Kennedy: Red Sox Expect To Pay CBT In 2025

Red Sox president Sam Kennedy spoke to members of the media today, including Jen McCaffrey of The Athletic and Chris Cotillo of MassLive. He confirmed that the club is over the line when it comes to the competitive balance tax and expects to stay there, with room to possibly make additions.

Public estimates of the club’s CBT number have them right around the line, which will be $241MM this year. RosterResource has them at $241.6MM while Cot’s Baseball Contracts has them at $240.4MM. Those calculations are unofficial and it seems that Boston’s internal calculations have them over the line.

A club’s final CBT calculation isn’t made until the end of the year. That means there’s some wiggle room to make adjustments now or midseason. For example, the Blue Jays were projected to pay the tax in 2024 but fell out of contention and sold off various players prior to the deadline, which allowed them to narrowly limbo under the line.

For the Sox, they could consider something like that, as clubs often do when they are right around the border. For instance, Masataka Yoshida has been in plenty of trade rumors and has an $18MM CBT hit on his deal. The Sox wouldn’t find any club to take on the whole thing but could perhaps unload part of it if they wanted to avoid the tax. In the past five years, the Sox have only paid the tax once, going narrowly over the line in 2022.

However, it doesn’t seem as though the club is particularly worried about the tax this year. Kennedy said back in November that the club was hoping to be aggressive this winter, building a club that was capable of winning 90 to 95 games, even if that involved paying the tax. For much of the winter, they didn’t make a huge free agent splash but finally did so last week by signing Alex Bregman to a three-year, $120MM pact. The deferrals in that deal reportedly knock it down closer to $90MM in terms of present-day value, but that lower figure still reportedly added $31.7MM to the club’s CBT calculation for the year.

As the season progresses, it’s always possible that the club pivots at the deadline. As mentioned, that’s how things went for the Jays last year. But that’s clearly not how the Sox plan on things going this year. Assuming the club stays in contention through the end of July, they will be looking to make additions without worrying about ducking under the tax line. Those additions could come in the next few weeks, with several free agents still available, though the club could also keep some powder dry for deadline additions to address midseason injuries and/or underperformance.

Since the club hasn’t paid the tax in the past two years, they would be a “first-time” payor in 2025. As such, they would have a 20% base tax rate for whatever they spend over the line. There’s also a 12% surcharge for going $20MM over and further surcharges if they eventually go $40MM or $60MM over the base.

It’s surely a refreshing uptick for Boston fans. Up until a few years ago, the Sox had spent many years as one of the top spenders in the league. They had a top five payroll in all but one year of the 2000-2020 period, winning four titles in that time. They dropped back to the middle of the pack more recently, with Cot’s having them 12th in the league in the past two seasons. They finished last in the American League East in 2022 and 2023, before finishing at .500 last year.

They haven’t climbed all the way back to their previous level, with RosterResource ranking their projected 2025 payroll as ninth in the majors. However, they’re only $11MM away from sixth place and it seems like there’s a good chance those standings will shift in the coming months.