White Sox 2012 payroll

With the completion of the formality of signing pre-arbitration players, we now have a pretty good idea of what the 2012 payroll is projected to be. While the Sun-Times trumpets that "payroll is expected to sit at about $97 million this season, about $30 million less than 2011", one probably shouldn't take accounting from a journalism major.

While his 2012 base salary is $500K, Danks' new contract also includes a $7.5 million signing bonus. Under MLB accounting - which is mainly for luxury tax purposes - any signing bonus, whenever paid, is pro-rated over the life of the contract. So, as Danks' contract is for five years, $1.5 million is added to each of Danks' yearly base salaries. Thus, in 2012, Danks is listed on the payroll as being a $2 million expense.

But that's accounting. And I think everyone is well aware of the shenanigans accountants engage in. Danks' $7.5 million bonus is to be paid between June and October 2012. So, after also subtracting $1 million for Dayan Viciedo's pro-rated signing bonus, the "real" 2012 payroll is about $102.5 million.

A couple months ago, Jim discussed the odd timing of the signing bonus. While this is a trick the Yankees and Red Sox have utilized in the past for avoiding/minimizing luxury tax concerns (see, e.g., the first contract of C.C. Sabathia), the White Sox are certainly not in any luxury tax danger. Jim posited a few possibilities for the structuring of the contract but we're still unclear on why it was done this way because no one has bothered to ask the White Sox why it was done this way.

In any event, I'm sure the drastic reduction in payroll will be a renewed discussion point in such intellectual circles as sports radio. We should at least be discussing an amount that isn't an accounting construct.

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