Poll: Circumventing The Luxury Tax

Rumors of a long-term contract extension between the Red Sox and Adrian Gonzalez were made a reality yesterday, when the first baseman agreed to a seven-year, $154MM deal. While Gonzalez’s surgically repaired shoulder was a legitimate concern, there’s some belief that Boston waiting until after Opening Day to announce the deal to avoid a competitive balance (a.k.a. luxury) tax penalty. The same was true of Josh Beckett‘s extension last year.

The Red Sox aren’t breaking the rules here, in fact they deserve credit for finding a creative way to save money. But as Jon Paul Morosi of FOX Sports mentioned yesterday, “the spirit of the [luxury tax] isn’t being honored here.” He wonders if the upcoming Collective Bargaining Agreement will push the deadline back to avoid such shenanigans. Between the Gonzalez and Clay Buchholz extension, the Sox have saved upwards of $10MM against the tax this year by announcing the deals after the season started.

Of course the luxury tax only impacts a handful of teams, so altering a rule that effects only a small number of clubs may be unfair. As Cork Gaines showed at Business Insider recently, the Yankees have been paying the tax every year since it’s been in place, with the Red Sox, Angels, and Tigers all contributing at some point as well. The luxury tax is based on the annual average value of the contract, and the 25% of the money goes to the “industry growth fund” while the remaining 75% is used to fund player benefits.


Full Story | 54 Comments | Categories: MLBTR Polls

54 Responses to Poll: Circumventing The Luxury Tax Leave a Reply

  1. Fangaffes 4 years ago

    I don’t see what difference changing the deadline would make. Teams would announce deals after the deadline no matter when it is.

    • BJ Fledgling 4 years ago

      Agreed. Any time a line is drawn, somebody will inherently find themselves on the other side of it. Super 2’s, arbitration, luxury tax: there is a system there to be gamed, and congratulations to the Red Sox for figuring it out.

      • nhsox 4 years ago

        Building off of this, who wouldn’t try to save money on their taxes if they knew of legal ways to do so?

        The “spirit of the luxury tax” debate is pretty senseless. The system has little honor in the first place because the rules are not difficult to circumvent. That’s not the Red Sox fault, the luxury tax is just a wishy-washy rule that never had the power to carry a whole lot of clout.

  2. grant77 4 years ago

    It might be best to calculate it after the season, that way you get all of the rentals included as well.

    • TapDancingTeddy 4 years ago

      Exactly. Whatever you pay in payroll is what gets taxed. Announce stuff whenever you like – pay the same.

  3. Martin M. 4 years ago

    The Red Sox were smart, but is shouldn´t be that easy to break the rules.

    • RedSoxDynasty 4 years ago

      What are these “Broken Rules” you speak about?

      • JacksTigers 4 years ago

        They didn’t break the rules, but the did con the system.

    • bust0ff 4 years ago

      If this is breaking the rules then I consider any team who does not reinvest revenue sharing money back into players to be breaking the rules too. How come no poll for that?

  4. The Red Sox did absolutely nothing wrong, they followed the rules precisely. They took a risk, a small one but a risk still that by waiting the situation could have changed and AGon could have decided against signing with them. If MLB starts trying to be the morality police they’re going to find that there’s no logical place to stop. It’s a slippery slope.

    • start_wearing_purple
      start_wearing_purple 4 years ago

      I think you bring up a great point. if MLB wants to enforce the “spirit of rules” then there’s going to have to be a lot of looking inward.

      • Right. When MLB stepped in to force the Marlins to start spending they were actually enforcing the rules. If they stepped in to force the Sox to sign the contract earlier they wouldn’t have been enforcing a rule, they would have been making a business decision for a team they don’t own. That’s where the slope begins.

    • bonestock94 4 years ago

      I guess they took a risk if you believe they didn’t have a deal in place shortly following the trade.

      • MaineSox 4 years ago

        Even if they had a deal in principal it wasn’t a signed and “done deal” so he could have backed out at any point, which was the point that pageian was making.

        • From what I can tell AGon seems to be a stand up guy, if they had a tacit agreement in place then it’s not much of a risk. Still, things can change, there was always a chance that they’d given up their young players for someone who wouldn’t be with the team for more than a year. You never know until the paperwork is done.

  5. nebelski 4 years ago

    I don’t really understand what the big deal is. Trust me, I am not a fan of New York or Boston or any other big market teams… My teams are Pittsburgh, Baltimore, Colorado, and Tampa Bay. The Luxury Tax, even in the case of Boston “circumventing” the tax, is working! They are being fiscally responsible enough to not ridiculously inflate their payroll. They are making the decision to let some of their players go so that they can sign a new player(s) instead of buying up larger portions of the market in an attempt to become virtually invincible. This is evidence that the Luxury Tax is working… it’s doing what it was intended to do.

    • JTT11 4 years ago

      So your saying I should trust your opinion because you are not a fan of Boston or NY? so by implication opinions of Boston and NY fans on the issues of Lux Tax are untrustworthy?

      Do you even have any idea what the Lux Tax is intended to do?

      Who is the “They” you refer to in line 3? Are you saying the Yankees and Sox arent fiscally responsible? Last i checked yankees were worth a 1.6 billion and Sox 870 mil. seems pretty damn fiscally responsible to get a 4x return on your investment into player contracts.

      who are the “they” in line 4? Boston and Yanks didnt let anyone “go” so they could sign new players. TB didnt let crawford “go” so they could sign someone else.

      you presented no evidence that you know what the Lux Tax is, let alone that the Lux Tax system is working.

  6. Ian_Smell 4 years ago

    I think I know someone who’s trying to cirsumvrent the law…

  7. theredyankee 4 years ago

    The Red Sox aren’t geniuses for figuring this out, all you have to do is look at the calendar. However, what is being missed is that essentially what they are doing is mortgaging the future. While sure the MLB luxury tax isn’t the same as the NFL hard cap, but still all they are doing is transferring future liabilities. NFL teams that do this by giving long terms deals that will never be played out with huge signing bonus allowing teams to spend future cap money now, eventually end up having to blow it all up and start over, which is fine, as long as you get results during your brief window of opportunity. What the Red Sox are doing, in order to save a few bucks now, are year after year boxing themselves in down the road and at some point, in 3, 4, or 5 years, they will be in decline, and still be maxed out, and have the choice of having to pay the ever escalating Yankee tax in order to compete, which is what they are avoiding now by doing this, or end up paying a bloated payroll for a non competitive club in decline because they cannot retool, or completely blowing it up. There really is no such thing a a free lunch, one way or another, at one time or another, you always pay. The thing is the Red Sox had a very patient organizational approach under their new regime, that was until the Yankees won it all, and then they threw that out the window, with Beckett and Lackey last year, and Gonzalez and Crawford this year, all of which are bad deals, with Lackey and Crawford being very bad deals.

    • RedSoxDynasty 4 years ago

      They won’t pay later cuz they run a smart ship in Boston and have money coming off the books every year(58 mil after 2011) and never cross the luxury tax by more than a couple of million dollars. Also every team that signs free agents overpays and makes mistakes like Bay, Werth, ARod, Jeter,Burnett, KRod, Perez, Zito, Rowand, etc so Boston is one of many making mistakes although AGonz looks like a steal for what he’s likely to produce!

      • theredyankee 4 years ago

        The Red Sox are one of the best run franchises in baseball, no doubt, but what they have done the past two years have been somewhat reactionary, and that is the wrong approach. Theo was right about building a bridge, and if they would have just waited one more year, they were still a playoff contender, instead of tying up all that money into Lackey and Beckett last year, and then compounding it by signing Crawford, which was pointless, because going forward Ellsburry is more the player Crawford was in Tampa than Crawford will be going forward, and Ellsburry is much cheaper, and the Red Sox are going to have to end up eating money on the back of the 7 year deal, for sure. If they would have just waited one more year, the Red Sox would have been in the catbird seat, capwise. A big market team with big contracts expiring every year for the next 3 years, they would have been in position to reload while contending and have payroll flexibility. However, after the Yankees won last year, they threw their long term plan out the window, and what they have done over the past two years is just tie themselves in knots and restrict their ability to make moves, unless that is they choose to pay the graduated and escalating luxury tax rates the only the Yankees do, which the Red Sox will not. Remember, there are actually TWO luxury tax rates, the simple one that everyone else pays when you go over one season, and then the graduated and escalating one that the Yankees pay, which would apply to anyone else who goes over the cap for two consecutive years and then stays over the cap. It is to avoid this second and more punitive rate which is why the Red Sox are playing the games that they are with the cap in the first place. So for example, they have 6 contracts expiring after the season (Tek, Papi, Pap, Cameron, Drew, and Scutero) but what you are going to see is their reluctance if not inability to replace these guys with high profile guys, because they have tied up future money, in terms of the luxury tax, which is really a soft cap. So the Red Sox really still don’t have a catcher, Salty IS NOT the answer, and they have nobody in AAA or AA. Also, when Drew expires after the season, they aren’t going to be able to bring in a big ticket guy, not unless they really want to mortgage the future and virtually assure they have to blow it all up later, which they may do, and if they win a title it will be worth it. However, another hitter isn’t going to put them over the top, because the problem is with their pitching staff, and for all the talk of how great their pitching is, it is just that, and talk is cheap. Really what the Red Sox have is a #2 guy in the #1 spot in Lester, he is an outstanding pitcher, but he is only at best a 1A kind of guy, NOT an ACE, they got a young relatively unproven #3 guy at the #2 spot in Buccholz, which is fine, he’s a keeper, and this would be fine if they had balance, but their back end is horrible. Lackey and Dice K are absolute garbage, and that ISN’T GOING TO CHANGE, and Beckett still has flashes of brilliance, but he can’t string a run together like he used to, he can give you what he gave against the Yankees once in awhile but give you allot of 6 inning 4-5 run starts too. The thing is, they have all that money tied up into that rotation that was supposed to carry them, and they clearly don’t have what they thought they had, and they have absolutely no flexibility to change it. I’ll close by saying it again, there is no such thing as a free lunch, one way or another, at one time or another, you always pay.

        • Redbirds16 4 years ago

          That’s quite the tome you’ve written there. And I’m sure you have some well supported, wonderful points. But it’s rather difficult to read if you don’t separate your thoughts into paragraphs. Not to be the ‘literary police’ or anything, but it’d be nice not to struggle while reading your opinion.

        • notsureifsrs 4 years ago

          imagine reading this

          • MaineSox 4 years ago

            I did, and the content was worse than the structure.

        • MaineSox 4 years ago

          So let me see if I’ve got this straight. Lester is not an Ace he’s a #2, Buchholz is a #3, Lackey and Dice-K are “absolute garbage”, Scutaro Ortiz Pap and Drew are leaving and they can’t replace them, Salty isn’t the answer and they can’t replace him either, and Beckett can pitch well but he wont. Is that about right?

        • RedSoxDynasty 4 years ago

          They’ve got Bard to replace Paps, Lowrie and Iglesias to replace Scutaro, and Kalish to replace Drew! Salty needs to be given a fair chance as well! The Sox know these things and spend accordingly knowing they have internal solutions! And if Lester isn’t an ace than name 15 pitchers who are better cuz there aren’t and only CC is a better lefty! And outside if Philly,I’ll take a 1,2,3 of Lester, Buchholz and Beckett over anyone. I do agree about DiceK and Lackey being a huge drop off however and I don’t know, outside of them pitching better, the Sox can solve this problem without taking a huge financial hit!

        • $1519287 4 years ago

          please use paragraphs

      • theredyankee 4 years ago

        The Red Sox are one of the best run franchises in baseball, no doubt, but what they have done the past two years have been somewhat reactionary, and that is the wrong approach.

        Theo was right about building a bridge, and if they would have just waited one more year, they were still a playoff contender, instead of tying up all that money into Lackey and Beckett last year, and then compounding it by signing Crawford, which was pointless, because going forward Ellsburry is more the player Crawford was in Tampa than Crawford will be going forward, and Ellsburry is much cheaper, and the Red Sox are going to have to end up eating money on the back of the 7 year deal, for sure.

        If they would have just waited one more year, the Red Sox would have been in the catbird seat, capwise. A big market team with big contracts expiring every year for the next 3 years, they would have been in position to reload while contending and have payroll flexibility. However, after the Yankees won last year, they threw their long term plan out the window, and what they have done over the past two years is just tie themselves in knots and restrict their ability to make moves, unless that is they choose to pay the graduated and escalating luxury tax rates the only the Yankees do, which the Red Sox will not. Remember, there are actually TWO luxury tax rates, the simple one that everyone else pays when you go over one season, and then the graduated and escalating one that the Yankees pay, which would apply to anyone else who goes over the cap for two consecutive years and then stays over the cap. It is to avoid this second and more punitive rate which is why the Red Sox are playing the games that they are with the cap in the first place. So for example, they have 6 contracts expiring after the season (Tek, Papi, Pap, Cameron, Drew, and Scutero) but what you are going to see is their reluctance if not inability to replace these guys with high profile guys, because they have tied up future money, in terms of the luxury tax, which is really a soft cap.

        So the Red Sox really still don’t have a catcher, Salty IS NOT the answer, and they have nobody in AAA or AA. Also, when Drew expires after the season, they aren’t going to be able to bring in a big ticket guy, not unless they really want to mortgage the future and virtually assure they have to blow it all up later, which they may do, and if they win a title it will be worth it. However, another hitter isn’t going to put them over the top, because the problem is with their pitching staff, and for all the talk of how great their pitching is, it is just that, and talk is cheap. Really what the Red Sox have is a #2 guy in the #1 spot in Lester, he is an outstanding pitcher, but he is only at best a 1A kind of guy, NOT an ACE, they got a young relatively unproven #3 guy at the #2 spot in Buccholz, which is fine, he’s a keeper, and this would be fine if they had balance, but their back end is horrible. Lackey and Dice K are absolute garbage, and that ISN’T GOING TO CHANGE, and Beckett still has flashes of brilliance, but he can’t string a run together like he used to, he can give you what he gave against the Yankees once in awhile but give you allot of 6 inning 4-5 run starts too.

        The thing is, they have all that money tied up into that rotation that was supposed to carry them, and they clearly don’t have what they thought they had, and they have absolutely no flexibility to change it. I’ll close by saying it again, there is no such thing as a free lunch, one way or another, at one time or another, you always pay.

    • rockfordone 4 years ago

      I agree with on the bad deals. u forgot DiseK.

      • notsureifsrs 4 years ago

        they made more money from the matsuzaka signing than they spent on it

    • Redbirds16 4 years ago

      I’d agree, except the Sawks seem to draft really well. So they’ve also got a nice influx of cheap talent to support their big FA splashes. Undoubtedly, they’re one of the best franchises in the business. I doubt they’ll be the Pirates anytime soon.

      That said, they lost again last night. The unrealized potential on the current roster is getting annoying.

      That said, I expect them to right the ship tomorrow. And if not tomorrow, the day after that, and if not… etc…

      • theredyankee 4 years ago

        Sorry, I just thought it would automatically throw it all together like on most sites, so I didn’t bother.

    • MaineSox 4 years ago

      You might think so, but you’d be wrong. The Red Sox mix their free agent signings with good, cheap, internal talent well, as well as staggering their bigger deals so that they always have money coming off the books as well as positions to fill with new talent. And really even if you have “overpaid” players in two positions and two starting spots, you still have 7 other positions (including DH) to fill with talent and three other spots in the starting rotation.

      Also I don’t know how you can call any of those deals bad. Not only is it too early to be certain about anything, but they all look like reasonable deals (or even really good in Gonzalez’s case) for the talent of the players with the possible exception of Crawford if you don’t put much value in defense.

      • theredyankee 4 years ago

        Your right about most of what you say, and the Sox have developed players in recent past, but after Iglesias, who will play every day in 2012, everyone else that we’ve seen up for a cup of coffee is nothing to write home about, and they don’t have a catcher in their system, and Salty isn’t the answer.

        I think that either Kalish or Reddick can play on the top level once Drew is gone, if you get a righty to platoon with one of them, that’s not going to put you over the top, but sure it will hold down the fort for now.

        Doubrant can be the #5 man if they ever can get rid of Dice K, but pitching wise the only help they possibly have down on the farm is Michael Bowden, IF he pans out, and Tazawaa IF he makes it back from surgery. The problem is even if all 3 pan out, you only have 5 spots, and the first 4 are tied up long term.

        No doubt what the Red Sox did, they overreacted when the Yankees won two years ago, and then when they still didn’t make the playoffs last year despite their moves, they doubled down this past offseason, and for them it is win now or bust.

        The problem is, they aren’t winning now, not with that pitching.

        Another way of looking at it is they got Beltre last year off the discount rack late in the offseason and cashed in big. Remember, last year the narrative was that the pitching and defense was going to carry them, compensating for their lack of offense. Now all they have done is trade the offensive numbers of V-Mart and Beltre for Gonzalez and Crawford, which statistically is only going to be a marginal upgrade, but to make that marginal upgrade they have now tied up virtually all of their future payroll.

        Worrying about the future when it happens, is alright if you can win it now, but it has already been demonstrated that this team cannot win it all now.

        They probably don’t make the playoffs, and even if they do there is just no way they are winning 3 rounds. This team is only going as far as their pitching can carry them, and considering Dice K and Lackey, that means they are going nowhere.

        What do the Red Sox do if and when they finish 85-77, out of the playoffs again?

        Who are they going to bring in to make this team a contender in 2012?

        How can they bring in anyone even if that one guy is out there.

        Face the facts, by doing what they have done over the past two offseasons, the Red Sox have created some big problems for themselves which cannot be addressed quickly or easily.

        What the Red Sox have done is become the Yankees of the late 80s, where every year they thought they were one player away, when they weren’t, and that mentality just compounded their problems until they had to blow it up.

        Look for the Stump Merrill/Kevin Maas era, coming to Fenway Park some time during the 2013 season.

        • MaineSox 4 years ago

          Where do I even start? They do have catchers in the system, ones that could come up and play at least as well as Salty right now. The fact that they stay with Salty is out of some strange love affair and hope that he turns it around, not out of necessity or because they don’t have any decent catchers.

          Kalish looks like a 5 tool athlete, none of them superstar level but all of them above average.

          Doubront could be the #5 and do pretty well, and Dice-K will be gone after ’12. They also have Ranaudo, Pimentel, Britton, Workman et al who have the potential for varying levels of greatness.

          Gonzalez and Crawford are a marginal upgrade over Beltre and V-Mart from last year, the fallacy is assuming that it is a marginal upgrade from what Beltre and V-Mart would do this year and going forward, and it is certainly a major upgrade from what they would be in the future.

          They have 50Mil coming off of the books after this year and even with the addition of Gonzalez’s extension they will be 30Mil under this years payroll, so they can add another major player without even reaching their current payroll.

          Even without the money they have coming off the books they have the players they need to compete already in the system, either at the big league level or in the minors. As you already said they have Iglesias to play Short; they also have Lowrie, Middlebrooks, Tejeda, Navarro etc. for infielders and Brentz, Hazelbaker, Jacobs, Reddick, Linares for outfielders who are all either ready now or will be ready when spots open for them.

          They probably don’t make the playoffs? Seriously? After two weeks they are out of contention? You know how ridiculous that is so I don’t even need to say anything about that.

          Lackey was “absolute garbage” to the tune of 4.0 WAR last year. Lester, since ’09, has the third lowest xFIP in baseball, behind only Doc and Lincecum. Buchholz had an unsustainable ERA last year but even if he regresses a full run he would still be in line with guys like Lester, Verlander, and Lincecum and he also had an unsustainably low K/9 last year. Beckett before his injured year last year was one of the best pitchers in the game from ’07-’09 with the second lowest xFIP, the third best K/BB, and the 6th best WAR in all of baseball. Dice-K makes more than most 5th starters, and is frustrating to watch, but he is also better than most teams’ 5th starter.

          You seem to want things to fall apart for them, but they know what they are doing. They only have big contracts at two positions, and they are paying the money to two players who are among the best at their respective positions and are both under 30. They have all 5 of their rotation locked up through ’12 and four locked up through ’14, but despite what you claim if you actually look at the pitchers’ track records they are not locked in to terrible pitchers. They also have the money to bring in any player/players that they end up needing, as well as players in the system to fill in any position they need for cheap money, and fill in at a high level.

          • theredyankee 4 years ago

            Anybody could come up and play as well as Salty is right now, even I could do that, but they need more than that, and they don’t have anyone at catcher who is really considered a prospect.

            I don’t know about Kalish being a 5 tool guy, but he is a bone fide major leaguer, and might even be more than that, how much more we will see. Personally I like Riddick more, I really think he has real potential to be a 5 tool guy, but I don’t know what happened to him after the 09 season, because he looked good when he first came up, but there are just allot of little things that tell me that something happened off the field, whether it be a character issue or just being difficult in the clubhouse, but since spring training last year, it seems like the organization has no patience for him. It might just be as simple as Tito just thinks the kid is a jerk, but whatever it is, his confidence is shot and every time he has been back, Tito gives him just a little bit of PT, and then a quick hook. I actually think Reddick is the better player, but they can only keep one of them, they are both the same kind of player, and I think they will keep Kalish, and I think Reddick can and will flourish with a non-contender.

            Doubrant isn’t that hard a thrower, but he is a pitcher, and he is a lefty who will give you innings, and you could put him on the back end of the rotation for at least a couple of years. Pitchingwise, of all the other guys you mentioned only Pimentel is on the 40 man roster, so all of those other guys are nothing more than suspects, which if they pan out are no less than 2 years away, probably more, and they will be lucky if 1 of those 4 guys you mentioned pan out.

            Regarding the V-mart/Beltre AGon/CC comparison, yes you could make the argument that there are all kinds of ways to project things, sure they caught lightning in a bottle with Beltre, and it came cheap for them, but my point was that still he had great numbers last year, and last year they didn’t make the playoffs, and still for all the money they spent they aren’t going to get a great deal more production, not unless you think AGon is going to hit .340 and with 50HRs, so what is going to put them over the top?

            Regarding Tek, Papi, Pap, Scutero, Cameron and Drew coming off the books, they are at 160M right now, and like you mentioned they have to take the extensions they have given to AGon and Buccholz out into account, then they really have only 20M coming off the books. Subtracting the 50M but then adding 22M per for AGon and 7.5M for Buccholz gets them to approximately 140M and the cap this year was 155M, and the Red Sox still need at least 1 catcher, maybe 2, and at least one hitter to replace the lost bats of Drew and Papi, and assuming the other bullpen guys move up one spot and Pap leaves, then you need a 7th inning guy, and probably also a lefty specialist. That’s allot of spots to fill with not allot of money.

            One of the points I was trying to make was how there are really 2 soft caps, one is a simple cap for teams that go over for 1 season, and the other one a progressive cap for teams that go over and stay over. So the Red Sox are right against the cap for next year already, and they are going to want to get under the number, which means they can’t add anyone, not any big ticket guys. They were just barely over last year, remember the Commissioners office made an announcement of such in August after the Red Sox made their in season moves, so that is season 1, and this is season 2 over the cap. So they really have to get under, because even if they just go over just a little next year, while the tax wouldn’t be that high for that season, they are over the cap for the 3rd straight year, with the tax becoming more progressive if you stay over it 3 or more years.

            So other than some minor moves on the back end of the 25 man roster, the team you have now is the team you have next year. Once they get back under, they can make moves going forward paying the simple tax, but if they don’t get back under, they will have to pay the progressive tax, and in fact will have to pay the most progressive rate because they will be over the cap for the 3rd year, not just 2 years.

            That is why you can count on the Red Sox substantively standing pat, not only this year, but also NEXT YEAR, because they have always gotten back under. That was the whole point of announcing these deals AFTER The season started in the first place.

            The problem with that, is that they weren’t a playoff team last year, and their not one this year either, so how are they going to be better next year, when they don’t have any ability to bring anyone in?

            All the Red Sox have done by deferring future liabilities is box themselves in down the road.

            Like I said, there is no free lunch. One way or another, at one time or another, you always pay.

          • MaineSox 4 years ago

            They are a better team this year because they will get healthy years from Youkilis, Pedroia, Ellsbury, Buchholz, and Beckett, not just because they got Gonzalez and Crawford to replace Beltre and V-Mart.

            You keep saying that they aren’t a playoff team, but that is simply ridiculous. They were a playoff team last year before all of the injuries and they are a playoff team this year. They aren’t going to play at this level for the rest of the year, to imply that this is the quality of this club is purely wrong. They don’t need to be a better team next year to be a playoff team next year either.

            How can you say that they will certainly stand pat? They could go out and sign Fielder to DH for them next year and still have their payroll under this years payroll. Unless you know their internal talks, and they have said that they are lowering their payroll (which would be contradictory to what they have said publicly). You are just stating opinion and theory as fact.

            They also don’t need to find players from outside to replace players they already have, so the money argument is pointless anyways. We already went over this, they have Kalish/Reddick for RF, Iglesias/Lowrie for SS, if Salty doesn’t come around they have Lavarnway who hits like a 1st baseman, but his defense is weak, and they have Federowicz whose defense would be well above average right now, and his offense isn’t terrible either. You don’t need an all-star catcher to be a playoff team anyway; most teams’ catcher is their #9 hitter, so the fact that the Sox’s catcher is their #9 isn’t going to keep them out of the playoffs.

  8. $7562574 4 years ago

    forget about luxury tax. just increase revenue sharing by 5 times.

  9. “cirsumventing”

  10. Redbirds16 4 years ago

    In my opinion, I think the teams really ‘cheating’ the system are the ones who don’t spend their luxury tax income on acquiring talent. Although teams have gotten better at this of late now that there’s a bit more coverage on it, it’s still pretty laughable that teams who receive these luxury tax funds spend so little on actually trying to compete.

    Bad sportsmanship, good business seems to be the motto of some of the perennial bottom-dwellers.

    The deadline can be fixed (the end of the season makes sense to me), but that’s not the largest issue that needs to be addressed.

    • Agreed. The teams who are really circumventing the spirit of the rule are the ones who aren’t spending what they receive on what they should be spending it on. You can’t buy cigarettes with food stamps.

      Even moving the deadline back to the end of the season could be gotten around but it would be harder. It would be a big risk to both the player and team. In this case, what if AGon had a career ending injury? For the team, what if the free agent market shaped up so that Pujols and Fielder weren’t going to hit the market? AGon could set his own price. But still, it could be done.

    • nictonjr 4 years ago

      Luxury tax income doesn’t go to teams. That is revenue sharing…

      • East Coast Bias 4 years ago

        This is a huge point that most people don’t know. Luxury tax is for the “growth of baseball” so mlb can spend it as they see fit. It also covers players’ benefits.

        Revenue sharing is a completely different thing, which helps small market teams. I think they should get rid of revenue sharing, but keep the lux tax.

    • theredyankee 4 years ago

      Totally. Too many teams just take the luxury tax money and just bank it instead of putting it into payroll, because for them that is actually the best way to maximize profits.

      One opinion that I have which I have not seen elsewhere is that I believe the Wildcard was actually the worst thing for competitive balance.

      Sure it lets more mediocre teams hang in the race so they can sell some tickets later in the season, but what it also does is reduces the number of teams that can actually compete for a championship.

      The Yankees and the Red Sox just use the wildcard to hedge their bets when setting their annual payroll, and everyone else who can has to spend to keep up. The Yankees and Red Sox pretty much know that if they don’t win the division, they can count on in all likelihood winning the wildcard. Hasn’t always happened that way, but it usually has, and it has happened enough for both teams to factor the wildcard as a fallback, and they consider their revenues, set their payroll, and so long as they make the post season, they make a windfall profit.

      If they didn’t have the ability to use the wildcard as a hedge, what they would have to do is cut their payroll accordingly, because if making the playoffs and getting that post season revenue is an all or nothing proposition, you either win the division or your out, there would be no way they would have the payrolls that they do, because the loser would then lose tens of millions.

      This would then have a residual effect and allow everyone to scale things back so smaller markets can actually compete for a championship, not just compete for a playoff spot.

      All you have to do is expand to add 2 more teams after the next CBA, realign again, and then have 2 leagues with four divisions each, playing an unbalanced schedule. The whole point of the wildcard was so that all these teams wouldn’t be out of it before the summer, but when you have only 4 teams in a division, that would be far less pervasive.

      • NL_East_Rivalry 4 years ago

        What if you cut two teams, have 7 divisions and 1 wild card or 1 bye for the best team? So many things to be thrown around. Few places in the South you could shift around like NO or Virginia/Carolina. MidWest has a million places to add teams. On cutting teams, who would you cut? Everyone says TB and A’s, but A’s still have money and wont cut and TB still wins.

  11. bigpupp 4 years ago

    I think a lot of people are confused with what exactly circumventing the luxury tax really is…

    tacking on 5 extra player options at league minimum knowing that player will void them just to lower the AAV is circumventing the luxury tax.

    Signing an extension at a later date is not

  12. Great article!!

  13. SierraM363 4 years ago

    I bet the Yankees would’ve done the same thing too if they weren’t already so far over the cap.

  14. johnsilver 4 years ago

    1) Get rid of the Luxury tax period.

    2) Get rid of the welfare teams that need it to survive.

    3) Baseball is back to the way it was a couple decades ago and without Selig interfering after this year so maybe a chance for #1 at least.

  15. It really doesn’t matter. Creative teams will find another creative way around the rules. I’d prefer that MLB spend it’s resources finding a way to realign the divisions evenly and/or help the A’s get into a new south bay park.

  16. bjsguess 4 years ago

    The rule needs to be changed. No question that it’s far to easy to manipulate.

    Create a rule that says your opening day payroll and your end of year payroll (who was on the books as of Sept 10th as an example) will be looked at. Whichever is higher is what you pay in luxury taxes. If you acquire big name guys or sign them to extensions after opening day that gets picked up.

    The tax should be strict if it’s to achieve it’s stated goal. Personally, I’m not a fan of the tax (as it has hit my team before) but if it’s on the books at least enforce it by reducing loopholes. For what it’s worth, I’m a much bigger fan of a floor and ceiling cap. Guarantee that teams have to spend $50m/year and no team can spend more than $140m. Move the cap up annually to adjust for inflation/increased team revenues.

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