RONALD BLUM
DANA POINT
Looking ahead to an Obama administration, some baseball agents already are thinking about trying to beat a possible tax increase for their well-paid clients.
President-elect Barack Obama has proposed increasing the top federal income tax rate from 35 percent to 39.6 percent, where it was under the Clinton administration. If signing bonuses are paid before Jan. 1, they likely would be taxed at the current rate and would not be subject to any tax increase.
“It’s something we’ll consider,” agent Craig Landis said Tuesday at the general managers’ meetings. “Besides the federal issue, we have a state issue in some cases, anyway, where it’s advantageous to take signing bonuses because of the state income tax. A Florida resident can take the signing bonus and not have to pay his team’s state tax.”
Obama’s proposal would increase federal income tax on families earning more than $250,000 annually, money that would help finance a decrease for workers and families earning less than $200,000 annually.
Next year’s major league minimum is $400,000. Agent Scott Boras, negotiating eight- and possibly nine-figure deals for free agents Manny Ramirez and Mark Teixeira, already has thought about the possibility of asking for larger signing bonuses payable this year in some of his contracts.
“There’s some consideration to be had with the impact of the election,” he said.
Free agents can’t start negotiating money with all teams until Nov. 14. Only a relatively small percentage of contracts are finalized before Jan. 1.
Still, for a big-money free agent earning $10 million in 2009, Obama’s plan could increase his federal tax by more than $400,000.
“There’s some consideration to be had with the impact of the election,” said Paul Kinzer, who represents free-agent closer Francisco Rodriguez.
With the general election Tuesday, many of the GMs said they had voted by absentee ballot. New York Mets general manager Omar Minaya said he could predict whether his counterparts supported Democrats or Republicans.
“I’m working out, I’m at the gym, I’m looking around, everyone’s watching TV,” he said. “And you can tell: A guy would be on the Fox channel, somebody would get off (the machine), and the other guy would just switch right to CNN. Or somebody would be on CNN, and the other guy would go like, OK, ‘I’m not watching this stuff.'”
Minaya, who worked for the Texas Rangers when George W. Bush was controlling owner, said some of the GMs also turned to MSNBC.
Agents generally had thought about the possibility of a tax increase more than the GMs. Many of the club representatives said they likely wouldn’t be able to determine until after Nov. 14 whether beating a tax hike was a trend.
“It’s not off the wall,” said Andrew Friedman, executive vice president for baseball operations of the AL champion Tampa Bay Rays. “We’d certainly be open-minded to it depending on what the rest of the terms of the deal are.”
On the first full day of the meetings:
– Listing some of the Wall Street firms that have fallen, baseball commissioner Bud Selig warned GMs in a video conference about the national economy, mentioning that Bear Stearns, Lehman Brothers and Merrill Lynch have all collapsed or been take over in the past year.
“We’re living in a tumultuous economic period,” Selig said later in a telephone interview with The Associated Press. “Many economists believe that we’re going to have significant problems. Maybe this could turn out to be the most difficult period since the Great Depression. I view these coming months with trepidation.”
– Blue Jays pitcher A.J. Burnett told the team he will opt out of the remaining two seasons of his $55 million, five-year contract, forfeiting $24 million and becoming eligible for free agency. Toronto GM J.P. Ricciardi said talks will continue on the possibility of a new deal for the hard-throwing right-hander, who turns 32 in January. “We have a good dialogue going,” Ricciardi said. “They’re going to get back to us later in the week.”
– Matt Holliday met at the hotel with Boras and members of his staff, prompting speculation about trade talks involving the Colorado outfielder.
– Padres GM Kevin Towers said San Diego has narrowed the field of suitors for 2007 NL Cy Young Award winner Jake Peavy, focusing on three National League teams. Peavy has $63 million in guaranteed money remaining on his contract, which runs through 2012 and contains a club option for 2013 and a no-trade clause. His initial list of teams, given to the Padres last month, included Atlanta, the Chicago Cubs, Houston, the Los Angeles Dodgers and St. Louis.
– The Yankees declined their 2009 options on first baseman Jason Giambi ($22 million) and pitcher Carl Pavano ($13 million), making the pair eligible for free agency. “Given the circumstances and the money involved, I don’t think they were surprises to anybody,” New York GM Brian Cashman said.
