a new stadium.

    Those 4 teams pay 23% of revenue sharing. So the Yankees are looking to be able to get in each year:

    2014 - 11.5% revenue sharing if oak gets new stadium in 2014, else 7.5%
    2015 - 17.5% revenue sharing if oak gets new stadium in 2014, else 11.25%
    2016 - 23% revenue sharing if oak gets new stadium in 2014, else 15%

    The Yankees pay around 90-110 million in revenue sharing each season. Or roughly 25-27% of the revenues from the team.

    Note that the Yankees have much of their revenue hidden by YES and they also receive deductions (~50 million) from their new stadium to the amount available for revenue sharing.

    Therefore, the Yankees are most likely shooting to stay under 189 for 2014-2016 because:

    1. It simply reduces their costs
    2. They can get a moderate rebate of some of their revenue sharing if they do it

    HAL has said he thinks the club does not need to be above 189 to compete, which combined with the above signals that this is not just a 1 time thing to reduce their tax rate. They are picking a bad time to do THAT if it is. They could wait till 2015 when they'd have a better handle on heathcott/austin/williams/sanchez/marshall and other guys who could help them reduce, as well as banuelos & pineda being back from injury.

    Starting in 2014 is very convenient as it is right when the revenue sharing rebate program hits 50% payments. I will say this, they can stay under in 2014-2015 resetting their tax rate, then go over in 2016 and pay 17.5% luxury tax but also receive 100% of their revenue sharing rebate which will probably be 15% (I don't think Oak will be getting a new stadium anytime soon, the owners keep killing it)

  11. #11
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Frankly, I hope the days of Yankee free spending habits are over. I truly would like to see us go after role players, not stars/superstars. The role players ideally would fit in where we cannot fill the spot with home grown talent.
    I hope we never again offer a contract longer than 7 years to any player no matter how good he may be, and then only to a player no older than say 31. I never want to see a contract over three years offered to any player over 35.

    If this hurts us in the short run, so be it. I am confident it will help us and the game in the long run. I would like to see us take all the money (and then some) saved in 2014, by keeping payroll undet $189MM and put it into developing our farm system and by obtaining the best and brightest people to run it.

    Andy
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  12. #12

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Nome View Post
    Frankly, I hope the days of Yankee free spending habits are over. I truly would like to see us go after role players, not stars/superstars. The role players ideally would fit in where we cannot fill the spot with home grown talent.
    I hope we never again offer a contract longer than 7 years to any player no matter how good he may be, and then only to a player no older than say 31. I never want to see a contract over three years offered to any player over 35.

    If this hurts us in the short run, so be it. I am confident it will help us and the game in the long run. I would like to see us take all the money (and then some) saved in 2014, by keeping payroll undet $189MM and put it into developing our farm system and by obtaining the best and brightest people to run it.

    Andy

    Thing is the money allowed to be spent on talent has been capped. WE can't use our money advantage in the domestic or international drafts. You can throw millions at player development, but if they just don't have the talent, it's just not gonna be productive I agree that our people in charge of drafting and developing players need to be replaced, but the new financial constraints will make that impact less powerful. if we had done that when we could spend freely in the international draft and could overpay in the domestic draft, it would have been a real game changer

    The only open avenue is FA signings. As distasteful as it is to most, if it's a choice between scrappy less talented players on a non playoff team and a perennial playoff contending team of mercenaries, I say, let them spend the money

    We could be spending like the Dodgers are now= we have the resources. We've also passed up on Cespedes and Darvish because of the new financial tact the FO has decided on. If they really hope to keep to the $189M cap, we'll have a chance to see how that plays out in terms of fan reaction and the value of the franchise
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  13. #13
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Nome View Post
    Frankly, I hope the days of Yankee free spending habits are over. I truly would like to see us go after role players, not stars/superstars. The role players ideally would fit in where we cannot fill the spot with home grown talent.
    I hope we never again offer a contract longer than 7 years to any player no matter how good he may be, and then only to a player no older than say 31. I never want to see a contract over three years offered to any player over 35.

    If this hurts us in the short run, so be it. I am confident it will help us and the game in the long run. I would like to see us take all the money (and then some) saved in 2014, by keeping payroll undet $189MM and put it into developing our farm system and by obtaining the best and brightest people to run it.

    Andy
    I agree Andy. No more 10 year contracts. You see where that has gotten us. I also agree you can put together a very competitive team under 189 mill. The great Yankee teams in the 90's were not even near that. Then again agents like Boras killed the sport and kept on asking more money for their clients.

  14. #14

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by AJW View Post
    I agree Andy. No more 10 year contracts. You see where that has gotten us. I also agree you can put together a very competitive team under 189 mill. The great Yankee teams in the 90's were not even near that. Then again agents like Boras killed the sport and kept on asking more money for their clients.
    You could also get a gallon of gas for a dollar in the 90s.

  15. #15
    #notonemore Big_E's Avatar
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Zimmers' Helmet View Post
    Thanks so much for clarifying. My impression was that the stated sub-$189 million goal was for 2014 only, so they could reset the clock on the payroll tax. If their true intent is to stay below $189 million through 2016, then it can no longer be said that the Yankees prioritize winning over maximum profits.

    If that's their true end game, then I'd rather see the Sons Of Steiny sell the team.
    Quote Originally Posted by NelsonMuntz View Post
    Agreed. I thought getting under $189 million by 2014 "reset the clock" as well. If this is what we can expect for the next four years then count me on the Mark Cuban bandwagon.
    Really? I think we should be able to win if we have the highest (or second highest) payroll in baseball.

    The Giants won with a $117M payroll in 2012
    The Cards won with a $104M payroll in 2011
    The Giants won with a $98M payroll in 2010

    And you want the Steinbrenners to sell if they keep payroll under $189M?

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  16. #16
    #notonemore Big_E's Avatar
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by ieddyi View Post
    We could be spending like the Dodgers are now= we have the resources. We've also passed up on Cespedes and Darvish because of the new financial tact the FO has decided on. If they really hope to keep to the $189M cap, we'll have a chance to see how that plays out in terms of fan reaction and the value of the franchise
    The Yankees have one WS title in the last 12 years. It hasn't hurt the franchise value at all...

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  17. #17

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Big_E View Post
    The Yankees have one WS title in the last 12 years. It hasn't hurt the franchise value at all...
    And they won the division and were in the playoffs every year except one during that period

    They also have always had one of the most potent offenses in baseball mainly due to free agency

    The division has gotten a lot tougher and already there are signs of fan complacency- witness the empty seats during the playoffs

    If you think that not filling holes in the lineup due to penny pinching is gonna be a successful new model going forward, I gotta disagree

    Again, the Yanks could be spending even more than the Dodgers if they so choose. To choose not to when there are big holes in the team structure won't go down well w/ the fanbase
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  18. #18

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Quote Originally Posted by Big_E View Post
    Really? I think we should be able to win if we have the highest (or second highest) payroll in baseball.

    The Giants won with a $117M payroll in 2012
    The Cards won with a $104M payroll in 2011
    The Giants won with a $98M payroll in 2010

    And you want the Steinbrenners to sell if they keep payroll under $189M?
    A team can win with a payroll in that range, but compete year in year out? The Giants have made the playoffs twice in the past 9 years. Sure they won the WS both times, but thats no guarantee. I don't want the Yankees to just be some other team that has a nice 3 year stretch and then is mediocre for 5 years while rebuilding.

    Another big problem with the Yankees 189 limit is that they have considerable sunk costs which cannot be relied upon to help their team. They have eaten into half of their budget on just 4 players. 2 of which are old, 1 of which is already declining.

  19. #19

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    So which big contracts do we have coming off the books after this year?

    Mariano probably retires.

    Ditto Andy Pettitte.

    Thats about 24 million right there.

    Youkilis is on a one year deal for 12 million, but since we have no 3B in the system ready to takeover in 2014, there's a chance we could resign Youkilis if he has a good year as I suspect he will, so I won't count that money coming off the books right now.

    Another one we'll have coming off the books is Ichiro, thats probably about 10 million when he signs this week.

    Kuroda is another one who comes off the books and I think thats about 12 million.

    So thats about 45 million coming off the books in total.

    Does that get us below 189 million and am I missing any big ones?
    "Owning the Yankees is like owning the Mona Lisa." -- George M. Steinbrenner III

  20. #20

    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    Granderson for 15 is gone

    Cano for 15 also but I think he will be back and at a substantial raise
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  21. #21
    Bazinga Hitman23's Avatar
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    Re: Could someone please explain to me all the ramifications of $189 million in 2014?

    This thread is awesome. I have gotten a good deal of info that I was completely unaware of before. Thanks to OP and for all those who answered.
    Thank you, 2013-2014 New York Rangers for a great season!

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