MLB Players Fear the 'Fiscal Cliff', Too!
By: Brian A. Shactman | CNBC Reporter
The "fiscal cliff" can't hit a curve or slide hard into second, but it can take millions away from Major League baseball players. Right now, free agency is in full swing, and every agent has taken notice of the new dynamic.
"Will this higher tax rate coming down the pike have an impact on some of the players and the agents and deals they get? Yes," said Dr. Patrick Rishe, a sports economist at Webster University in St. Louis. "But I don't think it will be as out of control as some people think it will."
Let's be honest. In the big leagues, 100 percent of the players are in the 1 percent.
The MINIMUM salary last season? $480,000. The AVERAGE salary? $3.4 million.
So, if you go from 35 percent to nearly 40 percent in federal taxes, your bill goes way up. (Read More: No Crying Over Taxes in Baseball's Winter Meetings.)
"Teams can only do so much," Rishe said. "You aren't going to see players signing multi-year contracts and get $40, 50, 60 million in signing bonus."
Historically, baseball only gives big bonuses to draft picks. In fact, the league is better known for deferring money rather than front-loading. But there is already evidence the fiscal cliff is having an impact.
If you doubt it, just look at two major contracts signed this week.
Outfielder B.J. Upton signed a 5-year, $75 million deal with the Atlanta Braves. Included in the deal? A $3 million signing bonus, payable by ...
DECEMBER 31.
Then, there's his former Tampa Bay Rays teammate, Evan Longoria.
He signed a $100 million contract extension. His bonus was a little more complicated, but in summary: He converted $4 million in 2013 salary into bonus money and $1 million is payable on Dec. 15.
If you still don't believe me, go study every MLB contract that's signed between now and New Year's Eve or when we get a deal — whichever comes first.
—By CNBC's Brian Shactman
@bshactman
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