The Boston Red Sox pale in comparison to another historic club paying a gigantic luxury tax bill this season.
The Associated Press published an article through ESPN two days ago that reported the MLB teams having to pay a luxury tax bill for their rosters: “The Los Angeles Dodgers were hit Friday with a record luxury tax of nearly $43.6 million for a payroll that fell just shy of $300 million. For the first time, four teams exceeded baseball’s spending threshold and owe tax. The New York Yankees and Boston Red Sox will pay along with the San Francisco Giants, a first-time offender.”
The report defines how the luxury tax works: “Teams pay on the amount they are over the tax threshold, which was $189 million this year and will remain the same in 2016, the last year of the current labor contract. The tax rate starts at 17.5 percent for first-time offenders, then climbs to 30 percent, 40 percent and 50 percent in subsequent years, resetting when a club drops below the threshold for a season.”
The report also highlights the issue by showing the difference in taxes owed. While the Dodgers set a record because of how costly their roster will be, the Yankees must pay $26.1 million for a record of 87-75, the Red Sox must pay $1.8 million for a 78-84 record, and the Giants have to pay $1.3 million for a record of 84-78.
With big signings like Hanley Ramirez and Pablo Sandoval in the last offseason and Rick Porcello‘s contract extension after the trade from the Detroit Tigers, some of Red Sox Nation may have thought that Boston was spending money like it was going out of style. To pay a luxury tax on a team that was in the division basement, it would seem that the spending was highly counter-productive.
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However, to only be paying just under $2 million, compared to the Dodgers and the Yankees, the Red Sox didn’t bury themselves too deep.
Remember ‘Moneyball’, that baseball analytic concept that was mocked by Joe Morgan and a ton of other baseball ‘experts’ said doesn’t work? That theory that was made into a movie, starring Brad Pitt, that made a ton of money, even though multiple ‘baseball people’ said would never get off of the ground? That nonsense that Billy Beane was able to use to keep the Oakland Athletics competitive for years, when they should have went bankrupt? That ridiculous narrative that former Red Sox general manager Theo Epstein used as the business model to resurrect Boston’s baseball team back into World Series glory? That same model that Epstein used to put the Chicago Cubs back on the map?
It looks as though smart spending while raising your own talent properly is back in style. “Among the teams that reached the League Championship Series, Toronto [Blue Jays] ranked 10th in payroll at $136 million, the Chicago Cubs 11th at $133 million, Kansas City [Royals] 13th at $129 million and the [New York] Mets 19th at $110 million.”
For all of the big names in free agency, all of the contract extensions, all of the money flying out of Boston, New York, San Francisco, and especially Los Angeles, more frugal teams dominated. The Yankees barely warmed a seat in the postseason, losing in the A.L. wildcard game. The Red Sox and Giants didn’t even make the postseason picture. And the Dodgers? Well, Clayton Kershaw did his best Kershaw-in-the-playoffs impression by losing the N.L. Division Series lead game 3-1, but then won 3-1 in Game 4 only for Zack Greinke to lose 3-2 to the Mets in Game 5 for another quick playoff exit.
By signing another big-named free agent named David Price, the price of the luxury tax for 2016 should increase heavily for the Red Sox, if Hanley and Sandoval are not able to be traded.
It is highly unlikely that Price will disappoint compared to the two big hitters, who did anything but hit consistently in 2015. Nobody is expecting Price to pitch nearly as badly as Porcello did, either.
If anything, the team has been relying on many young stars like Xander Bogaerts and Mookie Betts, who barely get paid a fraction of the money being spent on one of the previously mentioned players. If it wasn’t for Ramirez, Sandoval, or Porcello, the luxury tax wouldn’t even be an issue for the Red Sox, even with Price’s $217 million for seven years. Price will average between $30-32 million per season, which is a great deal more than Bogaerts’ $543 thousand. Bogaerts isn’t due for arbitration until 2017 and free agency in 2020.
The same goes for Betts and many of the other young starters on the roster. Arguments can easily be made for players like Bogaerts and Betts that they could have made the All-Star team based solely on their performances on the field; yet, the injury-prone Hanley, the inconsistent Porcello, and the shall-we-say-‘winded’ Sandoval took prominent seats at the money table last year.
So far, Boston’s new president of baseball operations Dave Dombrowski seems to have strengthened the team a great deal, making trades where he could to fill holes in the roster with great talent while also spending in free agency on solid investments. He wasn’t in charge when former GM Ben Cherington made the deals for Hanley, Sandoval, and Porcello, but he should always remember how this 2015 luxury tax bill worked out for the Red Sox. Money spent does not always make a champion. In fact, it can even weaken a team’s chances. The Red Sox have spent money; let’s just hope it’s not too much for them to handle.