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Thread: 10 years/305M

  1. #301
    Tends to be difficult JL25and3's Avatar
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    Re: 10 years/305M

    Quote Originally Posted by Kingofkings19 View Post
    Teams are still going to receive money regardless. The luxury tax goes towards player benefits and MLB future fund.
    Right. Luxury tax is not revenue sharing. It doesn't go to other teams.

    I'm still not sure what the reduced luxury tax will do that will suddenly enable them to build a young team with dynasty possibilities in 2015. It will increase their profits, but I'm far from convinced that they're going to suddenly turn around and start spending lavishly. And if they do...what is it they're going to spend the money on that builds that young dynasty team? Money buys free agents, who are usually at least 30, but it no longer provides a great advantage in building a farm system.
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  2. #302
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    Re: 10 years/305M

    Quote Originally Posted by Yankee Fan in Boston View Post
    I agree that it's difficult to figure this all out until the bidding starts. Bats like Cano don't come along often, and it's always interesting to see who is willing to spend once FA really starts.

    To the earlier comments, one difference between Tex and Cano is that Cano is roughly 1.5 years older than Tex was when he signed with the Yankees. That may or may not make a difference, but it's certainly something the Yankees should take into consideration.
    Keep in mind that Tex was the final piece to a Championship team. Cano is . . . ?

  3. #303

    Re: 10 years/305M

    If for some reason we pass on Cano, we better sign Guerrero.

  4. #304

    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    Right. Luxury tax is not revenue sharing. It doesn't go to other teams.

    I'm still not sure what the reduced luxury tax will do that will suddenly enable them to build a young team with dynasty possibilities in 2015. It will increase their profits, but I'm far from convinced that they're going to suddenly turn around and start spending lavishly. And if they do...what is it they're going to spend the money on that builds that young dynasty team? Money buys free agents, who are usually at least 30, but it no longer provides a great advantage in building a farm system.
    That's true there is no guarantee that they turn around and spend in 2015. I guess if they have a worse season next yr that could change their outlook.

  5. #305

    Re: 10 years/305M

    Quote Originally Posted by unfamous loser View Post
    I'm not sure who they'll be, but looking at who else is going to be available... there will be multiple teams in line, raising the bar enough, in some capacity. there always is, for higher-end, reasonably aged talent.

    anything less than 8/$180M (including any potentially gimme bonuses), I'll be beyond utterly shocked. it'll probably take a major screw-up by his representation for him to not at least land that.
    Who are all these teams that are going to go 7-8 years with Cano?
    Plays the game the wrong way.

  6. #306
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    Re: 10 years/305M

    Quote Originally Posted by Gigi Buffon View Post
    Who are all these teams that are going to go 7-8 years with Cano?
    I can certainly see Texas and SF willing to go 7-8 years.
    Texas badly needs a left-handed bat, and can flip their surplus of middle infielders for a quality starter. Meanwhile, the Giants have a lot of money coming off their payroll this winter and could be a sleeper.
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  7. #307
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    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    Right. Luxury tax is not revenue sharing. It doesn't go to other teams.

    I'm still not sure what the reduced luxury tax will do that will suddenly enable them to build a young team with dynasty possibilities in 2015. It will increase their profits, but I'm far from convinced that they're going to suddenly turn around and start spending lavishly. And if they do...what is it they're going to spend the money on that builds that young dynasty team? Money buys free agents, who are usually at least 30, but it no longer provides a great advantage in building a farm system.
    Well, if they can get under the limit, the rate then resets, yes?

    http://www.fangraphs.com/library/business/luxury-tax/

    Right now their rate is 50%

    Get under $189M, and the rate resets.

    Once they go over again, their rate would be 17.5%, which is a very significant difference.

    Granted, this is only half of the equation. They need to draft, develop, and perhaps trade for youth. However, if you can get a core, then you can spend on FA's to augment. Spending to augment at 50% is difficult.
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  8. #308
    Tends to be difficult JL25and3's Avatar
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    Re: 10 years/305M

    Quote Originally Posted by goin for 27 View Post
    Well, if they can get under the limit, the rate then resets, yes?

    http://www.fangraphs.com/library/business/luxury-tax/

    Right now their rate is 50%

    Get under $189M, and the rate resets.

    Once they go over again, their rate would be 17.5%, which is a very significant difference.

    Granted, this is only half of the equation. They need to draft, develop, and perhaps trade for youth. However, if you can get a core, then you can spend on FA's to augment. Spending to augment at 50% is difficult.
    USA Today puts the luxury-tax payroll at $236.2M for 2013. If that's their payroll in 2 years, the difference between 17.5% and 50% would be about $15M. In the context of the Yankees' revenue streams, do you think that's a franchise-changing amount of money? Do you think that $15M will enable them to build a dynasty that they couldn't have built otherwise?

    I'm not suggesting that they have to spend that much - in fact, given the money coming off their payroll, I think it would be difficult - or that they spend just for the sake of spending money. But I also don't think resetting the luxury tax really does much to change the future of the franchise.
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  9. #309
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    Re: 10 years/305M

    I honestly wonder if the 15 million they'd save on the luxury tax is going to offset the damage they'd do to the brand and the lower revenue from attendance and TV ratings they'll incur by getting under 189.
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  10. #310
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    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    USA Today puts the luxury-tax payroll at $236.2M for 2013. If that's their payroll in 2 years, the difference between 17.5% and 50% would be about $15M. In the context of the Yankees' revenue streams, do you think that's a franchise-changing amount of money? Do you think that $15M will enable them to build a dynasty that they couldn't have built otherwise?

    I'm not suggesting that they have to spend that much - in fact, given the money coming off their payroll, I think it would be difficult - or that they spend just for the sake of spending money. But I also don't think resetting the luxury tax really does much to change the future of the franchise.
    The key is the revenue sharing, not luxury tax.

    I have no idea how it works.

  11. #311
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    Re: 10 years/305M

    Quote Originally Posted by RhodyYanksFan View Post
    Not if no other teams are offering him anything close to that. Teix had his choice between Anaheim, NY & Boston all offering similar deals. I don't think there will be 3 teams fighting for Cano.
    Really? 1B who hit like Tex are common. 2B who hit like Cano are not. There's a huge, huge difference there.

    Texas, Wasington, Baltimore, Detroit, Toronto should and can be major players. That's not even including the Dodgers, Giants, or some random team looking to make a splash. You're greatly underestimating, 1) How good Cano is; 2) The position he plays; 3) The amount of money floating around in the game right now.

    I've been guessing since last year that he'd be getting Kemp money and I'm sticking to it. 7/190, 8/180, whatever. Worth it? Probably not, but the Yankees aren't gonna be the only team after him.

  12. #312
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    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    USA Today puts the luxury-tax payroll at $236.2M for 2013. If that's their payroll in 2 years, the difference between 17.5% and 50% would be about $15M.
    Sorry, I'm having a hard time understanding this.

    $236.2M X 17.5% = $41.33M

    $236.2M X 50.0% = $118.1M

    $118.1M - $41.33M = $76.77M

    Am I missing something?
    "Somebody once asked me if I ever went up to the plate trying to hit a home run. I said, 'Sure, every time.'" -- Mickey Mantle

  13. #313
    Tends to be difficult JL25and3's Avatar
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    Re: 10 years/305M

    Quote Originally Posted by sjb23 View Post
    Sorry, I'm having a hard time understanding this.

    $236.2M X 17.5% = $41.33M

    $236.2M X 50.0% = $118.1M

    $118.1M - $41.33M = $76.77M

    Am I missing something?
    They don't pay luxury tax on the entire payroll, only on the amount over a certain threshhold, which goes up to $189M next year.
    A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
    - Barry Manilow

  14. #314

    Re: 10 years/305M

    Quote Originally Posted by sjb23 View Post
    Sorry, I'm having a hard time understanding this.

    $236.2M X 17.5% = $41.33M

    $236.2M X 50.0% = $118.1M

    $118.1M - $41.33M = $76.77M

    Am I missing something?
    I don't think the tax is applied to the whole payroll, just the overage.

  15. #315
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    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    They don't pay luxury tax on the entire payroll, only on the amount over a certain threshhold, which goes up to $189M next year.
    Ok, thanks for explaining. Funny thing is, I think I knew that at one time and even mentioned it in a post.....I'm getting old.....
    "Somebody once asked me if I ever went up to the plate trying to hit a home run. I said, 'Sure, every time.'" -- Mickey Mantle

  16. #316
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    Re: 10 years/305M

    With that being the case, I agree whole-heartedly that saving $15M should not be a deciding factor by any means regarding staying under $189M - they'll lose more by missing the playoffs for an unheard-of 2 years in a row.

    I recently read that they will be receiving about $25M from the new MLB TV contract and about $40M+ from the YES transaction.....
    "Somebody once asked me if I ever went up to the plate trying to hit a home run. I said, 'Sure, every time.'" -- Mickey Mantle

  17. #317
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    Re: 10 years/305M

    Quote Originally Posted by JL25and3 View Post
    USA Today puts the luxury-tax payroll at $236.2M for 2013. If that's their payroll in 2 years, the difference between 17.5% and 50% would be about $15M. In the context of the Yankees' revenue streams, do you think that's a franchise-changing amount of money? Do you think that $15M will enable them to build a dynasty that they couldn't have built otherwise?

    I'm not suggesting that they have to spend that much - in fact, given the money coming off their payroll, I think it would be difficult - or that they spend just for the sake of spending money. But I also don't think resetting the luxury tax really does much to change the future of the franchise.
    I can see both sides. The team should try to utilize every avenue to drive revenues and control costs to get max profit.

    From the article, the Yanks have paid over a quarter of a BILLION dollars on luxury taxes, at the end of this year. It needs to be looked at.

    I think ownership and upper management see the huge amount of holes to fill, and this is the time to do it. (I can buy that argument)

    The franchise needs hygiene all the way around. Drafting needs to improve, player development needs to improve, and yeah, spending needs to improve. The time to go all in on spending is when you "get there". I am all for the Yanks breaking the bank open if they can line themselves up for a 3, 4, 5 year run.
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  18. #318
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    Re: 10 years/305M

    Quote Originally Posted by sjb23 View Post
    With that being the case, I agree whole-heartedly that saving $15M should not be a deciding factor by any means regarding staying under $189M - they'll lose more by missing the playoffs for an unheard-of 2 years in a row.

    I recently read that they will be receiving about $25M from the new MLB TV contract and about $40M+ from the YES transaction.....
    I guess you became a fan in 1995 and missed 1982-1994? Or 1965-1975?

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  19. #319
    Tends to be difficult JL25and3's Avatar
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    Re: 10 years/305M

    Quote Originally Posted by goin for 27 View Post
    I can see both sides. The team should try to utilize every avenue to drive revenues and control costs to get max profit.

    From the article, the Yanks have paid over a quarter of a BILLION dollars on luxury taxes, at the end of this year. It needs to be looked at.

    I think ownership and upper management see the huge amount of holes to fill, and this is the time to do it. (I can buy that argument)

    The franchise needs hygiene all the way around. Drafting needs to improve, player development needs to improve, and yeah, spending needs to improve. The time to go all in on spending is when you "get there". I am all for the Yanks breaking the bank open if they can line themselves up for a 3, 4, 5 year run.
    And with all that luxury tax they've paid, the result has been staggering success. They've spent pots of money and made much, much more money.

    They want to make more profit, fine, that's their prerogative. But I still don't see how forcing themselves under the $189M threshhold makes a lick of difference in their ability to build for the future.
    A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
    - Barry Manilow

  20. #320
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    Re: 10 years/305M

    Point taken. I think (we will see if they are correct) that the FO believes that they can build (re-build) a WC caliber team AND save money in the process....
    Goin for 2<strike>7</strike>8!

  21. #321

    Re: 10 years/305M

    According to Forbes numbers, the Yankees are running dangerously close to the red for such a financially leveraged firm.

    1.4 million operating income on 471m revenues is very very low. This is for last year. The numbers can't be pretty this year. The numbers will improve with the Fox deal but we're still talking about a low margin business for a financially leveraged (stadium debt) firm with a lot of business risk (competitive equity).

    So yeah, they have good reasons to cut back. The Steinbrenners are rich, but not that rich. Too much of their wealth is concentrated in the Yankees and they just can't afford to run the team at such low margins (or at a loss). They aren't Moreno and Ted Lerner, who got billions elsewhere and just want to buy a championship before they die.

  22. #322

    Re: 10 years/305M

    Quote Originally Posted by sjb23 View Post
    With that being the case, I agree whole-heartedly that saving $15M should not be a deciding factor by any means regarding staying under $189M - they'll lose more by missing the playoffs for an unheard-of 2 years in a row.

    I recently read that they will be receiving about $25M from the new MLB TV contract and about $40M+ from the YES transaction.....

    I see the point that $15mm one time would not be that big of a difference to the Yankee organization as a whole.

    that said, holding everything constant, it's not just a one time $15mm hit. it's that amount (roughly?) every year on an ongoing basis, correct? So if the Steinbrenners are looking at, say, a five year time horizon, it's $75mm that they could save by dipping under the $189mm threshhold.

    Coupled with how low their operating margins are said to be (as referenced in this thread), it's a pretty different picture for overall franchise valuation.

    Fully admit I don't understand all of the rules and impact but based on what I do understand, I think it's a far greater hit than just a one time $15mm hit.

  23. #323

    Re: 10 years/305M

    Quote Originally Posted by grizy View Post
    According to Forbes numbers, the Yankees are running dangerously close to the red for such a financially leveraged firm.

    1.4 million operating income on 471m revenues is very very low. This is for last year. The numbers can't be pretty this year. The numbers will improve with the Fox deal but we're still talking about a low margin business for a financially leveraged (stadium debt) firm with a lot of business risk (competitive equity).

    So yeah, they have good reasons to cut back. The Steinbrenners are rich, but not that rich. Too much of their wealth is concentrated in the Yankees and they just can't afford to run the team at such low margins (or at a loss). They aren't Moreno and Ted Lerner, who got billions elsewhere and just want to buy a championship before they die.
    yep, and this is why I never understand people complaining that the Yankees are not investing enough. They have been the top payroll in baseball every year since 1999 (in 1998 ironically they were second), and while I don't know their numbers, back of the napkin figures suggest that they aren't rolling in cash flow every year.

    Not that I feel sympathy for the Steinbrenners, and I'm sure they've taken enough off the table (such as the Yes deal) to set themselves up for life, but if your main asset is in one industry and you're basically breaking even every year on that asset, I think they have every right to not spend as if it's monopoly money.

    As a fan, all I can really ask for is that they have the number one payroll in the sport most years and never outside the top three or four. And they easily clear those hurdles.

  24. #324

    Re: 10 years/305M

    I can't get behind that. I'm sorry

  25. #325

    Re: 10 years/305M

    Quote Originally Posted by grizy View Post
    According to Forbes numbers, the Yankees are running dangerously close to the red for such a financially leveraged firm.

    1.4 million operating income on 471m revenues is very very low. This is for last year. The numbers can't be pretty this year. The numbers will improve with the Fox deal but we're still talking about a low margin business for a financially leveraged (stadium debt) firm with a lot of business risk (competitive equity).

    So yeah, they have good reasons to cut back. The Steinbrenners are rich, but not that rich. Too much of their wealth is concentrated in the Yankees and they just can't afford to run the team at such low margins (or at a loss). They aren't Moreno and Ted Lerner, who got billions elsewhere and just want to buy a championship before they die.

    that's the problem- those numbers don't reflect reality. Most of the estimates don't reflect the Yes stake income

    There's one set of numbers for tax purposes, etc then there's the real numbers. There's no way in the world the Yanks only netted 1.4M in 2012

    Baseball and Billions ( andrew zimbalist ) was a great book that looked into the topic
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