Yankees and Sox Singled Out

Yankees and Sox Singled Out

At least as it related to taxes, arch rivals in the baseball world are joined together in their financial misery. For 2010, the league set a threshold of $170 million on payroll for organizations above which they would have to pay a 22.5% tax.

The tax is called the competitive balance tax as it is intended to help keep the league competitively balanced without setting actual salary caps as exist in other sports like professional football. Many refer to the tax, however, as a luxury tax.

Only 2 teams were impacted by the tax for 2010. Both the New York Yankees and the Boston Red Sox exceeded the threshold. For the Yankees the bill amounted to an extra $18 million in costs for the organization. For Boston the bill was much less at only $1.5 million.

Next season the teams will have a little more room to work as the cap will be raised by $8 million, however the penaly will also increase to 30% if they go over.