Would people rather the offer be 6/96 or 7/105? Is it likely Panda will be worth $9M for that 7th year? (I think so.)
I would certainly think the LT threshold will bump. The MLBPA won't stand for it not to, since it will have been 189 from 2013-2015 (I believe). I know it doesn't bump again before the end of the current CBA, though. Either way, it will bump by his years 3-5 or 3-6 on the deal, so it shouldn't be prohibitive.snowmanny said:Like a lot of people on this board, I see 3B and LH as immediate needs that Sandoval fills, but I do not see him as an elite/$20M player. I also wonder if the luxury tax threshold will still be $189 Million five years from now. So while the Red Sox have talked about overpaying in AAV to shorten the length of contracts, I think I would prefer a lower AAV with a sixth year. But if the options are 5/90 and 6/100, I am not sure if the $1.33M reduction in AAV is worth the additional year. I'd be OK with that signing though; he might be a perfectly good player for six years.
This is exactly where I'm at. For whatever reason I have an easier time accepting that he is worth a$100m contract more than $20m AAVOCD SS said:Looking at the difference between $95M/5 and $102M/6, I'd be fine with the latter (which I say as someone who doesn't really want the Sox to sign him, just that I'll trust them enough on their assessment that if the first offer is on the table then they may as well go to the second).
bohous said:This is exactly where I'm at. For whatever reason I have an easier time accepting that he is worth a$100m contract more than $20m AAV
Your point stands, but it's not quite that big a difference, as the tax rate is based on where the games are played, I think. It's why back when the expos played those games in Puerto Rico, some players were pissed. Might be closer to a $4 million edge.mloyko54 said:I saw an accountant mention on Twitter the different State Income Tax Rates between the states.
California has a 13.3% rate in the top bracket
MA has a 5.2%
I went through and did the calcuations based on equal 95 million dollar contracts here is the difference.
CA - $82,365,000
MA - $90,059,000
So equal contract offers by the Red Sox and Giants are anything but equal.
It's not that simple -- pro athletes must apportion their income among the various states where they play, plus state income taxes are deductible for federal income tax purposes. The difference is therefore much more slight than your example would suggest.mloyko54 said:I saw an accountant mention on Twitter the different State Income Tax Rates between the states.
California has a 13.3% rate in the top bracket
MA has a 5.2%
I went through and did the calcuations based on equal 95 million dollar contracts here is the difference.
CA - $82,365,000
MA - $90,059,000
So equal contract offers by the Red Sox and Giants are anything but equal.
BarrettsHiddenBall said:Is there any evidence that tax rates have ever, ever actually figured into a decision?
I'm assuming 5/95 doesn't get it done and best case for 5yr deal is $100m. I guess a vesting 6th year option at lower AAV would work if $100m is the magic number. I just have a hard time seeing the Sox setting the market for a guy with his numbers at $20m/yr. Or maybe I just need to accept that $20m really is new market value.rodderick said:
May I ask why? 5/95 is a 19 million AAV, 6/102 is a 17 million AAV. Are 2 million less per year enough for you to commit to another season at a high price?
BarrettsHiddenBall said:Is there any evidence that tax rates have ever, ever actually figured into a decision?
Was hoping for some evidence. We have evidence that pro athletes generally use the reported size of their contract (not the net) as ego-fodder, and that Pablo Sandoval in particular has been dreaming about a $100m (gross, not net) contract. To my knowledge, there's no examples of a player choosing where to play based on the tax implications; if it absolutely factors into the decision making process, it should be easy to provide at least one.It absolutely factors into the decision making process. Whether it was 8 million, 4 million, or 2 million it's still money that separates offers.
It feels like the Sox are using Cafardo and the Giants are using everyone else. Which is fine. That being said doesn't it feel like Sandoval is going to return to the Giants?mloyko54 said:It definitely feels like all the leaks on the Sandoval negotiations are coming from the Giants. They're definitely feeding Ken Rosenthal and the Asst. GM going on radio to say they were still in was a little strange to me.
BarrettsHiddenBall said:
Was hoping for some evidence. We have evidence that pro athletes generally use the reported size of their contract (not the net) as ego-fodder, and that Pablo Sandoval in particular has been dreaming about a $100m (gross, not net) contract. To my knowledge, there's no examples of a player choosing where to play based on the tax implications; if it absolutely factors into the decision making process, it should be easy to provide at least one.
I have heard this kind of equation before but it seems senseless to me. If you are a travelling salesman living in Boston arn't you taxed as a full time resident of Mass. ? Why wouldn't it be the same for a professional athlete?mloyko54 said:I crunched the number further calculating the taxs paid just in games at Home (CA vs. MA) over the course of a 5 year contract. It may not be a factor but I still think it's interesting to see the difference.
Deal - 5 years - $95 million
$19,000,000 per year
approx $117,000 per Game
$9,500,000 per year on games played at home.
Based on the tax rates of CA (13.3%) Sandoval would pay:
$1,263,500 per year in CA State Income Tax
In MA Tax Rate (5.2%) Sandoval would pay:
$494,000 per year
Over the course of a 5 year deal that equates to:
$6,317,500 in CA state Income Tax vs. 2,470,000 in MA
Difference = 3.847 million dollars
Man, that's weird. Do they do the same for movie stars ?Papelbon's Poutine said:Because states decided to tax athletes on teams playing games in their state. They're not going to try to whack every traveling salesman that spends a week there to get an extra couple bucks. But if they whack athletes making millions, they can make some coin. Additionally, some cities get them too, on top of the state.
I'm looking for some evidence before taking it as truth. They don't need to say it; an example of a player with multiple reported offers taking a lower (gross) contract with a higher net payout would work; moreover you'd think the Rangers, Astros, Marlins and Rays should be benefiting from some type of discount, but they appear to pay the same rates as everyone else.rodderick said:
Are you looking for an example of a player coming out and saying it outright that taxes weighed into his decision of where to sign? Yeah, that would probably be hard to find.
BarrettsHiddenBall said:I'm looking for some evidence before taking it as truth. They don't need to say it; an example of a player with multiple reported offers taking a lower (gross) contract with a higher net payout would work; moreover you'd think the Rangers, Astros, Marlins and Rays should be benefiting from some type of discount, but they appear to pay the same rates as everyone else.
This is a factor that people bring up every offseason without any evidence that players actually consider it. There's an appeal to common sense, but then these are baseball players -- they're being selected primarily for the ability to hit a baseball or arm strength, not their common sense. As I posted, we do have evidence that the gross, reported numbers matter to some players as it relates to their ego (Panda included); we have evidence that some players would rather be somewhere they're already comfortable even if they leave cash on the table. As far as I know, there's no evidence that tax implications are a meaningful factor.
I certainly acknowledge we're dealing with incomplete info, which complicates the comparing offers approach; that's why I also mentioned the overall 'discount' that teams in low-tax states should be enjoying to market, if tax implications were a material factor.rodderick said:
Typically when a player has multiple offers, we only hear about the range of what teams have been offering, or just what the winning offer was. I can't recall many situations where it was confirmed that a player had very distinct options to choose from, and those numbers were widely available to the public. Those things don't usually get reported, so it's pretty hard to know, especially when taxes are a bigger factor precisely when offers are similar.
Derek Jeter tried faking living in Florida to avoid taxes didn't he? It must have been significant enough to try it.glennhoffmania said:Every single time this type of situation arises the issue of state taxes comes up and nobody gets it right. The reason is because there's no one right answer. It depends on where you're a resident, if anywhere, and how many days you spend in each state. So trying to do a back of the envelope calculation for Sandoval is totally pointless. And in almost every case the difference is marginal relative the size of the contract.
Ego, change of scenery, Fenway will give him a bigger payday in 5 years, wants something new, wants to play with Big Papi, mad because SF didn't give him 5/90 before the season aka RESPECT. Lots of reasons that we'll probably never really know.Rudy Pemberton said:If the offers are all close, why wouldn't he go back to SF?
Maybe he doesn't like it in SF for some reason we aren't aware of? Maybe the lure of playing for an historic franchise like the Red Sox in an historic ballpark like Fenway appeals to him? Maybe he wants to play with Papi for a couple of years? No idea why, but it seems like it's his choice to make with none of his suitors insulting him or blowing the others away.Rudy Pemberton said:If the offers are all close, why wouldn't he go back to SF?
If we're counting votes, this is what I'm going with. Occam's Razor.koufax32 said:Or maybe he's just trying to milk as much out of SF as possible.
More likely the other way around. Milk the Red Sox knowing he's got a suitable offer from his home team.koufax32 said:Or maybe he's just trying to milk as much out of SF as possible.
Reds always crying poverty. Maybe age factors into it for them. If available the sox have the prospects you would think to get it done..MakMan44 said:I can't see Frazier coming at a reasonable price, nor do I see him being particularly available in a trade.