Giants GM says California taxes make it harder to sign free agents

Coming off an unspectacular offseason in the player-acquisition department, San Francisco Giants GM Brian Sabean identified a culprit you might not expect: the state of California and its taxes.

The Giants failed to re-sign Pablo Sandoval, who left for Boston. They were runners-up for Jon Lester. They were rumored to be interested in James Shields and Yoan Moncada at various times of the winter, but landed neither.

The Giants did sign Nori Aoki, traded for Casey McGehee and brought back pitchers Jake Peavy and Ryan Vogelsong, but that wasn’t exactly a top-flight offseason for the defending World Series champs.

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Sabean explained to the San Francisco Chronicle how he feels like the Giants — even after three World Series wins in five years — have to “overpay” free agents to come to the Giants, because California’s top income rate of 13.3 percent is highest in the nation:

“To entice a free agent to come to San Francisco, we’re almost in an overpay situation, so why get involved in all those battles where you’re not going to be able to go up the totem pole money-wise?” Sabean said.

When asked to elaborate on why the Giants have to overpay, Sabean said, “You’ve got the state of California taxes. (San Francisco) is a long way from where some of these guys live in the offseason. It’s not a hitters’ ballpark, so you can scratch that side of the fence. It takes the right pitcher to consider wanting to come there for a number of different reasons, some of them I just mentioned, even if it’s a pitchers’ ballpark in a pitchers’ division.”

Asked if the high California income tax has been a problem for a while, Sabean said, “To a certain extent. Things now are getting more and more about the signing bonus, more and more about your take-home. Exponentially, when you get involved in some of those numbers, it makes a sizable difference to some.”

Sabean’s right that the bottom-line is very much a factor these days. We saw it with Max Scherzer and his tax-saving, back-loaded contract with the Washington Nationals. Yes, the $210 million figure is big, but that’s never the take-home. And we saw the other side of it, when James Shields signed with the San Diego Padres and experts expected that he’d actually make less than $40 million from his $75 million deal.

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Of course, this isn’t a new problem, nor are the Giants the only team that have to deal with it. The Padres, Los Angeles Angels, Oakland Athletics and Los Angeles Dodgers have to consider taxes too. It certainly hasn’t stopped the Angels from signing high-priced free agents, nor has it precluded the Dodgers from luring stars to L.A. and keeping them there.

As it pertains to the Giants, though, the Sandoval saga shows just what Sabean is talking about. Even though, San Francisco offered Sandoval more money, he opted for Boston. Because of the income-tax rate in Massachusetts, experts estimate that he saved $7.6 million by taking the lesser deal with the Red Sox. 

Of course, if you’re the the Giants, it’s hard to be too upset about this, considering all those diamonds on your fingers.

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Mike Oz is an editor for Big League Stew on Yahoo Sports. Have a tip? Email him at [email protected] or follow him on Twitter! Follow @MikeOz