[Here’s a guest post from IIATMS reader @Jerktweets which explains the new Derek Jeter deal a lot better than I ever could.]
Earlier today, it was announced that Jeter has been signed to a new 1 year/12 million dollar deal by the New York Yankees. We all know that the 189 million dollar luxury tax payroll limit has been a big issue. So how exactly does Jeter’s new deal affect
Technically, Jeter was still under contract this offseason as part of his original three-year deal. The deal was structured so that he was paid 15, 16, & 17 million for three years. Included was a player option worth 8 million that if declined gave Jeter 3 million dollars. The CBA states that player options are considered guaranteed years and will be included in any average annual value calculations. For luxury tax purposes Jeter’s contract was a four year deal worth 14 million per year.
Now, the player option clause also states that if the option is declined then for the year of the player option the team will be hit with a penalty to their luxury tax payroll equal to the difference between paid (physical money) and attributed (luxury tax AAV) for the contract length and the buyout.… Click here to read the rest