Competitive-Balance Tax(CBT)

Yankees, Red Sox, Angels to pay luxury tax

New York is required to pay $25,026,352, according to a Dec. 21 memorandum that was sent to all major league teams.
Two other teams also owe money for exceeding the payroll threshold of $120.5 million: Boston must send $3,155,234 and Anaheim $927,059. Checks for the competitive-balance tax, as it is formally known, are due at the commissioner's office by Jan. 31.

In 2003, the first year of the new luxury tax, the Yankees were the only team to pay, owing $11,798,357, according to the team's latest revised bill. Because they exceeded the threshold a second time, the Yankees were taxed at a rate of 30 percent for the amount they were over. Boston and Anaheim were taxed at a 22.5 percent rate.
If the Yankees go over the 2005 threshold of $128 million, which appears certain, they would be taxed at a 40 percent rate.
New York also estimates it will give up about $60 million as part of baseball's revenue-sharing plan this season, meaning the Yankees will send the commissioner's office about $85 million of their estimated $315 million revenue in 2004. Boston's revenue-sharing payment is estimated at approximately $42 million on revenue of at least $220 million.