New deal helps Yankees. ] Players Union to Yankees: No New Taxes By MURRAY CHASS Published: October 25, 2006 ST. LOUIS In the negotiations that culminated in a new labor agreement that was announced yesterday, the union had the best interests of George Steinbrenner�s checkbook in mind. Whereas the other clubs are out to get the Yankees� money and inhibit them from spending what is left, the union tried to help the Yankees. The union proposed that the rate schedule for the tax on payrolls above designated thresholds start over in the new five-year agreement that was announced yesterday at Busch Stadium before Game 3 of the Word Series. As a club that has exceeded the threshold and paid the tax each of the four years of the existing agreement, the Yankees pay at a rate of 40 percent. Last year they paid $34 million; this year they will pay nearly $26 million. The union wanted the Yankees to be able to go back next year to a rate of 22.5 percent, which they have not paid since 2003, the first year of the expiring agreement. Why was the union looking out for the Yankees� welfare? The Yankees are, as everyone knows, baseball�s biggest spenders. Not only do they have the largest payroll � by far � but their expenditures force other teams to pay more than they otherwise would, both to sign free agents and to retain their own players. Yankees salaries even affect other teams in salary arbitration. The luxury tax, or competitive balance tax as it is formally known, has worked, even on the Yankees. Teams that have flirted with the tax threshold have made sure they stayed under it to avoid paying any tax. The few teams besides the Yankees that have exceeded the threshold have not strayed too far over it. The whole purpose of the tax was to restrict payrolls. The owners would have preferred a payroll cap, as other sports have, but the union always fiercely resisted it. The owners� demand for a cap prompted the players to strike in 1994 and forced cancellation of the World Series for the first time. So the owners settled for a tax and hoped that it would have the desired effect, not holding their collective breath where the Yankees were concerned. But two years ago the Yankees surprisingly passed up signing a free agent because of what the contract would have done to their tax payment. Carlos Beltr�n�s agent, Scott Boras, offered him as a free agent to the Yankees at a discount � $100 million � compared with the Mets� $119 million offer. But the Yankees pulled out their calculator and figured out that the average annual value, on which luxury tax payrolls are based, of the Beltr�n discount would be $16.67 million, but the 40 percent tax meant it would actually cost the Yankees $23.34 million. As a result, the Yankees politely declined Boras�s offer, and Beltr�n signed with the Mets, helping change the culture of Mets baseball and helping take them one step from the World Series this year. All right, so he struck out with two out and the bases loaded in the ninth inning of Game 7 of the National League Championship Series. Are Mets fans going to hold that failure against him forever? � The Yankees may be the only team to pay the luxury tax this year. Payroll computations have not been completed, but the Red Sox are expected to come in just under or just over the $136.5 million threshold. Under terms of the expiring agreement, only teams that paid the tax last year were subject to the tax this year. The Yankees and Red Sox were the only teams affected. The Yankees� payroll will finish at about $201 million, creating a tax of $25.8 million. That, in turn, would mean the Yankees� profligate spending will have cost them $96.6 million over the life of the expiring agreement. Just as the Yankees� tax is falling this year from last, it should continue to drop as the tax threshold rises. The threshold in the new agreement will start at $148 million next year and rise to $155 million, $162 million, $170 million and $178 million. � The Yankees� payroll presumably will not rise to keep pace with the increasing thresholds. They won�t stop signing players for lots of money, but it is unlikely that the contracts will match the magnitude of the Alex Rodriguez-Manny Ram�rez-Derek Jeter deals. This may be na�ve, but the Yankees will continue to be the highest-paying team but at numbers below $200 million. Oh yes. As hard as the union tried to scale back the Yankees� tax rate for 2007 and subsequent seasons, the clubs� negotiators wouldn�t go for it. But Steinbrenner should at least send Donald Fehr, the union chief, a thank-you note acknowledging the union effort. Who else does anything nice these days for poor old George?