As Phillies “Seriously Considering” Signing Delmon Young, A Look At Why Luxury Tax In 2013 Is OK
While signing Delmon Young could impede Darin Ruf’s growth — they play the same position, and the Phillies couldn’t field an outfield with both…right? — it doesn’t necessarily throw a wrench in any trade deadline plans.
To date, the Phillies 2013 payroll stands at about $171 million, just $7 million below this year’s luxury tax threshold. Young last year earned $6.25 million with the Tigers. That he’s still unsigned with three weeks before spring training bodes well for the Phillies at the negotiating table (not as much, obviously, on the diamond). But he could command the vast majority of that remaining allotment.
Still, if ever the Phillies were to breach the luxury tax threshold, this might be the year to do it. Under the new CBA (signed in Dec. 2011), so-called “first time offenders” are subject to a 17.5 percent tax on every excess dollar spent. Thing is, the tax will jump next year, to $189 million, theoretically giving the Phillies more room to add at the trade deadline this season and still stay under for next season.
They’d want to get under the luxury tax threshold for next year. One, consecutive years of “offenderdom” nearly double the luxury tax rate, from 17.5 percent to 30 percent. Two, getting under for a year resets the team’s “offender” status, making the next time they go over as if it were their first, in terms of punitive luxury tax rates (in this case, 17.5 percent as opposed to 30 percent.
But they’d likely be able to, even if they signed Young and swung a deal later. Even if Young was entitled to all $7 million of the Phillies space (a stretch), any contract the Phillies added at the deadline would already be half-paid by their Opening Day club. Hard to see the Phillies finding (or wanting) a $22 million-a-year player in July.
Plus, with contracts for Roy Halladay ($20 million), Chase Utley ($13 million), Michael Young ($6 million), Carlos Ruiz ($5 million), Kyle Kendrick ($4.5 million) expiring at year’s end, some $49.5 million in 2013 commitments will be coming off the books, in most cases, permanently. Should make getting under the tax pretty easy.
If only fielding an outfield were so simple.
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