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Home Maury Brown The Red Sox, Adrian Gonzalez and MLB's Luxury Tax Loophole

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The Red Sox, Adrian Gonzalez and MLB's Luxury Tax Loophole PDF Print E-mail
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Written by Maury Brown   
Sunday, 05 December 2010 23:40

EDITOR'S NOTE: Maury Brown will be reporting from the Baseball Winter Meetings this week.

Today (absent the dizzying Jayson Werth deal with the Nationals) might have gone down as, "Best ado about nothing."

When it was reported that the Adrian Gonzalez deal with the Red Sox didn't transpire due to being unable to reach an extension by a self-imposed 2pm ET deadline, the chatter in the lobby of the Dolphin at the Baseball Winter Meetings was that there was, at the very least, a hiccup on closing the deal. "

But, over the course of the evening it's surfaced that the reported reason centers on the Red Sox having fears of breaking baseball's soft-cap, the Luxury Tax, or as it's more properly called, the Competitive Balance Tax. "

The buzz is, the A-Gon deal is being held up on purpose, taking advantage of a loophole in MLB's CBA. By waiting, the salary for Gonzalez will not count against The 2011 Luxury Tax ceiling, but rather 2012. "

You have to tip your hat to Theo Epstein and the ownership group of the Red Sox. Creative and resourceful, they've been the only club to leverage this loophole, not once, but twice last year with Josh Beckett's extension. "

What exactly is the clause. "

Under ARTICLE XXXIII, he Competitive Balance section (3) reads:

(3) If a Club and a Player currently signatory to a Uniform Player’s Contract desire to modify or amend their contractual relationship, they must enter into a new Uniform Player’s Contract that covers the then current championship season or, if signed after the championship season has started, the next immediate championship season. The Average Annual Value of such new Contract shall be increased or decreased, whichever is applicable, by the figure arrived at by subtracting the amount of Salary that has been attributed under the rules of this Article XXIII to a Club in previous Contract Years under the Contract that is being replaced from the amount that was actually paid to the Player by a Club in those Contract Years. If a new Contract is signed during a championship season to commence with the next championship season, the calculation called for in this paragraph (3) shall be performed at the end of the then current championship season. Except for the limited circumstances described in this paragraph (3), no Player may be signatory to more than one unexpired Uniform Player’s Contract at any time.

What one might ponder is whether the next CBA will have this loophole. And, it could change before then. The CBA adds that the Commissioner's Office and the MLBPA can adjust when "a contract year" falls on baseball's calendar.

Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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