Red Sox face luxury tax and draft pick punishment

The Boston Red Sox just got a Christmas gift from MLB in the form of a penalty for exceeding the luxury tax.  This is no sudden revelation, but it may soon have consequences.

The Boston Red Sox have now made it official and that is a hefty luxury tax (LT) penalty and a subsequent taking the draft pick elevator down to a lower level and having their draft slot dropped ten spots.  The price of victory has a cost and for the Red Sox, the cost is $237 MM – the highest payroll in MLB. The Red Sox penalty is in the vicinity of $12 MM and the only good news is the penalty figure is at 20% due to the Red Sox re-setting their payroll in the 2017-18 offseason.

The LT is set at $197 MM and only the Washington Nationals exceeded that and they are on the fiscal hook for $1.6 MM. So, apparently Washington is first in war, first in peace, and second in luxury tax.  The Red Sox are also on the cusp of a more onerous percentage as described in the quote, but all this is not a sudden revelation to Red Sox fans.

"This is the second straight year that the Nats passed the luxury tax threshold, so their tax bill will consist of 30 percent of every dollar spent in overage (so around $1.89MM). After exceeding the threshold in 2015 and 2016, the Red Sox ducked under the CBT line in the 2017-18 offseason to “reset their clock,” so they’ll be taxed at the first-timer rate of 20 percent of every dollar spent in overage. By Cot’s numbers, however, the Red Sox surpassed the threshold by more than $40MM, so they’ll face a 62.5 percent surcharge on the overage. – MLB Trade Rumors"

The tax man most certainly cometh for the Red Sox and that conjures up the vision of squirrely IRS agents with Scrooge-like window shades pouring over the books to squeeze every last mark, yen, buck, or a pound as sung in “Cabaret.”   Want some excuses?

More from Red Sox News

• Red Sox Nation deserves far more from Fenway Sports Group
• Bizarre trade deadline comes back to haunt Red Sox after Nathan Eovaldi departure
• Red Sox’ Moneyball-style offseason continues with Corey Kluber contract
• Rich Hill’s Red Sox departure puts him within striking distance of unique MLB record
• Red Sox offseason takes another nasty hit with Nathan Eovaldi departure

Start with Pablo Sandoval who is still “on the books.” The David Price contract certainly was no display of fiscal restraint. The Red Sox have not exactly been cautious spenders and the current situation is heavily influenced by poor business decisions, but, likewise, some have been extraordinarily successful – J.D. Martinez is certainly worth his baseball buck.

Boston has already floated feelers to access public and media response by expressing the possibility of shedding some now money and potentially future money – most notably Rick Porcello and his $21 MM. The Red Sox do not have an aging cast as their young players are the driving forces and now that bill will become due – just what will Mookie Betts get? Or Chris Sale?

The Red Sox have come far under the new – is it still new? – ownership from a team that could not accommodate the contract of enhanced Alex Rodriguez to a team that tossed money for Yoan Moncada and Daisuke Matsuzaka. No problem with paying MLB a $31 MM penalty for Moncada.

The Red Sox have certainly reached empire status by using the team as a springboard for purchasing a newspaper, a noted English football team, NASCAR involvement, and a real estate conglomerate that would bring envy to Trump.  The natural knee-jerk reaction is “they have the money.” Having and spending are two different issues. No one enjoys paying taxes – any kind of tax. But historically one owner would not even blink.

I think back and my response is “What would Tom Yawkey do?” Historically Yawkey would simply pay the bill since the absolute goal was winning and to Yawkey winning means acquisition of talent be it Jimmie Foxx, Lefty Grove, or Joe Rudi, but I suspect that will not be the modus operandi of the current crew.  This is not Yawkey, but hard businessmen who realize paying a tax – any kind of tax – is as enjoyable as a root canal without novocaine.

The direction that the team goes in will soon be determined with just what is needed to have a solid foundation for a repeat. The Red Sox underestimated Joe Kelly’s value or maybe they simply felt “Fighting Joe” was not worth it. Craig Kimbrel has already migrated into the ludicrous territory with his demands and Boston may pass. But what about replacements?

The path will be determined with replacements – spend or not for bullpen help? If Boston looks internal it means baseball cheap and external could mirror that with a plethora of low-end (cheap) relievers on the market. That happens to expect the ire of Red Sox Nation to surface since we collectively have just been hit with a ticket price increase. Again – victory comes at a price.  Are you willing to pay? I am.