Sharp observation by ESPN’s Jorge Arangure, Jr.: If Aroldis Chapman doesn’t sign a deal and receive his bonus by Thursday at midnight, he’s going to get a multi-million dollar tax bill that he could have totally avoided.
Why? Because, Arangure reports, signing bonuses that are received outside the U.S., by a non-U.S.
resident, and in a tax year in which the person did not work in the
U.S., are not subject to U.S. taxation. Chapman currently lives in tax-free Andorra. He hasn’t pitched in the U.S. Thus, any money he makes in 2009 can’t be taxed in the U.S. He will, however, work in the U.S. in 2010, so he will be subject to U.S. taxation on all earnings after the first of the year regardless of where he lives. If, as expected, he gets tens of millions of dollars, that’s going to be a several million-dollar tax bill.
Arangure’s source on this, agent Joe Kehoskie, says “As far as I’m aware, neither the Hendricks brothers nor Rodney
Fernandez (who represent Chapman) have ever completed a contract for a
foreign free agent, so I bet this issue flew right under their radar.”
Maybe. But it may simply be that the market just hasn’t developed for Chapman like everyone thinks it eventually will, and that rushing to save a couple million in taxes now could cost him several more million in the value of the contract he ultimately signs.
Still, somewhere, the agent that Chapman fired to sign with the Hendricks brothers is smiling. And amending his lawsuit to claim that if he were still representing Chapman, he would have imposed a December 31st deadline to all interested clubs in an effort to avoid the bill.
Ken Rosenthal of FOX Sports reports that the Cubs have signed pitcher Brett Anderson to a contract, pending a physical. Anderson, apparently, impressed the Cubs during a bullpen session held in Arizona recently. According to Jeff Passan of Yahoo Sports, the deal is for $3.5 million, but incentives can bring the total value up to $10 million.
Anderson, 28, has only made a total of 53 starts and 12 relief appearances over the past five seasons due to a litany of injuries. This past season, he made just three starts and one relief appearance, yielding 15 runs on 25 hits and four walks with five strikeouts in 11 1/3 innings. The lefty dealt with back, wrist, and blister issues throughout the year.
When he’s healthy, Anderson is a solid arm to have at the back of a starting rotation or in the bullpen. The defending world champion Cubs aren’t risking much in bringing him on board.
Ken Rosenthal of FOX Sports provides an interesting window into how teams handle a player’s contract after he has died in an accident. It was reported on Sunday that Royals pitcher Yordano Ventura died in a car accident in the Dominican Republic. He had three guaranteed years at a combined $19.25 million as well as two $12 million club options with a $1 million buyout each for the 2020-21 seasons.
What happens to that money? Well, that depends on the results of a toxicology report, Rosenthal explains. If it is revealed that Ventura was driving under the influence, payment to his estate can be nullified. The Royals may still choose to pay his estate some money as a gesture of good will, but they would be under no obligation to do so. However, if Ventura’s death was accidental and not caused by his driving under the influence, then his contract remains fully guaranteed and the Royals would have to pay it towards his estate. The Royals would be reimbursed by insurance for an as yet unknown portion of that contract.
The results of the toxicology report won’t be known for another three weeks, according to Royals GM Dayton Moore. Dominican Republic authorities said that there was no alcohol found at the scene.
Ventura’s situation is different than that of Marlins pitcher Jose Fernandez, who died in a boating accident this past September. Fernandez was not under contract beyond 2016. He was also legally drunk and cocaine was found in his system after the accident. Still, it is unclear whether or not Fernandez was driving the boat. As a result, his estate will receive an accidental death payment of $1.05 million as well as $450,000 through the players’ standard benefits package, Rosenthal points out.