There can't be any way MLB would let them get away with that. The IRS certainly won't. That should be perfectly legal. Tanaka personally saves on taxes associated with the penthouse, but the Yankees would be on the hook for whatever taxes would be tied to it. So it's not like the IRS is missing out on anything, just getting it from the Yankees and not Tanaka. I would think housing arrangements similar to this aren't all that uncommon in sports. Then it has to count against the cap. There's a reason we don't see NFL and NBA players living in team-owned housing, driving team-owned cars, etc. I don't believe MLB's luxury tax rules are written badly enough to allow it. I meant it being perfectly legal from a tax/IRS standpoint. How MLB or other sports accounts for it I have no clue, but there's probably a way for teams to include stuff like this without having cap implications. Players get stuff like this thrown in their contracts across all sports all the time, stuff like club memberships, suites on the road, airfare for personal use or fam/friends use, cars, etc. Do the value of those things typically count as payment to player and go against a contract value/cap, idk? Like if it's in a guys contract that he gets a $300k Ferrari does that count as additional $300k for his contract or is there a way that teams can give it to him without it being considered against a cap?