O's would live a high-rent life with luxury tax

March 08, 1995|By Buster Olney | Buster Olney,Sun Staff Writer

ST. PETERSBURG, Fla. -- The latest obstacle in the baseball talks is something called a luxury tax. Union chief Donald Fehr and the owners are haggling over what the maximum payroll level should be, and how much of a tax should be assessed upon those teams who exceed the maximum.

tTC They might as well be talking about the Orioles, whose payroll figures to be among the highest in baseball this year -- perhaps surpassing $45 million, including all benefits and insurance costs.

At the moment, the Orioles have eight players under contract: Cal Ripken, who will make $6 million in 1995; left fielder Brady Anderson ($3.25 million); designated hitter Harold Baines ($1.6 million); pitcher Jamie Moyer ($1.1 million); catcher Matt Nokes ($750,000); reliever Mark Eichhorn ($537,500); first baseman Rafael Palmeiro, whose per-year earnings average nearly $5.5 million over the duration of the contract, the tabulation system used by the owners; and pitcher Sid Fernandez ($3.33 million).

That's approximately $27 million in existing financial commitments, including the team's required contribution of about $5 million for pensions and benefits.

But there are more big paydays in store for some players on the Orioles roster, such as catcher Chris Hoiles and pitcher Mike Mussina. Signing reliever John Franco to a two-year deal will cost them about $5 million. Ted Higuera, so impressive in his workouts last weekend? His price may be in the neighborhood of $500,000 to $750,000, depending on how the market is set.

If the Orioles take the big plunge and lock up pitcher Ben McDonald to a long-term deal and pursue would-be free agent Andy Benes. . . . That could mean another $7 million-$8 million in the first year of the pitchers' contracts.

Of course, the Orioles' interest in committing big money could be affected by what system is finally agreed upon.

Suppose that the luxury tax turns out to be 50 percent on every dollar over a payroll threshold of $40 million, and the Orioles' payroll reached $46 million. The Orioles, then, would have to pay a $3 million tax -- 50 percent of the $6 million they were over the threshold.

"We don't know exactly what rules we're going to play under," said Orioles general manager Roland Hemond, "so it's hard for me to predict what [the payroll] is actually going to be.

"We really haven't addressed it yet. Once the collective bargaining agreement is set, we'll know more."

There's still a lot to be determined, Hemond said, like the rules regarding free agency, arbitration, the tax. "Right now," he said, "it's still guesswork."

If you guess that competing for the AL East title will be expensive, you'll be right on the mark.

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