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Luxury-tax rules aren't expected to affect market

Let's be honest. For most teams the competitive-balance tax -- more commonly known as the luxury tax -- isn't an issue. Only four teams have ever had to pay it. Only two, the Yankees and Red Sox, have done so more than once.

The Yanks, in fact, have paid in every one of the nine years since it was instituted. So when even the Bombers announced their intention to get their payroll under the threshold above which the tax must be paid, it left the impression that the recent changes made to the luxury tax were so Draconian that it could change the entire free-agent market.

"I'm looking at it as a goal and my goals are normally considered a requirement," managing general partner Hal Steinbrenner told ESPNNewYork.com.

It appears, however, that the new rules shouldn't have a huge impact on free agents looking for big deals this offseason.

Yes, there are some aspects of the regulation that have been toughened. A team whose payroll exceeds $178 million in 2013 will have to pay 17 1/2 percent of the amount above the limit if it's their first time over, 30 percent the second time, 40 percent the third time and 50 percent after that. That's an increase in the top rate, with an asterisk.

In the past, each instance of exceeding the limit stayed on a team's record. A second "offense" could come years after the first. Under the new system, a team starts all over if it stays under the threshold for one year.

Take the Phillies, for example. They probably would have gone over this year if they hadn't traded Hunter Pence, Shane Victorino and Joe Blanton during the season. Since they didn't go over, they can go above $178 million in 2013 and not have to pay a tax in '14, either, when the threshold rises to $189 million.

"We were headed to be over, and that's part of the reason why we made some of the trades we did, to help us stay under. We also got some pretty good prospects for the players we traded," assistant general manager Scott Proefrock explained. "That wasn't the motivating factor, but part of the equation in making the moves we made. So as far as going over [next] year, it's a deterrent, but I think it's more in the mix of things, similar to what last year was. If we need to acquire somebody at the {Trade] Deadline and it puts us over and we're in the thick of things, I don't think that's going to be a deterrent."

And it won't stop the Phils from pursuing free agents, either.

"I think it's a consideration," Proefrock said. "But I think the thing that's more of a consideration is our actual cash budget. That, quite frankly, is a more pressing issue than the competitive-balance tax."

That appears to be the general consensus. The Dodgers took on large salary obligations when they acquired Josh Beckett, Carl Crawford and Adrian Gonzalez from the Red Sox last season. But GM Ned Colletti said luxury-tax implications won't necessarily be an obstacle when he goes free-agent shopping.

"It depends on the whole dynamic of it," Colletti said. "Who they are. What the cost is. How it affects our club. We're open-minded to doing anything. Can't be reckless, though."

Nationals GM Mike Rizzo said teams always have to be creative in figuring out how best to spend their money.

"You have to have a good plan and a good strategy in place as you enter the offseason," Rizzo said. "It has to be well thought out, not only for the immediate season but for the long-term growth. Because some of the decisions you make now obviously will affect you down the road.

"That's what separates the successful teams from the not-so-successful teams. Finding the best value for your dollar. There are always ways of doing it, but you have to find the correct way that fits what you're trying to do."

Yankees GM Brian Cashman deferred questions about his club's desire to get under the luxury-tax threshold to Steinbrenner and club president Randy Levine. But he did salute his Red Sox counterpart, Ben Cherington, for being able to offload so much salary in the trade with Los Angeles.

"That was a tremendous move on his part," Cashman said. "He was able to hit the reset button and get talent in return. That was good for them and bad for us."

Bad for the Yanks, because in the end, they might just be the only team that will operate differently than they have because of the new luxury-tax rules.

Let's be honest. For most teams the competitive-balance tax -- more commonly known as the luxury tax -- isn't an issue. Only four teams have ever had to pay it. Only two, the Yankees and Red Sox, have done so more than once.

The Yanks, in fact, have paid in every one of the nine years since it was instituted. So when even the Bombers announced their intention to get their payroll under the threshold above which the tax must be paid, it left the impression that the recent changes made to the luxury tax were so Draconian that it could change the entire free-agent market.

"I'm looking at it as a goal and my goals are normally considered a requirement," managing general partner Hal Steinbrenner told ESPNNewYork.com.

It appears, however, that the new rules shouldn't have a huge impact on free agents looking for big deals this offseason.

Yes, there are some aspects of the regulation that have been toughened. A team whose payroll exceeds $178 million in 2013 will have to pay 17 1/2 percent of the amount above the limit if it's their first time over, 30 percent the second time, 40 percent the third time and 50 percent after that. That's an increase in the top rate, with an asterisk.

In the past, each instance of exceeding the limit stayed on a team's record. A second "offense" could come years after the first. Under the new system, a team starts all over if it stays under the threshold for one year.

Take the Phillies, for example. They probably would have gone over this year if they hadn't traded Hunter Pence, Shane Victorino and Joe Blanton during the season. Since they didn't go over, they can go above $178 million in 2013 and not have to pay a tax in '14, either, when the threshold rises to $189 million.

"We were headed to be over, and that's part of the reason why we made some of the trades we did, to help us stay under. We also got some pretty good prospects for the players we traded," assistant general manager Scott Proefrock explained. "That wasn't the motivating factor, but part of the equation in making the moves we made. So as far as going over [next] year, it's a deterrent, but I think it's more in the mix of things, similar to what last year was. If we need to acquire somebody at the {Trade] Deadline and it puts us over and we're in the thick of things, I don't think that's going to be a deterrent."

And it won't stop the Phils from pursuing free agents, either.

"I think it's a consideration," Proefrock said. "But I think the thing that's more of a consideration is our actual cash budget. That, quite frankly, is a more pressing issue than the competitive-balance tax."

That appears to be the general consensus. The Dodgers took on large salary obligations when they acquired Josh Beckett, Carl Crawford and Adrian Gonzalez from the Red Sox last season. But GM Ned Colletti said luxury-tax implications won't necessarily be an obstacle when he goes free-agent shopping.

"It depends on the whole dynamic of it," Colletti said. "Who they are. What the cost is. How it affects our club. We're open-minded to doing anything. Can't be reckless, though."

Nationals GM Mike Rizzo said teams always have to be creative in figuring out how best to spend their money.

"You have to have a good plan and a good strategy in place as you enter the offseason," Rizzo said. "It has to be well thought out, not only for the immediate season but for the long-term growth. Because some of the decisions you make now obviously will affect you down the road.

"That's what separates the successful teams from the not-so-successful teams. Finding the best value for your dollar. There are always ways of doing it, but you have to find the correct way that fits what you're trying to do."

Yankees GM Brian Cashman deferred questions about his club's desire to get under the luxury-tax threshold to Steinbrenner and club president Randy Levine. But he did salute his Red Sox counterpart, Ben Cherington, for being able to offload so much salary in the trade with Los Angeles.

"That was a tremendous move on his part," Cashman said. "He was able to hit the reset button and get talent in return. That was good for them and bad for us."

Bad for the Yanks, because in the end, they might just be the only team that will operate differently than they have because of the new luxury-tax rules.

This story was not subject to the approval of Major League Baseball or its clubs.