By Scott Kozlowski aka scottkoz20

Cliff Lee reportedly has signed a 5-year, $124 Million deal in order to return to the Philadelphia Phillies. In signing, he spurred offers from the New York Yankees and Texas Rangers in order to go back to the City of Brotherly Love. Reports had the Yankees offer at 6 years for $138 Million with an optional 7th year for $16 Million, making the deal worth nearly $154 million for the duration of the contract. Reportedly, Lee left $30 million on the table; and has been hailed by some in the media as a player that did not take the deal with the most money. However, is this truly the case?

As a resident of the State of New York, people leave this state on a daily basis because the tax rate is too high, especially towards the wealthy. An example of this trend is B. Thomas Golisano, the owner of the Buffalo Sabres in the National Hockey League. Last year, he made Florida is permanent residence in part because of the taxes of New York State. In addition, the City of New York also has an income tax that Lee would have been responsible for paying.

Therefore, I wanted to look at what Cliff Lee potentially is going to take home in Philadelphia compared to what he could have made in New York. For the basis of this comparison, I will use the reported deal in Philadelphia and the reported offer in New York. Additionally, I will assume that he is filing his taxes as married with 4 deductions, 1 for each member of his family.

His deal in Philadelphia will earn him an average of $24.8 Million per year for the 5 years of the contract. This is an average of nearly $477,000 per week before taxes. After taxes, his net pay would roughly be $282,000 per week. This represents $14.6 Million per year or over $73 Million over the term of the contract. Of his deductions, over $14,000 is going to the State of Pennsylvania in state taxes.

Now let us look at the reported offer from the Yankees. This deal would have paid him $23 Million for the first 6 years of the contract or an average of $442,000 per week before taxes. After taxes, his net pay would roughly be $211,000 per week; representing $10.9 Million per year or over $65 Million over the first 6 years of this contract. He would have been paying over $43,000 in just New York state taxes. This would not include the potential $21,000 in City of New York taxes that would need to be paid.

Just to make sure that all scenarios are covered, the offer with the Rangers would have reportedly paid him the same as the Yankees before taxes, but he would save the tax money as Texas has no state income tax. However, he would have earned about $300,000 less per year with Rangers.

In my opinion, what Cliff Lee did was take a deal with less money gross and term to sign with the Phillies. However, Lee’s agent, Darek Braunecker, did was earn his client from $1.5 to $8 Million more while playing 1 less season Therefore, the myth that he took less money is just that, a myth. Lee ended up taking the best deal financially for him and his family and there is nothing wrong with this.