Jeter’s new contract leaves Yanks with $80 Million before tax

Derek Jeter 2

With Derek Jeter signing a new contract for the 2014 season, the luxury tax payroll increased to $97.1 Million for seven players. Doing the math, that will leave the Yankees with $80 Million to spend on players for the 2014 roster if they want to be under $189 Million threshold .

On Friday, Jeter and the New York Yankees agreed on a one-year deal that would equal $12 Million. Major League Baseball defined the value for luxury tax purposes to $12.81 Million. Baseball’s luxury tax uses the average annual value for contracts defined by the sports collective bargaining agreement. Determining Jeter’s payroll figure for the tax is complicated due to the option and the new salary.

The other players that are signed for next season that make up the $97.1 Million are Alex Rodriguez ($27.5 Million), CC Sabathia ($24 Million), Mark Teixeira ($22.5 Million), Ichiro Suzuki ($6.5 Million), Alfonso Soriano ($4 Million) and Vernon Wells ($0). However if arbitrator Frederic Horowitz upholds Rodriguez’s 211-game suspension, Rodriguez’s payroll impact for 2014 can decrease to $2.5 Million.

The Yankees have paid a luxury tax every year since it was put in place in 2003. The Yankees are expected to pay another luxury tax in 2013, the threshold equaling $178 Million. If the Yankees do get under the threshold in 2014, it does come with some benefits. The tax rate would drop from 50% to 17.5 percent in 2015, and the Yankees would once again get a portion of its revenue sharing-payments.

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7 Responses to Jeter’s new contract leaves Yanks with $80 Million before tax

  1. Tanned Tom says:

    That has to be a typo, if A-Fraud is suspended the team must save more than $2.5 mil

    • mlblogsnewyorkyankees13 says:

      It's not a typo. When it comes to luxury tax, the value measures differently. Don't ask me why though because I'm not entirely sure how this thing works.

      • Tanned Tom says:

        I've read almost everywhere else that the impact would $25 mil and not $2.5.

        • mlblogsnewyorkyankees13 says:

          This was how it was in the Associated Press article. They were the ones who initially reported it.:

          "Rodriguez’s payroll impact for 2014 would drop to $2.5 million if arbitrator Fredric Horowitz upholds a 211-game suspension imposed on the third baseman by MLB for alleged violations of the sport’s drug agreement and labor contract."

          • Tanned Tom says:

            Ah, drop TO $2.5 mil is not the same thing as drop BY $2.5 mil. That's a $25 mil difference.

          • mlblogsnewyorkyankees13 says:

            Ah, I see! My apologizes. It was an error on my part on the article. I wrote it pretty late so my head wasn't in the right place. I should probably change it. 🙂

        • mlblogsnewyorkyankees13 says:

          It's also reported as $2.5 Million on YES Network. 🙂

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