Sports Star Agents Anticipate Obama Tax Hike

12/08/2008 05:12 am ET | Updated May 25, 2011

Going once, going twice... signed by the major league baseball team willing to pay a signing bonus before December 31st.

That is what we might hear from baseball players' agents after they have considered the real possibility that Barack Obama's intention to hike the tax rate on the wealthiest Americans will impact their clients.

You see, the current minimum yearly salary for a big league player is $400,000. That puts the lowliest of bench warmers and pinch hitters into the top 1% of all wage earners in this great country. Obama campaigned on the promise of restoring the top income tax rate to 39.6%, the applicable level during the Clinton administration.

That minimum salary figure equals the increase in yearly taxes that will be paid by a major leaguer who makes $10,000,000 a year if the Obama tax plan becomes law. Incredible. So what's a super-agent to do in this first week of activity in the free agent market?

He has to devise a strategy to get major league clubs to pay some of a player's 2009 compensation prior to the end of 2008. The only way that can happen is in the form of a signing bonus and a quick negotation. You know how some clubs dilly dally around before getting down to business with the players on their clubs that file for free agency? Sometimes it's just to see where the market has valued a player. Sometimes it's because they have no clear plan on what to do. This might jump start that process.

It certainly will be central to the discussions held by Scott Boras, who represents two of the most prized free agents this year: Mark Teixeira and Manny Ramirez. Both seek to sign contracts that pay them more than $100,000,000 during the course of a 5-10 year contract.

During Boras' 2007 negotiations with the Yankees for the services of Alex Rodriguez, I had described Boras' role as akin to an investment banker meeting with a company that wanted to acquire a smaller company. He had a briefing book that stressed return on investment and the increase in value to the acquiring company of having his client in their stable.

This year I think he'll try to convince the clubs that it may be in their best interest as well as a tax advantage for them to characterize salary as a bonus. It's all in the accounting process don't you know?