{"id":543325,"date":"2026-01-29T01:53:11","date_gmt":"2026-01-29T01:53:11","guid":{"rendered":"https:\/\/www.rawchili.com\/mlb\/543325\/"},"modified":"2026-01-29T01:53:11","modified_gmt":"2026-01-29T01:53:11","slug":"cody-bellinger-contract-comes-with-higher-luxury-tax-hit-for-yankees-in-first-two-seasons","status":"publish","type":"post","link":"https:\/\/www.rawchili.com\/mlb\/543325\/","title":{"rendered":"Cody Bellinger Contract Comes With Higher Luxury Tax Hit For Yankees In First Two Seasons"},"content":{"rendered":"

The Yankees finalized their five-year, $162.5MM contract with\u00a0Cody Bellinger<\/a> last week. That would ordinarily come with a $32.5MM average annual value that counts against the team\u2019s luxury tax ledger. In most cases, a contract\u2019s luxury tax number is taken by dividing the number of guaranteed years from the overall amount of guaranteed money \u2014 regardless of the salary distribution. Unlocked performance bonuses or option decisions can subsequently change the calculation, but the AAV is the starting point.<\/p>\n

However, as Joel Sherman of The New York Post<\/a> reports, Bellinger\u2019s deal falls into a rare exception built into the collective bargaining agreement: the \u201cValley Charge,\u201d as it\u2019s 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. The next few paragraphs will hopefully explain why that\u2019s the case \u2014 though it requires diving into some math and technical terminology within the CBA. Interested readers will also want to check out this X thread<\/a> courtesy of Ethan Hullihen.<\/p>\n

Bellinger\u2019s 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\u2019ll make $85MM over the first two seasons and will have his first opt-out decision with three years and $77.5MM remaining. For CBA purposes, all three years after the opt-out are treated as player option years because Bellinger decides whether to stick with the contract.<\/p>\n

To understand the Valley Charge exception, we\u2019ll need to bring over some language from the CBA. The provision applies when the base salary of a player option year \u201cis less than 80% of the\u00a0base salary \u2026 plus attributed signing bonus\u201d of the cheapest year before the opt-out. It\u2019s therefore not a direct comparison. The salaries of the option years range from $25.8MM \u2013 25.9MM. The years before the opt-out include both their $32.5MM salaries and $10MM each year for the prorated signing bonus: a $42.5MM value in total. The value of all three option years are less than 80% of that $42.5MM ($34MM), so they all fall within the Valley Charge.<\/p>\n

Once the Valley Charge is triggered, the contract\u2019s luxury tax distribution changes. Turning back to the CBA: \u201cFor each such player option year, the difference between the player option year value and the (80% value) shall be allocated pro rata across the years preceding the (opt-out).\u201d<\/p>\n

So, we subtract the salaries of each of the option years from the $34MM 80% value of the second season. That comes out to $24.5MM ($8.2MM + $8.2MM + $8.1MM). That\u2019s divided over the two seasons preceding the opt-out at $12.25MM annually and added to the $32.5MM initial value, bringing the new CBT number to $44.75MM. If Bellinger does not opt out, the Yankees will receive \u201ccredit\u201d in 2028-30 for the overcharge in the first two seasons, meaning he\u2019d only count against their CBT ledger for roughly $24.33MM annually over the final three years.<\/p>\n

RosterResource<\/a> now projects the Yankees for a tax number above $330MM in 2026. That\u2019s above their $320MM season-ending mark from last year, so it\u2019s not clear how much room ownership will allot for in-season maneuvers.<\/p>\n

* The Post\u2019s Jon Heyman<\/a> reports that the bonus will be paid in $10MM installments on April 1 and August 1 of this year. A player receives his full signing bonus regardless of his opt-out decision. Bellinger\u2019s bonus is up-front, so that\u2019s largely immaterial here, but the date of the bonus payment doesn\u2019t have any impact on the Valley Charge calculation.<\/p>\n","protected":false},"excerpt":{"rendered":"The Yankees finalized their five-year, $162.5MM contract with\u00a0Cody Bellinger last week. That would ordinarily come with a $32.5MM…\n","protected":false},"author":2,"featured_media":373745,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2290],"tags":[5,1365],"class_list":{"0":"post-543325","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-baseball","8":"tag-baseball","9":"tag-cody-bellinger"},"share_on_mastodon":{"url":"https:\/\/channels.im\/@mlb\/115975894291545099","error":""},"_links":{"self":[{"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/posts\/543325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/comments?post=543325"}],"version-history":[{"count":0,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/posts\/543325\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/media\/373745"}],"wp:attachment":[{"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/media?parent=543325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/categories?post=543325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.rawchili.com\/mlb\/wp-json\/wp\/v2\/tags?post=543325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}