Some clarity regarding Red Sox' luxury tax conundrum

Rob Bradford
January 07, 2020 - 3:01 pm
Categories: 

The Red Sox have spent just more than $10 million on free agents at this writing. That went to Martin Perez ($6.5 million), Jose Peraza ($3 million) and Kevin Plawecki ($900,000). Needless to say, that's not the Washington Nationals.

The Twitter account @RedSoxPayroll has updated its Google doc for the (you guessed it) Red Sox payroll and with arbitration estimates it stands at $232.04. That, of course, is not really close to the goal professed by principal owner John Henry, which was to get under the $208 million luxury tax threshold.

There is one thing to consider when eyeing the Red Sox march toward trying to dip below $208 million: The deadline that the mission has to be achieved is not Opening Day, as some have surmised. Technically it isn't until Dec. 2.

Now, for all intent and purpose, the real last chance teams have to take a chunk out of their payrolls is the trade deadline. Here's why ...

Once the trade deadline comes and goes it is very difficult to change a team's payroll projection.

Let's start with the fact that the number the team is working with is based on the annual average value of the contract of a player's overall deal. So if a team is on a two-year deal at salaries of $4 million in 2020 and $6 million in 2021 the AAV is going to be $5 million. That means the number affixed to the 2020 payroll will be $5 million. David Price is making $31 million for the next three years, so obviously, his hit is going to be $31 million.

Why is the trade deadline the cliff for rearranging the payroll number? Because that is the last time before the offseason you can break free from a significant portion of the contract. Also, if a player is traded exactly halfway through the 2020 season each of his two teams would be charged an extra $2.5 million for the '20 campaign.

So while it isn't plausible that the Red Sox roll out this current roster on Opening Day still expecting to get under $208 million, if the number is close there is a chance they could pare off some money after the season starts. If they find themselves slightly under $208 million and are in contention, don't hold your breath that there will be any significant additions.

We know all of this because of Henry's one comment just for the conclusion of the season, the likes of which hadn't previously been uttered publicly by anyone in the organization. It is why everyone with the Red Sox immediately started backtracking by proclaiming there absolutely no mandate to get under $208 million (which was along the lines of the messages we had been presented in previous years).

In fact, the stated luxury tax threshold goals of teams are almost never defined to the extent Henry did, as we were reminded recently by Dodgers team president Stan Kasten when talking to the Los Angeles Times:

"There are metrics in business that are mostly private that we look at, and I’d say we feel successful there," Kasten said.

Or how about Cubs president Theo Epstein earlier in the offseason?

"As an organization, we're not talking about payroll or luxury tax at all," Epstein said after manager David Ross' introductory press conference. "I feel like every time we've been at all specific, or even allowed people to make inferences from things we've said, it just puts us in a hole strategically. We'll see how things shake out at the end of the year."

But thanks Henry -- and the actions to date by Chief Baseball Officer Chaim Bloom -- we do have an idea of how the Red Sox are approaching things. So, we wait ... and wait ... and wait.