So I wrote a few things yesterday about the Yankees, and their tax bill that came out of  laziness, but luckily, we have the guy who knows all about the business stuff writing for the site, and he caught my mistakes. In an email I received yesterday, Tom wrote:

“The proceeds from the Luxury tax go to the Commissioners discretion more or less.  The first $10 million is set aside for the Industry Growth fund, and then half of the remaining pot is for the Office of the Commissioner for player benefits.  25% of it goes to fund projects from the Commish’s office, and the last 25% goes to the Industry Growth fund as well.  So most of the money from Luxury tax goes more or less to the discretion of the Commissioner.

For revenue sharing, all proceeds are divided up equally amongst the clubs, 34% of each team’s net profits.

So in light of your post about the Yanks $415 million profits, if that’s net then about $135 million would have been their revenue sharing bill, of which they probably got 35-40 back from the league so the $100 million figure would be about right when all is said and done.  If it was their gross, then their net profit would have only been around $100 million which would not come close to that large a revenue sharing bill. As is, they paid about $30 million in luxury tax last year.

So their total cost of doing business under the two rules was close to $130 million (135 for revenue sharing + 30 for luxury tax, minus the 40 they get back from the league from the central fund). 

The stadium does not reduce their luxury tax payment, just the revenue sharing number.  Losing some $80 million in contracts next year will eliminate the luxury tax on them if they keep the same roster. Just trying to clarify.

I should have been able to figure out the net/gross question on my own, but really got lazy there.  Second, under the old CBA, money from both the revenue sharing plan and the the Commissioner’s discretionary fund went to the bottom teams, something that, I guess, was corrected in the new CBA and I missed. Additionally to Tom’s points though,  is that any costs that the team puts towards a stadium, including paying off any debt from loans associated with it, will be deducted from their total revenue, and therefore lower their revenue sharing bill.  So when the 2009 season starts, The Yankees  will pay less into revenue sharing because they have financed the stadium themselves. Depending on their spending habits, their luxury tax obligation may not go down.  Thank you, Tom, for catching my error, glad to have you around!