Everything you need to know about J.D. Martinez’s decision on whether or not to opt-out of his contract with the Boston Red Sox.
A new World Series champion was crowned last night with the Washington Nationals defeating the Houston Astros. Not only does this end the reign of the Boston Red Sox, but it also kickstarts the free agency period. That means that J.D. Martinez is on the clock.
Martinez has five days from the end of the World Series to decide if he is going to opt-out of the five-year, $110 million deal he signed with the Red Sox prior to the 2018 season. He hasn’t tipped his hand as to which way he’s leaning, which means he could still need a few days to mull over his options. Or he could hit the free-agent market by this afternoon. Nothing should surprise us with Martinez playing things close to the vest.
Which is why we’re here to break down what this decision means for the Red Sox.
If he opts-in
Martinez will earn $23.75 million in 2020 if he decides to stick with his current contract. It’s hard to imagine a 32-year old designated hitter would earn a higher average annual value so he may be content to stay put unless he believes he’ll receive a longer deal that locks in more guaranteed money late into his career before his skills begin to erode.
His salary falls to $19.35 million in each of the final two years of the deal but Martinez has the ability to opt-out before the 2021 or 2022 seasons. It’s conceivable that he could bet on himself to continue performing at an elite level for one more year while earning his peak salary before hitting free agency next winter seeking a multi-year deal that puts him back over $20+ million per season.
Martinez would count $22 million against the payroll for luxury tax purposes. Keeping his full salary on the books would make Boston’s goal of getting under the $208 million tax line much more difficult. The Red Sox would be projected to be more than $10 million over the threshold, depending on which arbitration-eligible players return. Boston has already started trimming the budget by releasing or outrighting expendable players but it’s not enough to get them under the tax.
Trading Martinez wouldn’t be easy. His market is already limited by his defensive limitations pegging him primarily as a DH. His salary will keep some small-market American League teams out of the mix. Teams will view Martinez as a one-year rental considering he’ll have the option to opt-out again next year. Boston can’t expect much in return under those circumstances, which means trading Martinez essentially amounts to a salary dump.
The Red Sox are clearly a better team in 2020 with Martinez in the lineup but what else would they need to give up to afford him or what would the long-term ramifications be if they are a repeat tax offender for a third consecutive year?
If he opts-out
Martinez would be a free agent eligible to sign with any club if he opts-out of his contract.
The Red Sox would owe Martinez a $2.5 million buyout and he’d still count for $6 million on the payroll for luxury tax purposes, according to MassLive’s Chris Cotillo. The $16 million in savings probably gets them under the tax threshold but still doesn’t leave much room to upgrade the pitching staff. The budget will be tight regardless of what Martinez decides but letting him walk away gives them a bit more breathing room.
Boston would extend Martinez a qualifying offer for one year at $17.8 million. Obviously he’ll decline since that’s a steep pay cut from the $23.75 million he would have made by opting in. The qualifying offer allows Boston to recoup a draft pick if Martinez signs with another team, although that compensation pick will come after the fourth round instead of the first round since Boston was over the tax in 2018.
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The Chicago White Sox are rumored to be the favorites for Martinez if he hits the market and the Texas Rangers could be a fit. We can’t rule out the New York Yankees getting involved after they declined the 2020 club option for Edwin Encarnacion.
There’s also a scenario where Martinez could opt-out, only to sign a new deal with the Red Sox that tacks on more years at a lower rate per season. A five-year, $90 million deal would count for $18 million on the payroll for tax purposes.
Martinez is certainly worth more than that now but it’s highly unlikely he still will be as he approaches his age-37 season. The deal could be frontloaded to pay him the same amount he’d have made in 2020 if he didn’t opt-out while securing more guaranteed money in the long run. The Red Sox would owe him less as he ages but since the luxury tax accounts for the average annual value, this revised deal would still help inch the Red Sox toward their goal of getting under the tax next season by shaving about $4 million from the payroll.
Would another team offer Martinez more than $90 million? Would it come from a legitimate contender and does Martinez even care about being on a playoff team as long as he’s getting paid? Do the Red Sox want to lock themselves into five more years of an aging slugger when a logjam of infield prospects may require freeing up the DH role to find room for everyone?
There’s a lot of unanswered questions that the Red Sox will face and they can’t find a solution until Martinez answers a question of his own – will he opt-in or opt-out? We’ll find out within the next five days.