‘Tis a high price to pay

News item: The Yankees and the Dodgers are the only teams which have to pay a luxury tax on their payroll for 2013. The threshold for this season is $178 million, the Dodgers’ payroll was $243 million, and they pay at a 17.5 percent rate and owe $11,415,959.

Checks are due in the Commissioner’s Office by January 21.

But what does all that money get used for? From Article XXIII of the Collective Bargaining Agreement:

(1) The first $2,375,400 of proceeds collected for each Contract Year shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements.

(2) 50% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to fund benefits to Players, as provided in the Major League Baseball Players Benefit Plan Agreements.

(3) 25% of the remaining proceeds collected for each Contract Year shall be contributed to the Industry Growth Fund and, with accrued interest, used for the purposes set out in Article XXV.

(4) 25% of the remaining proceeds collected for each Contract Year, with accrued interest, shall be used to defray the Clubs’ funding obligations arising from the Major League Baseball Players Benefit Plan Agreements.

Okay, but what’s the “Industry Growth Fund?”

The objective of IGF is to promote the growth of baseball in the United States and Canada, as well as throughout the world. To this end, IGF will be operated jointly by Players and Clubs in furtherance of the following purposes:

(1)to enhance fan interest in the game;
(2)to increase baseball’s popularity; and
(3)to ensure industry growth into the 21st Century

(See Article XXV of the CBA, linked above.)

So now we’re smarter than we were several hours ago. Isn’t that a good thing, class?

9 thoughts on “‘Tis a high price to pay

  1. Actually, thanks for this info. I had often wondered what happens to the luxury tax money, but I’ve always been too lazy to look into it.

  2. So we are being taxed for the privilage of paying, among others, Andruw Jones $3.2 million in 2014?