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Derek Jeter, generous fan Christian Lopez, and the cheap-o Yankees

Following the last post, here are three scenarios for the possible tax consequences to Christian Lopez, the Yankees fan who caught Derek Jeter’s 3000th-hit home-run ball and gave it back to the Yankees. The Yankees gave Lopez a pile of swag, including signed jerseys, and tickets for the rest of the season.

Scenario #1: Lopez owes tax on the full face value of the tickets.

This is the simplest calculation and the one that The New York Times used in its story . The four “Legends” seats tickets the Yankees gave Lopez for a game last week sell for up to $1358.90 each. They also gave him four “Champions Suite” seats for every remaining game, which could be bought through the Yankees website for a total of somewhere between $44,000 and $75,000, depending on exact location. So Lopez under this calculation could owe tax on somewhere between $50,000 and $80,000 of income.

Scenario #2: But, in the real world, Yankee Stadium tickets aren’t so precious.

Anyone who has seen a Yankees game on television in the past two years has probably also seen an embarrassingly vast sea of blue behind home plate. These are the empty overpriced seats that the Yankees first tried selling for up to $2,625 per game (that is not a typo). Those tickets have been Bronx Bombs with fans who think that any seat selling for $1,000 or more should at least have a flight attendant and transatlantic movies.

What are these seats really worth in the marketplace? Well, you can buy those $1,358.90 Legend tickets in Suite 25 directly from the Yankees’ website to see New York play the Seattle Mariners on Monday, July 25. Or you could get them on Stubhub at more than 60% off, where seats in the same section were being offered as of July 12 for $500 apiece. Prices for less desirable games tend to drop further as game day approaches.

Then there are the four “Champions Suite” tickets the Yankees gave Lopez for every remaining game. These are less desirable than the Legends seats. That’s right, the Yankees cheaped out and didn’t give him tickets in the best sections THAT THEY HADN’T SOLD ANYWAY. Again, a quick check on StubHub shows tickets in the same sections selling for anywhere from 25% to 60% below face value.

So the actual market value of all these tickets could be closer to $25,000 than $80,000, depending on just how good the seats were that the Yankees parted with.

This is a gray area, just as it is for game show contestants. People win a trip to an all-inclusive Jamaican resort, or a washer-drier combo–they have to pay tax on the value of that prize. It’s pretty easy to figure out what an appliance is worth. But there can be a significant difference between the “value” of a trip as quoted on a game show and what consumers are actually paying for the same trip on discounters like Expedia. These are the kinds of issues that keep tax pros like me fully employed.

Scenario #3: Lopez doesn’t owe anything.

It’s possible! Columbia University law professor Michael J. Graetz, who helped advise the IRS on the tax treatment of Mark McGuire’s 70th home run ball (sold at auction for $3 million), told the Times that it might be able to make the case that the Yankees gave Lopez everything out of, “detached and distinterested generosity,” and without any business motive. In that case, Lopez might have received tax-free gifts, and would owe nothing.

The New York Yankees. Generous to their fans. Why do I think that one’s not gonna fly?

A potentially costly catch

Derek Jeter’s slog to 3,000 hits mercifully ends, and with a home run no less. A fan, Christian Lopez, is in the stands for his 23rd birthday and catches the ball. Fan agrees to give the ball back to Jeter. Yankee management buries fan in a pile of swag, including signed jerseys, bats, and premium… Continue Reading