Payroll concerns have been the prominent storyline of the Red Sox offseason, especially given the team’s relative lack of major moves. There has been much more attention paid to the club’s apparent attempts to trade such high-salaried players as David Price, Nathan Eovaldi, Jackie Bradley Jr., or perhaps even Mookie Betts in order to avoid surpassing the Competitive Balance Tax threshold for the third consecutive season, based on comments made by Red Sox principal owner John Henry last September.
During a season wrap-up press conference, Henry said “This year we need to be under the CBT. That is something we’ve known for more than a year now.” This statement was already partially walked back by team CEO Sam Kennedy a few days later, as Kennedy said that avoiding a luxury tax penalty was “goal but not a mandate” for the coming season.
Henry further discussed the team’s financial direction in a recent e-mail exchange with Dan Shaughnessy of the Boston Globe. This past week, Shaughnessy contacted top executives with the Red Sox and the umbrella Fenway Sports Group ownership company asking “I am working on a column in which I will suggest that there was no plan to disclose the mandate to get under the $208MM luxury tax threshold before you went into the September 27 press conference. It felt like John just came out with it spontaneously. And now that is the charge for [newly-hired chief baseball officer] Chaim Bloom. Is this accurate?“
In response to the question, Henry sent this message…
“You might actually be right for once in that I don’t plan what I’m going to say before answering media questions in a live media event. But this focus on CBT resides with the media far more than it does within the Sox. I think every team probably wants to reset at least once every three years — that’s sort of been the history — but just this week…I reminded baseball ops that we are focused on competitiveness over the next 5 years over and above resetting to which they said, ’That’s exactly how we’ve been approaching it.’ ”
“You seem to think Chaim was brought in to reduce payroll. That has simply not been the way FSG operates here or across the pond. We try to act responsibly so as to be consistently competitive. Your main point seems to be that I accidentally disclosed a secret plan but unlike you, I am honest about Sox issues. The question was asked and I answered it.”
Whereas Henry’s September comment about the “need to be under the CBT” seemed rather direct, this latest statement implies that Henry was only speaking in broader terms about his team’s (or any team’s) long-term payroll goals. Obviously, every club would prefer to avoid the luxury tax whenever possible, and especially avoid three straight years of CBT overages to avoid the maximum “three-timer” penalty of a 50% tax rate on any overages.
According to Roster Resource’s Jason Martinez, the Red Sox have a luxury tax number of just under $237.89MM for their 2020 payroll, putting them in line for a third straight year of overages. The Sox already surpassed the CBT threshold in both 2018 and 2019, costing them roughly (by the estimate of Cot’s Baseball Contracts) $25.37MM in tax payments. Also, for spending more than the maximum $40MM over the threshold in 2018, Boston’s top pick in the 2019 draft was dropped back ten slots in the draft order.
(As always, it should be noted that the CBT isn’t at all a hard salary cap, so a “need” to avoid the tax is ultimately more of an ownership preference for both the Red Sox and any other team in baseball. To use Boston’s overages from the last two years as an example, $25.37MM over a two-year span isn’t exactly a major expenditure for any franchise, especially a big-revenue club like the Red Sox.)
To this point, it’s been a pretty quiet offseason for Bloom and his front office. While the club hasn’t shed any of its heftiest contracts, the Sox also haven’t made any big expenditures, with Martin Perez and Jose Peraza representing Boston’s most notable additions. Given that there has been virtually no buzz connecting the Red Sox to any major free agents or trade targets, it’s probably safe to assume that the team’s payroll won’t be going up. While Bloom may not be under any overt directive to cut salaries, the question may be just how a fine line Bloom has to walk in trying to keep the team competitive in 2020 while not incurring an even larger luxury tax bill.