MLB payroll details, thoughts and analysis.
- Raul Mondesi was inked to a one year deal with an option by the Pirates - check out the option for 2005 - $8m for a 33 year old Raul Mondesi?
- Two big signings for the Cubbies - Kerry Wood and Derrek Lee. Both deals void the one-year contracts that had been originally signed to avoid arbitration. The Cub Reporter checked in with some additional details about how the signing bonuses are to be paid out on both contracts.
- The Yankees came to terms with Travis Lee on a one year deal with an option for 2005.
Brian Pogar also checked in with some corrections on Andy Pettitte and Brad Ausmus' deals with the Angels.
And last but certainly not least, Jeff wrote in to clear up a whole bunch of the orange numbers I had on my payrolls - thanks to Jeff, I've cleared up contracts on the Marlins, Mariners, Giants, Brewers, Athletics, Devil Rays, Braves, Angels, Indians, White Sox, and Twins payrolls.
I've gotten quite a number of questions recently concerning the calculation of deferred money against the luxury tax payrolls - I've added a detailed section to the FAQ which address this. At a high level (and as many readers have noted), the majority of deferred money is indeed reduced back on a present-value basis for inclusion in the luxury tax payroll. In many cases, the present-value calculation only results in a difference of a few hundred thousand dollars, so I have opted to ignore the present-value calculation for the time being. However, I will be going back around shortly to adjust these deferred money deals - especially for cases like Manny Ramirez and Alex Rodriguez, where such a large quantity of money is deferred (and the teams are over the tax threshold).
One more FAQ entry that I was remiss in not addressing sooner comes courtesy of an inquiry by Gannan745, who asked, "Where does the luxury tax money go?". In fact, the money collected as luxury tax is split out to a number of different areas. The first $5m is held in reserve, in case any adjustments need to be made to refund tax money collected (e.g., in the case of a contract buyout that isn't exercised). However, once it is determined that no refunds are due, that $5m earmarked for the Industry Growth Fund (more on this later). Of the remaining money, 50% is used to fund player benefits, 25% is used to fund baseball programs in developing countries with no high-school baseball, and 25% is put into the Industry Growth Fund (IGF).
The IGF has many different goals - promotion and marketing of MLB, international development, investments in new media technology, community service, and "enhancement in popularity and revenue growth" among teams that receive money from revenue sharing. The money allocated to these teams must be based on "investment criteria". I have not seen any reports of which teams (if any) received any disbursements from the IGF thus far - if anyone has, please let me know.