Heyman: Mariners turn down Tigers' Jackson proposal

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Edwin Jackson.jpgSI.com’s Jon Heyman tweets that the Tigers offered Edwin Jackson to the Mariners for right-handers Brandon Morrow and Shawn Kelley, yet were turned down.
It might well be the end of trade talks between the two teams, since it’s hard to imagine Detroit taking much less for their 26-year-old right-hander. Jackson faded in a big way towards the end of last year, but he was one of the AL’s best pitchers for five months and he has the stuff to back it up. He finished 13-9 with a 3.62 ERA and a 1.26 WHIP in his breakout season.
Morrow, the fifth overall pick in the 2006 draft, has spent much of the last three seasons in the majors, but he’s yet to settle into a role. He ended last year in the rotation and he turned in an encouraging September to finish with a 4.39 ERA in 69 2/3 innings. That did come with 44 walks, though. He’s 8-12 with a 3.96 ERA and a 204/128 K/BB ratio in 197 2/3 innings as a major leaguer. He’s made 15 starts and 116 relief appearances.
Kelley, 25, overcame long odds to win a bullpen spot last spring and he started off his career with a 1.54 ERA in 11 2/3 innings before going down with an oblique strain. He missed two months and was just an average reliever after returning, but he should be a useful setup man for the long haul.
Jackson is just two years away from free agency, which limits his trade value somewhat. He’s probably not worth four years of Morrow and five of Kelley. Morrow, though, will very likely will be a part of any deal that gets done. If the Tigers were willing to take lefty Jason Vargas or a prospect rather than Kelley, that might appeal to Seattle.

New tax law could affect MLB trades

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Jim Tankersley of the New York Times notes that a tax law passed by Republicans could affect trades in Major League Baseball. The law added the word “real” to a certain line of tax code that now only allows real estate trades to qualify for tax immunity. Previously, certain assets like trucks and machinery could have been traded tax-free.

A perhaps unintended consequence of that change could mean baseball teams could have to pay capital gains taxes when they trade away and acquire players. MLB’s chief legal officer Dan Halem said, “There is no fair market value of a baseball player. There isn’t. I don’t really know what our clubs are going to do to address the issue. We haven’t fully figured it out yet. This is a change we hope was inadvertent, and we’re going to lobby hard to get it corrected.”

Tankersley wonders how players would be valued for the purposes of this tax law:

Mr. Verlander, for example, was clearly a more immediately valuable asset to the Astros than the three prospects they traded to get him. He gave up only four runs in his five regular-season starts for the team, then won four straight starts to begin the playoffs. In very simple terms, he brought value to the Astros in a trade, and had the new law been in place last year, the team would have owed taxes on that added value.

But what, exactly, was that value? Was it the size of his contract? Mr. Verlander earned $28 million last year, while the players traded for him drew minor-league salaries. Was it the additional wins he brought to the team? Statisticians estimate Mr. Verlander gave the Astros nearly two more wins last season, a value that, depending on the statistician, could reach $20 million. Or was it some calculation of the total future value Mr. Verlander will bring to the team, minus the total future value it gave up in the prospects it traded away — and possibly adjusted for the amount the team will have to pay Mr. Verlander?

Complicating matters further is that teams value players differently, and one player might help a certain team far more than another team. A struggling club with a surplus of starting pitchers might trade one to a playoff contender in desperate need of one, in exchange for position players who could improve a struggling lineup. In that case, both teams could, reasonably, be considered to have gained value in the trade, and thus would owe taxes on it.

Republicans said they weren’t trying to hamstring sports teams, but that’s exactly what they might have done here. It seems likely that the law will eventually be amended to exempt sports teams, given that leagues like the MLB and NBA are enormous and worth so much money. Whether that will be done in a reasonable amount of time is another question entirely.