The New York Yankees are facing a luxury tax penalty of at least $29.1 million. The record penalty comes the same season one of baseball’s great dynasties is in danger of missing the playoffs.
The Yankees currently sit in fourth place in the AL East, behind the Orioles, Rays, and Red Sox. If they miss the playoffs, it will be for the second time in 19 seasons.
Even though they are in fourth place, New York has a 77-68 record. With the playoff race as tight as it can be, they are only 1.5 games out of a wildcard spot.
The Yankees are just as famous for their number of championships as they are for their yearly payroll. The organization has never been afraid to spend money to sign the best players. However, New York and its fans are used to being in first place.
Since 1921, the Yankees have won the AL Pennant 40 times and have won the World Series 27 times. No other professional sports team has been nearly as dominant.
The luxury tax threshold is the amount of money a team like the Yankees can spend before they need to pay the league a fee. This season the threshold is $178 million. The Yankees current payroll is $236.2 million.
Because the Yankees are repeat offenders of the luxury tax, they must pay 50% of the difference. In this case, the number is $29.1 million.
Since the luxury tax was established a decade ago, New York has paid it every year. They are the only MLB team to suffer this fate. In total, they have paid $224 million in tax penalties.
Still, the Yankees are optimistic they can cut their payroll to under the $189 million threshold for 2014. They were actually close this season before expensive players like Alex Rodriguez and Derek Jeter had to be replaced because of injuries.
The only other team that will have to pay a luxury tax this year is the Los Angeles Dodgers. The Dodgers payroll currently sits at $234 million. Because they are first time offenders, Los Angeles will only pay $9.9 million in penalties.
Are you surprised the Yankees owe $29.1 million in luxury tax penalties?
[image via Keith Allison | flickr]