MMQB on Branch, Meriweather and others NE stuff

[borg]

How are you coming up with your figures?

Massachusetts is 5.3% tax and New York State is 6.85%.

5.3% tax on $36 million (taking out the 1.5 million paid to Branch's agent) is 1.8 million.

So, if the Patriots and Deion were $500k apart over 6 years, the tax ramification would mean they were an additional $300k apart, less when you realize that the state income tax gets deducted from the federal tax, so that $1.8 million he pays to Massachusetts saves him ($1.8 x 35% top Fed tax rate) $630k of Fed taxes, so the total additional losses per year because of state taxes are $200k.

Six year contract....$1.2 mill. Need to make $2 mill to bank the $1.2. I didn't include deductions and I didn't include cost of living factors either. As far as my Lebron example, I included NYC taxes and Obamas progressive federal tax plan, yet to be voted on.
One thing I know, and this is coming from a close friend who's a money manager to many of the big money athletes, is that players are instructed by their "people" to maximize their first free agent/big money contract...not by looking at the headline number, but by aftertax dollars. They have it drilled into their heads that they are professional athletes whose careers can end tommorow, so they need to bank it now. After the big contract, sure, play where you want, but set yourself up first. When two offers are similar, choose the best tax structure, not the team. Many take this advice to heart and you would be surprised at what lengths some of these guys go to preserve their bank accounts. Players making 8 figure yearly salaries have themselves put on monthly allowance. Bills get paid through accounting offices to keep tabs on their indulgences. As far as Lebron, the state tax issue was #2 on his list of considerations. Look where all the golfers and tennis players live. All the northern European golfers take residence in Florida. The window for maximum earnings is small, so keep as much as you can.

 

[Synovia]

Six year contract....$1.2 mill. Need to make $2 mill to bank the $1.2. I didn't include deductions and I didn't include cost of living factors either. As far as my Lebron example, I included NYC taxes and Obamas progressive federal tax plan, yet to be voted on. .

No, you didn't. You just made things up.


Could you please post references to it being possible to have a 60% tax liability.


And why didn't you include your made up tax plan in the Lebron Miami example? Were you just being dishonest?

 

[Ron Sellers]

One factor that never gets mentioned by the media, but is front and center in detirmining which team to play in, is state income tax. Many players want to maximize earning potential, playing in income -tax-free states like Washington if offers are the same. Branch's Seattle contract earned him to an extra $2 mill , free and clear, vs Taxachusetts. To clear this $2mill, over $3.5 of pretax income is needed if he stayed in Mass.

Look at Lebron James as an extreme example. Miami vs NYC. 38% total tax liability vs close to 60% for NYC residents at the highest level. Using a $100 mill contract as an example. $62 mill cleared vs $40 mill. So for Lebron to get the extra $22 mill difference in his bank clear of taxes (if he lived in NYC) he would need another $50 mill in income. Add in the real money, endorsements, etc. and we're talking cash money homey.

I agree that logically it would make sense for players to prefer to sign with teams that play in states with lower or no state income tax. However, I don't see that reasoning coming into play in any decisions the players make. If it did then ever since the start of free agency era in the NFL players would have been flocking to Tampa Bay, Jacksonville and Miami, even willing to play for less for those teams; that's never been the case. In addition if I am not mistaken the taxes are split up dependent on where players played each game; 1/2 the player's salary is based on his home state, and 1/16 is paid to the state in which each he played each of his road games.

As for the Lebron James example, it seemed to me the primary motivations were to go to a team that was already good, and perhaps the attraction of South Beach.

Bottom line is that while it would make a lot of sense for players to consider state and local taxes in their decisions about which team to play for, I haven't seen anything to make me think that it enters into their decision making process.

 

[upstater1]

Six year contract....$1.2 mill. Need to make $2 mill to bank the $1.2. I didn't include deductions and I didn't include cost of living factors either. As far as my Lebron example, I included NYC taxes and Obamas progressive federal tax plan, yet to be voted on.
One thing I know, and this is coming from a close friend who's a money manager to many of the big money athletes, is that players are instructed by their "people" to maximize their first free agent/big money contract...not by looking at the headline number, but by aftertax dollars. They have it drilled into their heads that they are professional athletes whose careers can end tommorow, so they need to bank it now. After the big contract, sure, play where you want, but set yourself up first. When two offers are similar, choose the best tax structure, not the team. Many take this advice to heart and you would be surprised at what lengths some of these guys go to preserve their bank accounts. Players making 8 figure yearly salaries have themselves put on monthly allowance. Bills get paid through accounting offices to keep tabs on their indulgences. As far as Lebron, the state tax issue was #2 on his list of considerations. Look where all the golfers and tennis players live. All the northern European golfers take residence in Florida. The window for maximum earnings is small, so keep as much as you can.

Those agents have a conflict of interest. They want to get paid now because they can get fired tomorrow.

Tedy Bruschi didn't hire an agent. And the Patriots never cut him despite his hefty contract.

That's pretty telling.

As far as Obama's tax plan (I hope we can talk politics here since it's relevant) a vote doesn't need to happen. It's not a plan at all. The tax cuts expire this year. Then they go back to Reagan/Clinton era.

 

[BSR]

I thought the new Giant/Jets stadium was still in NJ, not NY. Why would NY tax rates be relevant?

 

[VJCPatriot]

I thought the new Giant/Jets stadium was still in NJ, not NY. Why would NY tax rates be relevant?

Because players don't live in the stadiums?

 

[BSR]

Because players don't live in the stadiums?

You pay where you earn not where you live.

 

[MoLewisrocks]

Of course he would have gotten his bonus paid. IIRC though, the way the NE deal was set up was it was 6 additional years, and the SEA job started this year.

I think a big chunk of the Patriots money was coming via roster bonus in the 2nd year though. I could be remembering it wrong, but I remember Branch getting significantly more money in the first 3 years in seattle.

No, it was not 6 additional years, it was 6 years including the remaining year on his rookie deal. That's it, just like Brady and anyone else the Pat's extend who is still under contract - they retain the remaining year. All that matters in any of these deals is the signing bonus and/or guaranteed money. We never had details like roster bonuses on Branch's deal because they never achieved one and those details only come out after someone in the media sees the contract. Branch didn't tear his ACL until the end of the 2007 season in the playoffs in January 2008. We didn't cut Welker after that happened... He'd have seen his first 3 here and probably more as was the case in Seattle because of dead cap (which mattered before 2010).

 

[Patsfanin Philly]

His numbers are junk, but yours are old too.

NY state tax is 8.97% for high earners since 2009. NYC income tax is an additional 3.4%

If Congress allows the Bush tax cuts to expire, the max rate goes to 39.6% Federal, 8.97% NY State and NYC 3.4% for a total of 51.97%.....

TPC Tax Topics | 2010 Budget -  Tax Increases on High-Income Taxpayers.

 

[Synovia]

If Congress allows the Bush tax cuts to expire, the max rate goes to 39.6% Federal, 8.97% NY State and NYC 3.4% for a total of 51.97%.....

TPC Tax Topics | 2010 Budget -* Tax Increases on High-Income Taxpayers.

Which is nowhere near 60%

 

[Synovia]

You pay where you earn not where you live.

Depends on the state you live in. Maryland residents (And I'm sure some other states) pay whether or not they work in the state.

 

[BSR]

Depends on the state you live in. Maryland residents (And I'm sure some other states) pay whether or not they work in the state.

Hmmm...did not know that. I wonder how that works then. For instance, the Baltimore players must get screwed when they have to pay Maryland and Massachusetts taxes for this game they just played.

 

[patsfaninpittsburgh]

Which is nowhere near 60%

Taxes also include the 1.35% HI or Medicare tax.

This brings total tax to 53.32% and doesn't include loss of itemized deductions/credits or ATM implications.

And yes 53.32% is near a 60% tax threshold. Assuming otherwise is quite dumb.

 

[Synovia]

Taxes also include the 1.35% HI or Medicare tax.

This brings total tax to 53.32% and doesn't include loss of itemized deductions/credits or ATM implications.

And yes 53.32% is near a 60% tax threshold. Assuming otherwise is quite dumb.

Not when the comparison is to 38% that doesn't include any of those things.

 

[PatsWickedPissah]

The point made is that tax impact is significant to high earning sports figures. So significant that 2 offers cannot simply be compared by the $ alone.

 

[shmessy]

"I will hand it to Rodney Harrison. In the year-and-a-half I've worked with him, he's become more thoughtful about the game than I remember from his playing days, when his life was a seek-and-destroy mission. And Sunday, after watching a day of the viciousness, he laid it on the line on our Football Night in America show."
______________________________

What a true profile in courage, Peter. Rodney is becoming so much more circumspect about this when it's SOMEONE ELSE laying the wood.

Gimme a break.

That being said, I agree that the helmet-to-helmet thing should be an ejection - - whether it's done on purpose or poor discipline/training (which I think is REALLY Merriwether's problem).

It's just too funny, though, how Peter King is adoring of Rodney for taking this stand only after he retired.

 

[shmessy]

In the meantime, his Favrelove EXCEEDS character at this point:
_________
"• The Vikings are more than alive. They might be a Brett Favre/Green Bay melodrama-away from becoming the favorites in the NFC North."
___________

Is he kidding????? They barely squeaked by a 1-4 team at home to become 2-3 and he's writing this drivel??????

 

[upstater1]

Depends on the state you live in. Maryland residents (And I'm sure some other states) pay whether or not they work in the state.

It depends on how much time you spend in each state. When I worked in NY and also my spouse was earning an income in Michigan, it got highly complicated. When she started earning in NY, they came back and said that because her move back to New York came after she once held a NY job, she was a NY resident all along and that her Michigan income was a temporary relocation. I explained to them that in her field, she might have ended up anywhere in the USA, and the fact that she landed a job in NY was only coincidental.

They accepted that reasoning. Also, in order to have this hearing, a guy drove out from Albany to Buffalo and back. The hearing probably cost $5k with all the people present. The amount of money in dispute was considerably smaller.