The MLBPA views the Boston Red Sox trading Mookie Betts as a reason to address the luxury tax in the next Collective Bargaining Agreement.
Spring training is well underway and the absence of one player continues to overshadow those who are in camp for the Boston Red Sox. We’re all still recovering from the devastating trade that sent Mookie Betts to the Los Angeles Dodgers, wondering how one of the richest franchises in baseball can justify giving away a generational talent in a glorified salary dump. Apparently the MLB Players Association is as baffled by this decision as the rest of us.
MLBPA executive director Tony Clark visited JetBlue Park on Tuesday where he addressed his concerns regarding the Red Sox trading one of the best players in baseball in order to shed payroll, according to MassLive’s Christopher Smith.
"“Boston made whatever decision they made for whatever reason they made it,” said Clark. “I think that a face of our game — someone who should be more a face of our game — being put in that position, I don’t think it was necessary. … I know they (the Red Sox) have offered some commentary publicly. But you’d have to ask Boston as to why that’s the case. We simply believe that Mookie is a generational talent and the idea that he’s no longer here is one that we just didn’t believe was necessary.”"
By trading Betts along with half of the remaining $96 million on David Price‘s contract, Boston has slashed $43 million from their 2020 payroll plus $32 million over the next two seasons. That puts the Red Sox comfortably below the Competitive Balance Tax threshold, resetting the escalating penalties and creating the financial freedom they craved.
Under the current structure of the CBT, teams are penalized a 20 percent tax on any dollar amount over the threshold. The penalty rises to 30 percent if the club exceeds the threshold for a second consecutive season and vaults to 50 percent for a third consecutive season. There is also a 12 percent surtax for teams that exceed the threshold by $20 million and 42.5 percent if the payroll is over by $40 million.
The message from ownership regarding their budget has been inconsistent over the course of a tumultuous offseason but regardless of what they claimed in the wake of this trade, the luxury tax was a significant factor in why the Red Sox felt they had to trade Betts.
According to Forbes, the Red Sox are the third-most valuable franchise in baseball at a whopping $3.2 billion and they rolled in $512 million in revenue in 2018. Boston owned MLB’s highest payroll at approximately $247 million last season and they paid $13.4 million in luxury tax penalties as a repeat offender. That tax bill is a drop in the bucket for an ownership group raking in this much revenue.
The Red Sox were so desperate to avoid being a third-time offender that they sold their best player for 10 cents on the dollar. If one of baseball’s wealthiest teams is hiding behind the CBT as an excuse for their inability to afford Betts, that’s clearly a problem for the MLBPA.
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Betts will certainly cash in as a free-agent next winter but his market is limited to the few large market teams that can afford the mammoth contract he will demand. If the threat of tax payments is resulting in teams treating the CBT as a salary cap, that further limits the market for elite talent. We’ve seen some staggering figures tossed around predicting what Betts will earn but you are worth what the market says you are worth. Fewer suitors to drive up the price might limit his ceiling.
The MLBPA aims to remove obstacles that restrict what players can earn and the CBT is among the greatest threats to that goal. This is a concern that Clark wants to address in negotiations for the next Collective Bargaining Agreement.
"“We think there are a number of aspects in our CBA that need to be addressed,” Clark said. “And if the Competitive Balance Tax is being used in the fashion that it’s being used and the excuse that it’s being used for, then that is something we’re going to look at.”"
The current CBA expires at the end of the 2021 season. If the MLBPA gets their way, the new agreement could take the teeth out of the CBT and make it less prohibitive for teams to spend.
While this would seem to benefit wealthy teams such as the Red Sox, be careful what you wish for. There was a time before the luxury tax was implemented when we complained that the Yankees tried to buy championships by recklessly outspending everyone. The tax at least helped reel in their spending habits, just as it has for the Red Sox this offseason.
Any potential changes won’t be implemented before Betts hits the market. Eliminating the tax won’t help bring Betts back to Boston. It might help avoid a repeat of this scenario when it comes to retaining other young star players in the future. If nothing else, it means ownership would have one less excuse to justify their reasons for trying to save money.