Report: Braves sign Wagner to take over closer's role

Leave a comment

wagner red sox.jpgA source told’s Ken Rosenthal that the Braves and Billy Wagner have come to terms on a one-year, $7 million contract with a vesting option for 2011.
The Braves were expected to be in on Wagner, but it’s a curiously timed move, given that the team just offered arbitration to both Rafael Soriano and Mike Gonzalez on Tuesday. If either accepts the offer, the Braves would find themselves in position of two relievers due in excess of $6 million in 2010.
The odds are against that happening, though, and if the Soriano and Gonzalez depart, the Braves will could gain two additional first-round picks, plus two supplemental first-rounders, to make up for the one they’re giving the Red Sox to sign Wagner.
The Red Sox are also surely pleased with this turn of events. They weren’t poised to make a strong effort to retain Wagner, and now they’re set to land the 19th pick in the draft, assuming that the Braves fail to sign a higher ranked free agent. Matt Holliday, Jose Valverde, Jason Bay, John Lackey and Marco Scutaro are the only ones who will take precedence for the pick, and it’s highly unlikely Atlanta will land any of them. The Red Sox could now go ahead and ink Scutaro, safe in the knowledge that they’d still have at least one first-rounder.
In Wagner, the Braves get perhaps the best one-year closer option on the market. $7 million is certainly a fair price to pay, and the $6.5 million vesting option only kicks in if he finishes 50 games next year. Wagner will need to be both effective and healthy to pull that off, and if he does, the Braves would most likely want him back at that price anyway.

New tax law could affect MLB trades

Win McNamee/Getty Images
Leave a comment

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.