Obama’s Tax Plan Hits Athletes
Wednesday - November 12, 2008
The election may be over, but the political scrutiny goes on.
Not, as typical, in the halls of Congress, Florida courtrooms or survivalist cabins deeply hidden in the Appalachian foothills, but in a California hotel where baseball’s general managers and its pro-labor alter egos gather to figure out how to further separate fan from dollar.
For GMs, the issue is clear enough - raise ticket prices.
For player agents, things are trickier.
For them, the election of Barack Obama to the White House does not indicate an advancement in race relations, an end to corporate greed or the implementation of an affordable health-care system for all Americans.
Nope, the agents’ biggest concern is how the president-elect’s proposed tax plan will impact their clients who could face a tax increase that could cost the millionaires thousands of dollars.
Under the Obama plan, the upper-tier tax bracket would increase from 35 to 39.6 percent, meaning an athlete pulling in $10 mil per could see his bill increase by more than $400,000. Such a bump would no doubt be OK for Alex Rodriguez, who takes home $172,839.50 per game. Under an Obama tax code, ARod would have to kick in an additional $1,288,000 to the national treasury or nearly enough money to fund the New York Yankees for an entire day.
As reported on ESPN.com, several agents said plans on how to deal with any new tax structure would have to be “kicked around.”
And while Drew Rosenhaus - who obviously doesn’t represent a large number of PGA members - said many of his clients were euphoric about the election results, that most didn’t care about tax increases if it helped the country, and that he told those who asked to not let the proposed tax plan influence their vote, that patriotism is more important, not all representatives will operate so honorably. Any change in the tax rate will have a direct effect on negotiations and will likely drive up prices, as agents will ask for larger amounts or longer contracts to offset the income lost to taxes. And it’s exactly what they should do.
An agent has one job - to get as much as possible for as long as possible for their client. This is even more true in the NFL, where contracts are not guaranteed. It’s capitalism at its best in all its grime and glory. Economic fairness and fan access is the other guy’s problem.
Drew and his are going to get theirs, and if anyone is going to alter the system that currently forces small market teams to compete in an unfair market, it’s going to have to come from the owners. And that is not likely to happen. It’s easier to whine about the system than to actually fix it.
In the years since Jerry Reinsdorf signed Albert Bell to history’s then-richest contract just weeks after complaining how such deals were ruining the game, the owners have done nothing to stabilize the league’s financial structure, which in the near future may cause thinning of the ranks through bankruptcy.
The owners have continued to run their clubs like fantasy teams, using business models they would never accept in their civilian corporations.
So until they are able to get off the athletic crack pipe, the salary explosion will continue to benefit players and agents, to the detriment of fans.
Rosenhaus, a registered Republican, said he voted for Obama.
No doubt the campaign’s motto struck a chord:
Yes, we can renegotiate. Yes, we can hold out for more.
Yes, we can afford it.
Yes, we can spread the cost to fans.
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