Avila Wants To Keep Fans Happy, But Leery Of Luxury Tax
By: Will Burchfield
@burchie_kid
For many Tigers fans, this offseason has been a stressful one.
Although general manager Al Avila recently downplayed the organization's intention to shed payroll, the possibility remains that some of the Tigers' most popular stars could be shipped out of town.
On Tuesday morning at the Winter Meetings, MLB Network's Harold Reynolds asked Avila how he weighs the interests of the fans against those of the team in putting together a potential blockbuster trade.
"My concern is are we hurting our fan bases?" Reynolds said, referencing both J.D. Martinez and the Pirates' Andrew McCutchen as rumored trade chips. "What are you going to do if you're a fan that follows those teams?"
Along with Martinez, the Tigers have reportedly been fielding offers for Miguel Cabrera, Justin Verlander and Ian Kinsler.
"I agree with that except for the following," Avila replied. "In our case, our payroll is well over $200 million. In today's business, in today's baseball, if we continue to do that, well, it's going to cost us millions of dollars in taxes. Now you have the luxury tax, now you have the surcharge, so at the end of the year your owner is going to be expected to pay millions and millions of dollars in those taxes."
The luxury-tax threshold will be $195 million next season. If the Tigers' payroll exceeds that threshold, they will be taxed 30 percent on the overage. (First-time offenders are taxed 20 percent, but the Tigers already went over the threshold in 2016.)
Per MLB's new collective bargaining agreement, the Tigers will face a 12 percent surtax if their payroll is $20 million over the threshold and a 42.5 percent surtax if it's $40 million over the threshold.
Accounting for league minimum salaries and projected arbitration salaries, the team's 2017 payroll is indeed expected to exceed the $195 million threshold - but not by much. Using last season's $205,894,085 million payroll as a proxy, the Tigers would be on the hook for about $3.27 million in luxury taxes.
"On top of that, then, you have the possibility of losing draft picks and basically you have the possibility of losing international money and so the consequences increase as you push that envelope," Avila went on. "Basically your future is in jeopardy if you continue along those paths."
The new CBA actually reined in draft-pick compensation. Per ESPN.com:
"Teams that sign a premium free agent will no longer have to give up a first-round draft pick to the team that lost that player. However, teams with payrolls higher than the luxury-tax threshold would have to surrender a second-and fifth-round pick. All other teams would be required to forfeit their third-round pick."
The higher penalty would apply to the Tigers - at least in theory - if their payroll remains above the luxury tax threshold. But they don't look like a club prepared to a make a splash in free agency, either now or in the near future. And thus the incentive of shedding payroll to lessen the threat of draft-pick compensation would appear to be null.
Nevertheless, Avila stressed the importance of corralling costs.
"So the answer is, you've got to build your club with young players and have your payroll under control. Try to move players at the right time, try to keep the right players and try to keep that mix of veteran and young guys so you can control your salary, your payroll, on a year-to-year basis," he said.
