Arte waffling on going over the luxury tax.

[ELEVEN]

Tell me, how can you mend a broken team

How can a loser ever win

Ha! It's in your head now.

[Jay]

Funny how a single tweet about Arte waffling quickly becomes AW FACT and creates a shitstorm.

[eligrba]

Funny how a single tweet about Arte waffling quickly becomes AW FACT and creates a shitstorm.

 

Angelswin Knitting Circle.

[zenmaster]

I was listening to the radio this morning, AM 570 (yes I know it's dodger radio) but they said very clearly a number of times, Arte Moreno has said explicitly numerous times that he will not go over the luxury tax. He absolutely will not. How do these guys have jobs?

[AngelsLakersFan]

Here is how we use Jason Heyward, the CBT calculation and an opt out clause to our advantage.

 

• Contracts tend to be backloaded due to the Time Value of Money and inflation, a dollar today is worth more than one 8 years from now.
• CBT is calculated based on the average annual value, there is no adjustment for the net present value (as far as I know).
• Heyward should be seeking an opt out clause for security. He intends to opt out, the years following the opt out are there as a safety net.

 

So what do we do?

 

• Offer him an extremely front loaded contract, which will bring down to total value of the entire contract but offer the same net present value.
• Give him an opt out after year 5.
• Give him a bunch of years after the opt out at a significantly reduced salary
• Profit

 

Example: 10 year deal with the following payments: $40m > $30 > $30 > $30 > $30 >OPT OUT CLAUSE> $20m >OPT OUT CLAUS> $10m > $10 > $10 > $5 > $5

Total = $220m

AAV = $20m

 

With a little more massaging we could stay under the CBT! 

[Blarg]

I know they're not the GM. That's not the point.

Dipoto basically answered to Arte, which in lies the problem.

No one believes Epstein and Friedman aren't the ones pulling the strings. Cmon now.

They answer to ownership as well.

But if you think Dipoto didn't have clear more hurdles than just Arte you are not just a fool but a damn fool. His title was General Manager, not vice president or president of any department, he had superiors just like every other General Manager.

You just think they have so much power because they are usually the guys that talk to the press. The fact is they have the power that is entrusted their department authority, no more and they are not the last word nor should they be.

[Blarg]

I just believe Arte over committed himself in past deals. I also believe that Eppler will build us a winner but just not as fast as everyone expects. The guy has been here two months and we need to give him time to put in his own plan.

I think you are just as right as how long Moreno holds his luxuary tax position. That may change at a whim or with evidence that alters his perception of what will be required to win the AL West.

Less than 90 days until pitchers and catchers show up, plenty of time to fill out the roster with anyone out there.

[Jobu]

Less than 90 days until pitchers and catchers show up, plenty of time to fill out the roster with anyone out there.

"minor league free agents"

[Blarg]

Tell me, how can you mend a broken team

How can a loser ever win

Ha! It's in your head now.

Oh f you, I was catching up on the thread and now you've ruined my day.

[Docwaukee]

Here is how we use Jason Heyward, the CBT calculation and an opt out clause to our advantage.

 

• Contracts tend to be backloaded due to the Time Value of Money and inflation, a dollar today is worth more than one 8 years from now.
• CBT is calculated based on the average annual value, there is no adjustment for the net present value (as far as I know).
• Heyward should be seeking an opt out clause for security. He intends to opt out, the years following the opt out are there as a safety net.

 

So what do we do?

 

• Offer him an extremely front loaded contract, which will bring down to total value of the entire contract but offer the same net present value.
• Give him an opt out after year 5.
• Give him a bunch of years after the opt out at a significantly reduced salary
• Profit

 

Example: 10 year deal with the following payments: $40m > $30 > $30 > $30 > $30 >OPT OUT CLAUSE> $20m >OPT OUT CLAUS> $10m > $10 > $10 > $5 > $5

Total = $220m

AAV = $20m

 

With a little more massaging we could stay under the CBT! 

 

I was thinking about this the other day.  Apparently, there are rules against manipulating the contract as such.  Can't remember where I saw it, but it was there.  Suffice to say, the league has to approve every contract and if they were to see a contract like this they would know it was a direct attempt to circumvent the tax.  It's like you can't add additional years at $1 to the end of a contract to decrease the AAV.  

 

The other thing about paying him that much now is that you are effectively signing him to a contract of 5/160.  A grossly negligent overpay. It's also not smart financially.  

 

You have to balance getting fair value for what you are paying him in the first five year and leaving enough after the opt out so is probably a little shy of what he could get on the open market.  

 

If he chose to opt out, he'd be entering his 31 year old season.  So essentially, he'd still be younger than someone like Alex Gordon.  Let's say that you give him 10/220.  So a slight front load may be in order.  Maybe 120 over the first 5 years.  Still likely motivates him to opt out.

 

People tend to want to keep their money to have the opportunity to earn off of it.  In your scenario you are probably overpaying him by 18mil the first year and then 8mil in each subsequent year.  About 50mil total.  How much could arte make off of that kind of money if it were still in his own pocket during that 5 year period?  

 

There really is no 'advantage' to the team to give an opt out unless they really don't want the player 5 years from now, but then it cost them on the front end and forces the team to give up more money in advance.  

[Angel Oracle]

Oh f you, I was catching up on the thread and now you've ruined my day.

He simply started a joke.

[AngelsLakersFan]

I was thinking about this the other day.  Apparently, there are rules against manipulating the contract as such.  Can't remember where I saw it, but it was there.  Suffice to say, the league has to approve every contract and if they were to see a contract like this they would know it was a direct attempt to circumvent the tax.  It's like you can't add additional years at $1 to the end of a contract to decrease the AAV.  

 

The other thing about paying him that much now is that you are effectively signing him to a contract of 5/160.  A grossly negligent overpay. It's also not smart financially.  

 

You have to balance getting fair value for what you are paying him in the first five year and leaving enough after the opt out so is probably a little shy of what he could get on the open market.  

 

If he chose to opt out, he'd be entering his 31 year old season.  So essentially, he'd still be younger than someone like Alex Gordon.  Let's say that you give him 10/220.  So a slight front load may be in order.  Maybe 120 over the first 5 years.  Still likely motivates him to opt out.

 

People tend to want to keep their money to have the opportunity to earn off of it.  In your scenario you are probably overpaying him by 18mil the first year and then 8mil in each subsequent year.  About 50mil total.  How much could arte make off of that kind of money if it were still in his own pocket during that 5 year period?  

 

There really is no 'advantage' to the team to give an opt out unless they really don't want the player 5 years from now, but then it cost them on the front end and forces the team to give up more money in advance.  

 

I don't want to get too caught up in the actual contract values, since I wrote those out super quick, the general concept is what I'm looking at.

 

There may be some rules in place but on the surface it's hard to see what would trigger them in the contract I outlined. $10m and $5m is real money, considerably more than league minimum, and with player aging curves you could even argue it as a more appropriate value for a players services so far into the future.

 

The only rule that could come in to play - if it exists, would be to only count the 'active' portion of the contract for CBT purposes. So everything before the opt out. Of course that would make this a bad idea, but I also am not sure such a rule is in place.

 

The opt out does cost you on the front end, in exchange for a lower risk in the back end. It's a big benefit to the player, so there is real value to including it in place of cash. There are obvious benefits for the player but the team also benefits by including a payment structure more appropriate to the players value were he to not opt out. The two opt out clauses also give the player motivation to earn a larger pay day down the road, without having to worry about getting injured at the worst possible time. The focus here is on providing value to a player that is not easily quantified in simple total dollars. Other teams will offer more money but this offer is more competitive.

[Troll Daddy]

Opt out clause is a players best friend ... same goes with the no trade clause.

Vernon Wells and Mike Scioscia both had opt out clauses. Greinke opt out clause put a big hurt on the Dodgers.

[Ohtaniland]

[laagamer]

Well unless my brain is going to mush here is an example:

 

Player A signs 5 year contract for $100MM with payments in Yr 1 of 10MM, Yr 2 15MM, Yr 3 20MM, Yr 4 25MM, and Yr 5 30MM. The Average Annual Value of that contract is $20MM per year towards payroll every single one of those years.

 

The first two years are the most burdensome to payroll. However the final two years you're "getting" a $25MM and $30MM paid player for only the $20MM. This is required by the Collective Bargaining Agreement. Bonuses also count towards AAV, so if in the example above the player was given a $10MM signing bonus the AAV would actually be $22MM per year ($110MM/5 Yrs).

 

Google the CBA and pull up the pdf file and go down to page 100 or so and that is where they begin to talk about it. Or simply hit CTRL+F and type in Average Annual Value and it should pop up in search.

 

 

I just read the CBA. Trippy.