The Boston Red Sox have the highest payroll in baseball and are one of only two MLB teams on pace to pay the luxury tax in 2018.
Money can’t buy championships but having the highest payroll in baseball has helped put the Boston Red Sox in position to contend for one. Boston joins the Washington Nationals as the only teams in Major League Baseball currently on track to pay the luxury tax this season.
Boston’s Opening Day payroll for luxury tax purposes was $233.9 million, per the Associated Press. The Nationals are a distant second with a $201 million payroll, while every other team managed to stay below the $197 million tax threshold.
The Red Sox reset their base rate tax to 20 percent by dipping below the threshold last year. They will pay an additional 32 percent surtax for any amount over $217 million. That surtax rises to a staggering 62.5 percent on any amount over $237 million. That leaves Boston only a sliver of wiggle room for trade deadline deals if they wish to avoid the steepest level of the tax penalties.
As it currently stands, the Red Sox would owe $9.4 million in taxes. That’s the equivalent of paying an extra starting caliber player. Only eight players on the Red Sox roster make more than that this season.
The luxury tax is based on the average annual value of contracts from players on the 40-man roster, plus approximately $14 million in benefits. The penalty will reflect roster changes throughout the season so we won’t know the exact amount the Red Sox will owe for several months.
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Boston recently traded Roenis Elias to Seattle, removing a player from their 40-man roster without taking salary back. Purging his pre-arbitration eligible salary from the payroll doesn’t move the needle much. Plus, the Red Sox will presumably replace his roster spot with someone who will count toward the tax.
They theoretically could still duck the tax, or at least dip below the level where the surtax kicks in, by shedding payroll if they become trade deadline sellers. Boston is off to a major league-best 17-4 start this season, making that scenario highly unlikely.
The Red Sox could have a significant chunk of salary fall off their books if they allow Drew Pomeranz, Craig Kimbrel, and Joe Kelly to walk in free agency after this season. Hanley Ramirez could join them if he doesn’t receive the 497 plate appearances he needs for his 2019 option to vest. David Price has the ability to opt out of his contract.
There is a realistic path toward dipping below the 2019 tax to avoid being a repeat offender. However, that would mean letting several key members of this roster leave while resisting the urge to replace them with splashy free agent signings or trades.
The results of this season could go a long way toward determining the future. If they can’t go deep in the postseason with the highest payroll in baseball then it’s hard to imagine they’ll go deeper into the tax by throwing more money into this roster.