Yankees hit with US$18 million luxury tax

New York was hit with an US$18 million luxury tax Tuesday by Major League Baseball. The tax was New York's lowest since 2003 and down from US$25.7 million last year, when the Yankees won the World Series.

“Atta baby. And right now we're in the US$170s,” Yankees general manager Brian Cashman said, looking ahead to his 2011 payroll.

Season-ending payroll information and the tax was sent to teams Tuesday and obtained by The Associated Press.

Boston is the only other team that will have to pay. The Red Sox, who missed the playoffs this year, exceeded the payroll threshold for the first time since 2007 and owe US$1.49 million.

According to the collective bargaining agreement, the Yankees and Red Sox must send checks to the commissioner's office by Jan. 31.

Red Sox president Larry Lucchino declined comment.

Since the current tax began in 2003, the Yankees have run up a bill of US$192.2 million. The only other teams to pay are Boston (US$15.34 million), Detroit (US$1.3 million) and the Los Angeles Angels (US$927,000).

New York's payroll was US$215.1 million for the purpose of the luxury tax, down from US$226.2 million, and the Yankees pay at a 40 percent rate for the amount over the threshold, which rose from US$162 million to US$170 million. Boston's luxury-tax payroll was US$176.6 million, and the Red Sox pay at a 22.5 percent rate.

To compute the payroll, Major League Baseball uses the average annual values of contracts for players on 40-man rosters and adds benefits. The Yankees failed to land free-agent pitcher Cliff Lee despite being given permission from ownership to make a US$150 million, seven-year offer. Lee agreed to a US$120 million, five-year deal with Philadelphia.

“We weren't going to exceed where we were this past year, but the bottom line is that now that the Lee thing has declared itself, it would be hard-pressed for us to get up to that level,” Cashman said.

While the Yankees are stocked with high-salaried veterans, Cashman has mixed in young players in recent years such as Phil Hughes, Joba Chamberlain and Brett Gardner.

New York's payroll under the conventional method of calculation — salaries and prorated shares of signing bonuses — dropped from US$222.5 million in 2008 to US$220 million last year to US$215.1 million this season.

Boston's payroll rose by US$30.2 million to US$170.7 million. The US$44.4 million between the Yankees and Red Sox was larger than the payrolls of San Diego (US$43.7 million) and Pittsburgh (US$44.1 million).

After moving into Target Field, Minnesota's payroll also went up by US$30 million, leaving the Twins 10th in the majors at US$103 million. Cincinnati increased its payroll by US$9.8 million to US$82.5 million.

The Los Angeles Dodgers cut payroll by a major league-high US$21.8 million to US$109.8 million as owners Frank and Jamie McCourt argued in divorce proceedings. Houston dropped by US$17.9 million to US$90.1 million and the New York Mets by US$14.7 million to US$127.6 million. Cleveland cut US$16.7 million to US$60.5 million.

The Yankees, Phillies (third at US$145.5 million), Twins and the World Series champion San Francisco Giants (11th at US$101.4 million) were the only teams from the top half by payroll to make the playoffs.

Payroll figures are for 40-man rosters and include salaries and prorated shares of signing bonuses, earned incentive bonuses, non-cash compensation, buyouts of unexercised options and cash transactions, such as money included in trades.

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