Phillies eyeing Luxury Tax loophole for 2020

PHILADELPHIA, PA - SEPTEMBER 29: Bryce Harper #3 of the Philadelphia Phillies in action against the Miami Marlins during a game at Citizens Bank Park on September 29, 2019 in Philadelphia, Pennsylvania. (Photo by Rich Schultz/Getty Images)
PHILADELPHIA, PA - SEPTEMBER 29: Bryce Harper #3 of the Philadelphia Phillies in action against the Miami Marlins during a game at Citizens Bank Park on September 29, 2019 in Philadelphia, Pennsylvania. (Photo by Rich Schultz/Getty Images) /
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Betances is the Phillies target for Girardi to seal the deal regularly. Photo by Jim McIsaac/Getty Images. /

Methods:   

With the CBT, the Phillies and other organizations have employed the club-option tactic to lower their AAV. To illustrate, a player receives a $30 million pact for three campaigns or $10 million AAV, but the same deal with a $2 million buyout on a team option changes the AAV to $8 million. The buyout is for a fourth summer.

Exchanging bad contracts is another loophole to be under the CBT by taking a shot with a bounce-back candidate returning to his previous form. After all, the star received an expensive and lengthy commitment based on previous success, which can be fleeting.

Another way is acquiring a young standout or top prospect with a contract albatross for a decent return. But as the New York Mets found out last season, their new closer melted under the bright lights of Gotham. In fact, the Boston Red Sox and Chicago Cubs are considering the opposite this offseason.

To keep costs below the CBT, another strategy is to swap change-of-scenery candidates. And each franchise hopes a reclamation project will regain his prior form.

Nearing CBT’s highest level has happened with Chicago (NL) and Boston, plus both organizations are now paying the price for those decisions. Presently, New York (AL) is exceeding even the top tax rate. As for the Washington Nationals, they are again under the CBT, but they have holes at the hot corner and in the pen.

Perhaps, the Fightins will try this new method by only surpassing the first threshold of $208 million AAV and using 2021’s $210 million AAV to reset below the CBT and avoid higher penalties. For instance, a few teams could reach $223 million AAV and pay $3 million: a 20 percent tax on $15 million.