Yanks, Red Sox hit with luxury tax bills

Yanks, Red Sox hit with luxury tax bills

The New York Yankees and Boston Red Sox were the only teams in Major League Baseball to get socked with competitive balance tax bills this season.

The Yankees owe about $34 million and the Red Sox about $4 million. Both teams paid the tax for the second consecutive year. Last year, the Yankees were hit with a bill of $25.1 million and the Red Sox $3.1 million after Boston won its first World Series in 86 years. The Angels also paid just under $1 million in 2004.

The news comes amidst reports that the Yankees could lose as much as $80 million this year after drawing in excess of 4 million fans to Yankee Stadium for the first time. Combining the tax with an anticipated $70 million toward revenue sharing, the Yankees are expected to pay more than $100 million this year into MLB's coffers. Last year, the Yankees' revenue sharing assessment was $63 million.

The Yankees, as a third-time payer, had to pay a 40 percent tax on the difference between their $200 million player payroll and the $128 million competitive balance tax threshold. The Red Sox, as a second-time payer, had to pay at a 30 percent rate.

This year, only the Yankees and Red Sox are subject to the competitive balance tax, while the remaining 28 teams get a free pass because they were not over the threshold in 2005.

The threshold rises to $136.5 million next season and both the Yankees and Red Sox must pay at the 40 percent rate if their payrolls surpass that mark.

With the signings of Hideki Matsui, Johnny Damon and a number of relievers, the Yankees payroll is expected to remain in the $200 million range. The Red Sox, meanwhile, may not hit the threshold this year after their offseason restructuring.

The current competitive balance tax was written into the 2002 Basic Agreement, which expires on Dec. 19, 2006.

Barry M. Bloom is a national reporter for MLB.com. The Associated Press contributed. This story was not subject to the approval of Major League Baseball or its clubs.