Cody Bellinger Contract Comes With Higher Luxury Tax Hit For Yankees In First Two Seasons

"That would ordinarily come with a $32.5MM average annual value that counts against the team's luxury tax ledger. In most cases, a contract's luxury tax number is taken by dividing the number of guaranteed years from the overall amount of guaranteed money - regardless of the salary distribution. Unlocked performance bonuses or option decisions can subsequently change the calculation, but the AAV is the starting point."

"However, as Joel Sherman of The New York Post reports, Bellinger's deal falls into a rare exception built into the collective bargaining agreement: the "Valley Charge," as it's called in the CBA. That only comes into play with a contract that is front-loaded before a player option year or opt-out clause. That applies to the Bellinger contract, which allows him to opt out after the second or third seasons."

"Bellinger's deal comes with a $20MM signing bonus, which is counted as guaranteed money and is paid in full regardless of whether he opts out.* The outfielder will collect $32.5MM salaries for the first two seasons. The deal comes with respective $25.8MM, $25.8MM and $25.9MM salaries for the final three years if Bellinger does not opt out. He'll make $85MM over the first two seasons and will have his first opt-out decision with three years and $77.5MM remaining."

The Yankees signed Cody Bellinger to a five-year, $162.5 million contract. The contract's nominal average annual value would be $32.5 million, typically used for luxury-tax calculations. The collective bargaining agreement contains a "Valley Charge" exception that applies to front-loaded contracts that precede a player option or opt-out. Bellinger's deal includes a $20 million signing bonus counted as guaranteed money and $32.5 million salaries in each of the first two seasons. If he does not opt out, the final three seasons pay $25.8 million, $25.8 million, and $25.9 million. Bellinger can opt out after the second or third season, leaving $77.5 million and three years remaining at the first opt-out.

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