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How Obama Changes Baseball Free Agency

by Robbie Gillies

We already mentioned how Obama becoming President could help Chicago get the bid for the 2016 Olympics but that's not the only way his victory could change sports. No, it's not the implementation of a playoff system in college football. He might change a lot of things but the BCS system will not be one of them. Obama's victory could change baseball's free agency this offseason.

Obama plans to increase taxes for the wealthiest tax bracket about 5% from 35% to 40%. This becomes a significant increase when you're talking about multi-million dollar contracts. Free agents might be looking to lock up their contracts and signing bonuses before January 1, when the rate would come into effect. From the Associated Press:

“It’s something we’ll consider,” agent Craig Landis said Tuesday at the general managers’ meetings. “Besides the federal issue, we have a state issue in some cases, anyway, where it’s advantageous to take signing bonuses because of the state income tax. A Florida resident can take the signing bonus and not have to pay his team’s state tax.”

Next year’s major league minimum is $400,000. Agent Scott Boras, negotiating eight- and possibly nine-figure deals for free agents Manny Ramirez and Mark Teixeira, already has thought about the possibility of asking for larger signing bonuses payable this year in some of his contracts.

“There’s some consideration to be had with the impact of the election,” he said.

Free agents can’t start negotiating money with all teams until Nov. 14. Only a relatively small percentage of contracts are finalized before Jan. 1.

Still, for a big-money free agent earning $10 million in 2009, Obama’s plan could increase his federal tax by more than $400,000.

When dealing with contracts this significant, I'm sure the process won't be rushed, but getting the deal done early could save these players a nice chunk of change. I wonder how many athlete Obama-endorsers will regret their decision come tax time.

H/T: Big League Stew