How Cano's Extension Could Affect The Luxury Tax

My brain hurts from trying to figure out the crazy language the CBA is written in.

For a while Burch and I have talked about giving Robinson Cano an extension before Opening Day, as we believed that an extension signed before Opening Day of that player's last contracted year would simply be added to his current deal... it wouldn't totally replace it. Which means that Cano's old deal would keep his Average Annual Value (AAV) down a bit. However, I decided to take a closer look at Major League Baseball's new Collective Bargaining Agreement to make sure that's still true. Here is the exact wording...

If the new Uniform Player’s Contract is signed during the championship season, it must begin with the next succeeding championship season and cannot modify the terms of the Uniform Player’s Contract covering the then current championship season. 

The Average Annual Value of such new Contract shall be increased or decreased, whichever is applicable and beginning with the new Contract’s first Contract Year, by the figure arrived at by subtracting the amount of Salary that has been attributed under the rules of this Article XXIII to a Club in previous Contract Years under the Contract that is being replaced from the amount that was actually paid to the Player by a Club in those Contract Years. If a new Contract is signed during a championship season to commence with the next championship season, the calculation called for in this paragraph (3) shall be performed at the end of the then current championship season. Except for the limited circumstances described in this paragraph (3), no Player may be signatory to more than one unexpired Uniform Player’s Contract at any time.

Do you have a headache now too?

If you can understand that right away, then I'm jealous because it took me a while to figure out it. However, feel free to keep reading and I'll break it down for you.

Robbie's current contract is a 6 year deal for $57 million, due to his options for 2012 and 2013 being picked up (it was originally 4 years and $30 million, with a $2 million buyout in 2012 and 2013). That means that currently the AAV of Cano's contract is $9.5 million.

For argument's sake, let's say that Cano's new deal will be for 8 years and $184 million, which would be an AAV of $23 million.

Now, if Cano's new contract were signed after Opening Day of 2013 (the last season under his current contract), then Robinson's AAV would stay at $9.5 million through 2013, and starting in 2014 the new contract of 8 years and $184 million would be it, giving him an AAV of $23 million. But if Cano's new contract was signed before Opening Day of 2013, then one of two things would happen...

1. The extension may only cover 2014-2021, therefore his salary of $15 million for 2013 would help determine the AAV of his contract. If the contract were broken down by years it would look like this... 2008: $3 million, 2009: $6 million, 2010: $9 million, 2011: $10 million, 2012: $14 million (club option), 2013: $15 million (club option), 2014: $23 million, 2015: $23 million, : 2016: $23 million, 2017: $23 million, 2018: $23 million, 2019: $23 million, 2020: $23 million, 2021: $23 million. Which would total $241 million over 14 years, which works out to an AAV of $20.083 million.

2. The extension may start right away, therefore the $15 million he would have been paid in 2013 is thrown out, and when broken down by year this is what Cano would be paid... 2008: $3 million, 2009: $6 million, 2010: $9 million, 2011: $10 million, 2012: $14 million (club option), 2013: $23 million, 2014: $23 million, 2015: $23 million, : 2016: $23 million, 2017: $23 million, 2018: $23 million, 2019: $23 million, 2020: $23 million. Which would be a total of $226 million over 13 years, which works out to an AAV of $20.545 million.

You can see that signing Robbie to an extension before the start of 2013 could not only free up some room in order to get under the Luxury Tax threshold in 2014, but it could also help save the team from paying out more due to the Luxury Tax further down the road. Mind you it's not a ton of money, but getting under the threshold in 2014 could come down to a just few million dollars, making this extension a bit more important.