EXPLAINING IT ALL IN NUMBERS...

With Masahiro Tanaka now signed, the Yankees are over the cap for sure.  The way the cap works is teams over the cap (this year it is $189 million) pay a tax based on the amount that they are over.  The Yankees are at the highest tax level and pay 50% of the amount that they are over.  So right now, the Yankees are about $20 million over the cap, so they would pay a tax of $10 million.  With that, there are degrees of overage and it certainly matters.  

If the Yankees go on now and sign someone like Ervin Santana for $12 million per year and Grant Balfour for $8 million, they will be $40 million over the cap and owe a tax of $20 million.

The issue with the Yankees getting under the cap was that if they are under for 1 year, their tax rate immediately would reduce from 50% to 17.5% (tax rate increases each consecutive year you are over the cap, but resets to 17.5% in any year following a year when you are under the cap).  So if they would have stayed under the cap in 2014, then went over the cap in 2015 by $40 million, they would only pay a $7 million tax (17.5% of $40 million) rather than a $20 million tax in 2015 (a savings of $13 million).  

Hey Frank... that was for you.

 

--Douglas Solomon, BYB Guest Writer

Thank you to all the Bleeding Yankee Blue readers for continued success.  You've made BYB the fastest growing Yankees fan site in the history of Yankees fandom.  Thanks for reading, sharing and enjoying. Follow me on Twitter @BleednYankeeBlu and join the group Bleeding Yankee Blue (Official) on Facebook, just type it in.