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Vernon Wells trade to have big financial implications for Angels

March 25, 2013|By Mike DiGiovanna
  • The Vernon Wells-to-New York trade could be finalized Tuesday.
The Vernon Wells-to-New York trade could be finalized Tuesday. (Rich Pilling / Getty Images )

TEMPE, Ariz. — The Angels’ trade of Vernon Wells to the New York Yankees, which is expected to be finalized Tuesday, will have significant financial implications for the club, and not just because of the $13 million it will save over the next two years by shipping the veteran outfielder to the Bronx.

A major incentive for dealing Wells, who is scheduled to undergo a physical in Tampa, Fla. on Tuesday, is to give the Angels enough financial relief to finish the season under the $178-million luxury tax threshold, according to a person familiar with the team’s thinking but not authorized to discuss it.

The Angels, according to numerous reports, have agreed to pay $29 million of the remaining $42 million of Wells’ contract, which runs through 2014, meaning the Yankees will pay $13 million.

With savings from the Wells trade, the Angels’ opening-day payroll for players on the 25-man major-league roster will be about $153.5 million.

But for luxury-tax purposes, the payroll includes salaries and benefits, including awards and incentives clauses, for the entire 40-man roster, not just the 25-man roster.  The figure is calculated based on the roster at the end of the year; the Angels’ figure last year was $176.7 million, according to the Associated Press.

The Wells trade will bring the Angels’ payroll for luxury tax purposes down to about $172 million. That could allow more wiggle room under the threshold to add a high-salaried player before the July 31 trade deadline and for the Angels to increase their payroll in 2014.

The penalty for first-time offenders of the competitive-balance tax is 17.5% of the amount over $178 million. Those rates rise to 30% for second-time offenders and 40% for third-time offenders, but the luxury tax threshold will be raised from $178 million to $189 million from 2014 to 2016.

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