Blue Jays mailbag: How agents could have saved new Jays money in taxes
As of Monday morning, there had been a one-week delay in the official announcement of the mega 12-player deal between the Blue Jays and the Marlins causing much angst among Jays’ supporters that maybe commissioner Bud Selig was going to step in and veto the trade in the “best interests of baseball.”
The only time that particular power of the office was used was when then-commissioner Bowie Kuhn did it in 1976 to veto a move by the A’s to dismantle his team for cash. Maverick owner Charles O. Finley attempted to sell stars Joe Rudi and Rollie Fingers to the Red Sox and Vida Blue to the Yankees.
A Chicago insurance magnate whose de facto GM was once a kid working as help in the clubhouse, who went on to gain fame as MC Hammer, Finley was upset with the new concept of free agency after losing Catfish Hunter in the first year of the modern process in the winter of 1975-76. The attempted Finley fire-sale was a protest against the system from an owner that had won three straight World Series from 1972-74 and liked doing his own thing. Kuhn stepped in and stopped the sale.
But this Jays-Marlins deal has none of those markings. Selig admitted that the Marlins received good young talent in return. The true issue here is believed to be about money, taxes and broken promises. The Marlins are believed to be sending $8 million over along with Jose Reyes, Mark Buehrle, Josh Johnson, John Buck and Emilio Bonifacio.
The two Marlins players that signed free agent deals prior to the 2011 season, Reyes and Buehrle, both insisted that owner Jeffrey Loria had given them verbal promises that they would not be traded. The organization’s policy is to never offer no-trade clauses, but their agents now insist that because of the trade to a Canadian-based team their clients will be losing many millions in taxes by playing in Toronto instead of Miami. The state of Florida has no personal income tax and has always been a popular state of residency for professional athletes.
The very real tax differential will be worked out and made good by someone, but the question is who will pay for it and how it affects the fine-tuning of the deal. Player agents could have known this might happen. The Marlins have had 11 players sign deals of three-plus seasons since Loria took over. Among that group, five have been traded after one season — Buehrle, Reyes, Paul LoDuca, Heath Bell and Carlos Delgado. Three others have been traded after their second season — Buck, Mike Lowell and Luis Castillo. Of course Reyes and Buehrle couldn’t have known they would be in that group, but the fact that the Marlins back-end load most contracts — the lion’s share becomes someone else’s responsibility — and the fact they refuse to include no-trade should raise enough red flags.
The repeating modus operandi, consistent throughout their history, was enough warning for David Sloane, Delgado’s long-time friend and agent, who was wined and dined by Loria and David Samson after Carlos was railroaded out of Toronto. After one season in Miami, Delgado was dealt to the Mets where he ended his career. New York State offers a significant tax bite for the wealthy. Sloane now points to his blog that outlines his Delgado strategy, how it would have helped Reyes and Buehrle.
“With the current trade between the Marlins & Blue Jays, the deal I negotiated with the Marlins in 2004 for Carlos looks even better. When the Marlins refused to include a ‘no trade’ clause (back then), I insisted that they agree to unique language that gave Carlos some protection in the event of a trade.
“The deal I negotiated contained a guarantee that if he was traded to a team that resided in a state that had a state income tax, the team he was traded to would make him whole.”
In other words he would net out the same amount he would have received had he remained in Florida, a state with NO state income tax. This had NEVER been done in MLB before. BTW, the amount Delgado saved on a contract signed EIGHT years ago is roughly $2,269,500.
“The agents for Jose’ Reyes (Peter Greenberg, now part of Legacy Group), Mark Buehrle (CAA Jeff Berry), Josh Johnson (Sosnick/Cobbe), Emilio Bonifacio (Paul Kinzer who was recently fired from Wasserman Sports), John Buck (Aces) didn’t protect their clients as well as I protected Delgado. They will literally pay the price for being represented by agents who do a better job of recruiting Players than they do of representing them.”
You don’t often see such blunt agent-to-agent shots. An announcement the Jays-Marlins trade has been completed will be made soon. It was a solid baseball trade even though John Farrell’s Red Sox have smugly let it be known that they could have made that deal and chose not to. On to the mailbag.
Q. Hello Richard,
A Toronto sports fan who is excited for the new baseball season to start. Looking for your opinion around the catching position for the Jays, assuming Alex has yet to do anything by the time you read this, I wonder which combo will give the Jays the best chance of contending? While Travis D’Arnaud has lots of upside, he has zero experience in the big leagues, catcher is such an important role for a team, I wonder if trading J.P. Arencibia gives the Jays the best chance to compete.
Thank you for your time.
Ivan Yung, Mississauga
A. Behind the plate, the Jays have Arencibia, John Buck and Bobby Wilson, all with major-league experience and after that they have D’Arnaud, an Eastern League MVP in 2011, who was playing at an all-star level in the PCL in 2012 until injured with two months remaining in the Vegas season. That is a good position of strength for the organization. That being said, it would be difficult for the Jays to enter a season in which they are expecting to compete for the AL East with a rookie behind the plate in D’Arnaud. Sure the Giants did it in 2010 with Buster Posey, but how many Buster Poseys are there?
To me, it seems the Jays have no immediate plans to deal Arencibia to another team, however the acquisition of the veteran Buck from the Marlins allows for that faint possibility of a J.P. trade because Buck has more experience as an everyday catcher than does Jeff Mathis. If Arencibia was traded — and the deal would have to be really good — Buck could start until D’Arnaud was ready to take over.
The fact that D’Arnaud missed about 200 much-needed at-bats in 2012 and perhaps even a late-season call-up to get his feet wet, or the month he would have played in the majors in place of an injured Arencibia in July and August, changes the catching landscape entering 2013. Anthopoulos cannot make the significant moves that he has made and then go with a rookie catcher right away on Opening Day. All this changes after a month or two in ’13 with a healthy D’Arnaud at AAA-Buffalo.
Q. Confession of a fair-weather fan. Isn’t that what they call you when you lose daily interest in your team after they stop winning? Is this not too harsh if a generation goes by before your team shows any potential to be relevant late into a season? I don’t mean winning a pennant or World Series, or division title or one of . . . how many wild card spots now on hand. I mean challenging in a meaningful way for any postseason entertainment throughout a September stretch run.
Pat Gillick’s Blue Jay teams showed the formula. It wasn’t complicated, was it? Spending the most gives your team the most chances. The Jays did that (in the early ’90s). They even perfected the rent to buy system that brought in key talent for stretch drives like Rickey Henderson, David Cone and others. It did not win us a lot of friends but as locals what did we care? It was not our money.
Labatt was a heck of an owner and what happened next could not be blamed on the brewery. They were bought out by a Belgian brewery who did not share Labatt’s commitment in the longterm benefits of public relations through professional team governance. But the sale to Rogers seemed like a perfect fit. They owned a sports network and already held the discretionary entertainment resources of an entire nation. Who has a TV/cable bill that is less than $200 a month?
Surely an age spoiler, but I remember when the cost of TV was the $500 you paid for your RCA 26-inch colour television. If we didn’t have the left over scratch to actually attend a game, at least we could watch them in the prison of our home entertainment centre. But Rogers failed to be that guy. They sat on their hands for a decade and other than renaming the Sky Dome after themselves, did little to alter the lengthy morass Jay ambition became. If the team was not interested in competing, why should fans care. . . and they didn’t.
But this changed last Tuesday. Josh Johnson and Mark Buerhle may turn out to be nothing more promising than innings eaters. But every team needs them. No one needs that more than the Blue Jays, if you will recall last year, and the one before that, and the one . . . you get the idea. Jose Reyes will remind us of the glory days in middle infield and whether the others make significant contributions is rather beside the point. The owners at long last have gone all in, and that is already meaningful to this fan, and surely others who have been waiting for the better part of two decades for the return of fair weather. And this literally just in, that the Jays just signed Melky Cabrera . . . as I was saying. Hey if money is no object suddenly why not buy back Doc to repay him for 10 years of loyalty.
Bill Barlow, Toronto
A. That’s an interesting take on the history of the Jays since the World Series years. I agree that as much as the talent of the new players themselves is a renewed perception of the Blue Jays as a team and Toronto as a thriving franchise around baseball. The average North American baseball fan had surely become confused after all those years of being told that the Jays were in a small market that could not afford to compete. One of the main factors that made the Jays a small market for those years was the 65-cent Canadian dollar when it came to paying free agent players and keeping their own stars. That is no longer a problem and since Rogers is looking to maximize its “content” on multiple media platforms, the better the baseball product, the more wireless live-sports upgrades they can sell. Win means win-win. As for Roy Halladay, don’t be surprised if Anthopoulos has not at least called the Phils and in the course of any conversation with Ruben Amaro, Jr., found out what it would take to repatriate Doc. It’s just the way AA operates and does not mean it will ever happen. As I facetiously tweeted earlier, as long as you’re talking about bringing back former personnel, at the end of the 2013 season, assuming the Jays have competed hard and had success, AA should call the Red Sox and ask for permission to talk to John Farrell. Then when he gets JF on the line just say, “Blow me” and hang up.
Q. Hello Richard,
I was just wondering that with the Argos lease up after this CFL season, will the Blue Jays management decide to install a dirt infield at the Rogers Centre? What do you think is the likelihood of a decision like this? With this mega-trade complete soon I’m concerned whether Reyes is satisfied with playing on turf, having battled leg injuries in the past, do you see this as a potential problem for the Blue Jays in the years to come?
A. I have forever been a proponent of installing real grass at the Rogers Centre, ever since the Diamondbacks joined the NL and showed that it can be done at an indoor facility with a retractable roof. When not in use, Chase Field has ultra-violet lamps trained on the grass to simulate natural sunlight. It can be done. The Jays and the Rays are the only two stadiums with artificial turf. At least Tampa has an all-dirt infield that makes it aesthetically look like a real baseball field.
Even though grass should happen at the RC, it won’t because of the Jays’ recurring excuse of drainage, irrigation and multi-use for the stadium, concerts, trade shows and the like. It would take an entire off-season to install. However they should compromise and do the all-dirt infield thing. That would be a start towards a real baseball feel and would make it easier on the legs of talented veteran infielders with a history of hamstring woes like Jose Reyes. His wonky hammies will be an issue at some point next summer. As for Jays’ fans, how many times has a visiting team rested one of their star players because of the artificial turf, robbing Jays fans of a chance to see the best that day. It happens far too often.
Q. Are Maicer Izturis and Emilio Bonifacio both better hitters than Lind??If yes, is Bonafacio as good of an outfielder as Bautista or (Melky)? If yes, then wouldn’t it be better to have EE=DH, Jose or Melky at 1st, Izturis at 2nd, and Bonafacio at RF/LF??? Then we don’t have to see Adam Lind . . .
Breezy Stafford, New Orleans, LA
A. I think it’s an intriguing thought to have Bautista at first base and move Edwin to full-time DH again. Joey Bats was forced into playing first base a couple of times early last season, especially in the opening series in Cleveland, and showed natural leadership by taking charge of the infield defences in bunt situations, etc. It’s always an option, especially if the Jays were to deal Adam Lind and not land a veteran, fulltime DH. Encarnacion turned into a decent first baseman mainly because he does not have to throw the ball across the diamond. There would be ways to take advantage of Bautista’s strong throwing arm at first base. Former Gold Glove first baseman Keith Hernandez was used by the Cards and the Mets as the main cutoff man on balls into the right-field corner with a runner at first base. He would head to the edge of the outfield grass and become the relay man for throws to the plate. If Lind is back it will be as the left-handed DH. Rajai Davis could be the right-handed half of DH.
Having covered the Expos, you know Tim Wallach, you know what kind of person he is. You will not find a better managerial candidate. He knows how to manage, he is a players type manager and one that works well with the front office. He is the best man for this JOB!!
John Mo, Scottsdale, AZ
A. I did not cover the Expos, I was a public relations guy with Wallach at the Expos and he is one of the five favourite players that I worked with in almost 23 years there. However, I also remember sitting at a restaurant in Chicago on an off-day with a distinguished group that included Expos’ hitting coach Hal McRae, Wallach and Don Zimmer, who was a Cubs coach at the time. Over the course of the light-hearted conversation, Eli was making fun of players that continued to stay in uniform after their playing careers were over. The Expos’ third baseman said when he retired he would go home and play golf the rest of his life. He was saving his money for just that. The wizened McRae laughed and pushed the B.S. button on Wallach, saying after a couple of years of playing golf, he would be begging for a job back in baseball. McRae was right. It did not take that long. Wallach has three sons, one in the Dodgers’ organization, one in the Cubs’ system and one at his alma mater, Cal. St.-Fullerton as a catcher. You are right about Wallach as a person. As a players’ manager there would be few better.
Q. Hi Richard,
Just an observation regarding Reyes playing on turf: he’s a shortstop. He’s typically positioned over the dirt portion of the infield. Isn’t the turf-grass comparison overblown???
Mike A, Toronto
A. It would be if the Jays actually had a dirt portion of the infield.
Q. Hi Richard:
It’s probably safe to say that my last (post-blockbuster trade) question was premature. The Melky Cabrera signing and the rumour mill indicate loud and clear that AA is not done reworking the lineup. Looking forward to seeing what’s next. Exciting times.
Matthew McKean, Ottawa
A. I think that sums up the feelings of the majority of Jays fans. Exciting times.
Q. Hi Richard,
I am a bit puzzled by this huge trade and the positive buzz that it is getting. As much as we all want a winner in Toronto in any sport, I wonder if this move is any different than the Riccardi era moves. Jose Reyes at five years and $96 million would not be lauded as a great free agent deal nor would Mark Buehrle at three years, $48M. Health will be the likely deciding factor. At this point we might as well go for it. Do you think that a combination of Colby Rasmus and J.P. Arencibia plus a high prospect would pry David Price or Jeremy Hellickson from Tampa?
Matt Meisner, St. Catharines
A. The buzz following the trade with the Marlins comes largely because fan reaction had been so strong so long in maintaining Jays ownership was being cheapskates and that it would never change. The difference between these moves by current GM AA and the moves pulled off in the Ricciardi Era is that J.P. more often than not had to use free agency to fill his needs because the farm system was not highly regarded by Baseball America and others rating such things. Too many low-ceiling college guys.
For instance, the B.J. Ryan and A.J. Burnett additions were free agent signings. Especially for Ryan, who had had just one successful season as a closer, each deal involved overpaying to get them to come to Toronto. This trade by AA did not strip the farm system of prospects. They are still loaded in terms of players 2-4 years away from the majors. As for the players acquired, Reyes at times has been in the conversation for best player in baseball, while Buehrle has 12 straight seasons of 200-plus innings. Sure, health is always a factor in hindsight, but it seems that Jays’s fans, even when they are happy, seem to look for the dark cloud. Hellickson has been rumoured to be available and will draw much interest, but there is no way that the Cy Young Award winning Price can be pried from the Rays.
Looking back, were there any clues that The Trade was going to happen? i.e., any subtle hints AA dropped, or moves made (or not made); because this came out of nowhere, which is somewhat shocking nowadays.
Brent Shepherd, Victoria, B.C.
A. The only hints were in September when Anthopoulos said quite emphatically that he needed to improve the rotation and that he would have more money to spend because it was being ploughed back into payroll. He never has said stuff like that. Plus, at the GM meetings in Palm Springs, the reports were that other GMs laughed and said how “Alex is itching to make a big deal.” The biggest reason there were no leaks in this trade is that the Marlins might have been embarrassed at what they were doing, AA always plays his cards close to the vest and because there were no “no-trade” clauses to circumvent, there were no player agents involved. The more agents, the more teams, the more leaks.
Q. Do you think AA would talk to Jose Bautista about who to hire as manager? Or at least run it by him first?
Ben Smith, Peterborough
A. The relationship between Bautista and AA is special. They are in this together because of the chance they both took when Bats signed his big five-year contract after one great season. At the time, Alex’s promise was that he would do everything to win during the length of the deal. As such, AA would call Bautista not to ask him what he thinks, but to let him know what was about to happen. Alex in his brief time with Halladay before the trade, kept him up to date on everything involving him. He did the same with Vernon Wells he is doing with Bautista. It’s important to have the key players on your side.
HERE’S A COUPLE OF QUESTIONS THAT ARRIVED JUST BEFORE THE TRADE THAT REFLECTED THE FEELINGS OF FRUSTRATED FANS SINCE THE SEASON ENDED
Q. Hi Richard,
For Blue Jays fans, the clock is a ticking and most if not all of the top prospects whether it be for left field of starting pitching will be signed up with other teams while the powers that be, do nothing. Heck at least the Jays have the honour or whatever of being the only team with a Baseball Cap without any letters on them — wow, amazing news.? Maybe this team is in serious need of new ownership.? There is the old saying that ‘you can fool all the people some of the time and some of the people all the time but you just can’t fool all the people all the time. If no serious effort is made to improve the team, it would be interesting to see the fan attendance for 2013.?
Q-My grandfather passed away last weekend. He was probably the most irrational Blue Jays fan ever. I remember many times him yelling at the TV cursing the “darn Blue Jays.” In his irrationality there is some truth. These are one of the richest owners in the MLB. They have an astute GM, a huge market, and a wealth of minor league talent. It’s time for this team to make a step forward. The Blue Jays owners remind me of our current city government; a failure to realize this is a world class city. You need to think big to be big. I have been enjoying baseball here in South Korea and wow, what an experience. My favourite team was last in the league. I recall a game where we were down 11-0, yet people stayed and cheered until the end. One of the best parts is you can bring your own beer and food into the game. Mind you the beer in the stadium costs the same as outside. Baseball at its finest.
All the best,
Matthew, Seoul, South Korea
A. I’m sure your Jays’ fan grandfather is looking down and smiling. May he rest in peace.
Q. Great blog Richard — I really enjoy it. Would love to see you team up with Doug Smith, during summer months, so we could get daily tidbits, in addition to your regular coverage.
My question is with respect to all of the bullpen signings — do you see this as a strategy by AA as a selling point to potential free agent starters? i.e. sign with us and you’ll have one of the best/deepest bullpens protecting your back?
David Moon, Toronto
A. Thanks, but I know that North America’s Mr. Raptor, Smitty in the summer, post NBA, has enough work with his own son’s baseball. The guy works so hard at hoops, I would hate to add to his load.
As for the Jays’ bullpen, the last three World Series winners — the Giants in 2010-12 and the Cardinals in 2011 — have all had superior bullpens full of guys throwing mid to high 90s. Baseball is if nothing else a game of copycat GMs. It’s like TV shows or Hollywood movies. Strong, deep, hard-throwing bullpens are the CSI of baseball. Does a strong bullpen help lure starters that have a choice? Yes, it can be a factor, but usually if a guy is trying to cement his legacy.
I remember Don Sutton in his last kick at the free-agency can was looking for 300 wins and part of his search as his career wound down involved teams with great closers. But there aren’t too many Don Suttons out there. I’m already looking forward to seeing these bullpen guys compete at spring training. High 90s Jays include Steve Delabar, Esmil Rogers, Brad Lincoln, Jeremy Jeffress, Sergio Santos and Sam Dyson. AA will add a couple of more names but it looks like the Jason Frasor Era is over. Darren Oliver still may retire or ask for a trade from his $3 million option that was picked up by the Jays.
Q. Hi Richard,
As much as I approve of the Blue Jays/Marlins deal, there’s something that we’re forgetting in all of this. The Jays could have acquired two of the three big-name players, Reyes and Buehrle, last off-season for nothing more than the money they will now pay them anyway. Had Anthopoulos picked up Reyes last off-season, he could have acquired the two Marlins pitchers without having to give up so much young talent. He could then have used these prospects to acquire other established players. Was this deal a panic move in response to growing criticism from the fan base? And is this deal an indication that the Blue Jays are so far off the radar for free agents that unless the Blue Jays go out and trade for talent, players will simply not sign here?
A. Anthopoulos has never made a move in response to criticism from the fan-base. However, his concerns are often a reflection of the fan-base concerns. It’s naive to say that the Jays could have signed Reyes and Buehrle last winter and saved the prospects they now had to give up. Neither player was interested in Toronto at the time and both seemed to have been blindsided by the no-trade provision that they did not have included in their contracts with the Marlins and the broken verbal promise that they say they received from Fish ownership. The Jays would have had to pay more and besides even that would not have influenced the players because the Jays were not showing signs of being immediately competitive. The Jays have been off the radar for free agents, but Melky demonstrates the impact of the mega-deal with the Marlins. There is a snowball effect with free agents. Now a manager.
Q. Well, all of a sudden, it’s exciting being a Jays’ fan again. And finally you might have some meaningful September (October?) baseball to cover. I didn’t like losing Hechevarria and some of those young pitching prospects, but this is HUGE. And they kept the two big power arms in their rotation. So a chunk of the future is lost, but they still have a lot of young pitching depth with Drabek and Hutchison, Syndergaard and Sanchez and most importantly, Rogers is finally acting like the mega corporation that it is, rather than Kansas City North. The $170M of additional salary is a rounding error for them and given their increasingly negative profile in the city of Toronto, they had to show that they were serious, especially given their stakes in Raptors and Leafs. I know it’s not official, but I can’t believe that Selig would veto this, after having let the Red Sox do essentially the same thing. As for those Expos fans in Montreal, they are probably experiencing a touch of schadenfreude and “I told you so” today about that creep Loria. That man should never be allowed near a baseball franchise again. He’s now destroyed two, not one, franchises.
A. The Jays being viewed as contenders and the Argos in the Grey Cup. Sporting life in Toronto is good. And the Leafs are still tied for first.