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Paulwny
09-03-2002, 01:05 PM
Part of an article by Ronald Blum--AP

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Let’s say that the Yankees were prepared to offer a free agent a $10 million salary for 2003. Under the new rules, they’d have to pay an additional $1.75 million in tax.
Want to lower that check to the middle-America baseball fund? First, cut the offer to Mr. Free Agent to, let’s say, $5 million.
Then, introduce the player to the head of the Yankees’ local TV network, which - unbeknownst to Mr. Steinbrenner (wink-wink, nod-nod), offers the player a $5 million deal to tape a few commercials.

voodoochile
09-03-2002, 01:21 PM
Originally posted by Paulwny
Part of an article by Ronald Blum--AP

.
Let’s say that the Yankees were prepared to offer a free agent a $10 million salary for 2003. Under the new rules, they’d have to pay an additional $1.75 million in tax.
Want to lower that check to the middle-America baseball fund? First, cut the offer to Mr. Free Agent to, let’s say, $5 million.
Then, introduce the player to the head of the Yankees’ local TV network, which - unbeknownst to Mr. Steinbrenner (wink-wink, nod-nod), offers the player a $5 million deal to tape a few commercials.

Other sports specifically outlaw this type of cap evasion. I would be surprised if it isn't built into the specifics of the accord in baseball also. Though, both offers being equal, it would make more financial sensed for a star player to play in a major city where advertising offers are more likely to occur. However, should a team ever be caught actively circumventing the cap this way, they would probably be heavily fined.

An easier way is to backload the contract: 5 years, 75 million offer set up like this:

2003:$5M
2004:$7M
'05:$9M
'06:$11M
'07:$40M

If the contract gets rolled over for 2007 while they negotiate, there will be no luxury tax in 2007. While this is an extreme example, don't think rich teams aren't already planning something like this...

Paulwny
09-03-2002, 01:26 PM
Originally posted by voodoochile
don't think rich teams aren't already planning something like this...


Bean counters are more valuable to owners then the players.

Paulwny
09-03-2002, 01:35 PM
Originally posted by voodoochile
Other sports specifically outlaw this type of cap evasion. I would be surprised if it isn't built into the specifics of the accord in baseball also.

Thanks for this info, I didn't know that it had been addressed by other sports.