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1. The Duke
Posted: January 09, 2023 at 09:02 AM (#6112520)
The cardinals have some wonky cash flows which make it hard to figure out. They still owe Matt Holliday about $2 million a year from previous deferrals. Col is paying $16 million but the Arenado salary deferral goes out in smaller increments over a long period so net/net, they have a huge cash inflow this year. Wainwright and Contreras both deferred huge amounts of this years pay.
So for luxury tax calcs their payroll may be going up. For cash flow it's way down.
They are using the Lux tax calc to say payroll is up but it's really not.
2. Walt Davis
Posted: January 09, 2023 at 02:44 PM (#6112568)
Did you read the article? It goes into a good bit of detail on that. The news bit to me was that, for the $10 M deferred for Wainwright, the Cards have to set aside $8.2 (the NPV on that). (Oh well, seems free access to the article was a one-time thing, now it requires a sub. So sorry, going off my memory) They "save" just $1.8 on cash flow.
It has quite a lot of confusing (to me at least) detail on how Arenado's money is paid out. They don't discuss Contreras but that's not officially a deferral -- i.e. all money is paid out over the 5 years of the contract -- it's just simple backloading where a chunk of what "should" have been 1st year salary is paid as an option buyout. So that does substantially reduce 2023 actual payroll vs the CBT number -- at least as I understand it, I don't htink they have to set aside money now to guarantee the option buyout money will be there in 5 years but I could be wrong about that.
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Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.
1. The Duke Posted: January 09, 2023 at 09:02 AM (#6112520)So for luxury tax calcs their payroll may be going up. For cash flow it's way down.
They are using the Lux tax calc to say payroll is up but it's really not.
It has quite a lot of confusing (to me at least) detail on how Arenado's money is paid out. They don't discuss Contreras but that's not officially a deferral -- i.e. all money is paid out over the 5 years of the contract -- it's just simple backloading where a chunk of what "should" have been 1st year salary is paid as an option buyout. So that does substantially reduce 2023 actual payroll vs the CBT number -- at least as I understand it, I don't htink they have to set aside money now to guarantee the option buyout money will be there in 5 years but I could be wrong about that.
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