Jess,
I think I got it. At first you were confusing me with your $15M number which didn't make sense to me initially given Jeter's 2014 exercised salary at $8M + incentives to get to $9.5M. You kept throwing the $15M number around. So, I found this article on Fangraph which further clarifies your point about luxury tax meaning everything. Here is the key from the FanGraphs article:
"Because this is a new contract and not a continuation of the old contract, Jeter will count $12 million against the team’s luxury tax payment for 2014 instead, so by paying Jeter more than he was scheduled to make, they’ve actually lowered their luxury tax calculation by about $3 million. Which, you know, is pretty silly, but this is how the calculations work.
$3 million might not seem like a huge deal, but there’s a huge difference for the Yankees in having their calculation come in at $188 million instead of $189 million. Because they are a multiple time payer of the luxury tax, they pay a 50% tax on the amount they are over the threshold. If they get under the $189 million figure even just once, then they can safely go back over the tax in subsequent years, but their tax rate will be reset to the lowest figure of 17.5%. If they can get under $189 million this year — A-Rod’s suspension should help in that regard — then they could bounce their payroll back into the stratosphere for 2015 and pay much less in tax in the future."
It is now crystal clear what is going on here with Jeter. Thanks for hanging in there with me.
http://www.fangraphs.com/blogs...ury-tax-calculation/
http://www.baseball-reference....de01.shtml#contracts
It appears the Rockies did something similar with Helton to free up some cash, stay under luxury threshold and retain an aging superstar who wanted to play out his last years with a team he has long tenure with. http://www.huffingtonpost.com/...t-exte_n_495325.html
Any other players come to mind?
PIS/like2rake,
For discussion & example purposes only, I was comparing Jeter to Ortiz in terms of age, contract timing, and what they mean to their franchises. Nothing more than that. I'm not comparing them as players. However, based on the situation above Ortiz will be a free agent again in 2015 and could sign a new contract a la Derek Jeter above go through that fuzzy math luxury tax calculation next year.