Forbes has rated the Boston Red Sox as the third-most valuable franchise in baseball, which leaves us to wonder why they had to slash payroll.
The narrative that dominated the offseason was the pressing desire by the Boston Red Sox ownership group to slash payroll in an effort to avoid paying the luxury tax for a third consecutive season. While the penalties for repeat offenders are increasingly severe, fans have little sympathy for owners willing to dismantle a potential contender in order t save a few million when their franchise is worth billions.
That point is driven home by the latest evaluation of the value of each franchise. According to Forbes, the Red Sox are the third-most valuable team in Major League Baseball at an estimated $3.3 billion.
That puts Boston well behind the first-place New York Yankees ($5 billion), a division rival they compete with every year. No MLB team comes close to matching the value of the Yankees and the Dallas Cowboys ($5.5 billion) are the only North American sports team valued higher.
The Red Sox are only slightly behind the second-place Los Angeles Dodgers though ($3.4 billion). The Dodgers had no qualms with blowing past the luxury tax threshold by acquiring Mookie Betts and half of David Price‘s bloated contract in a massive salary dump deal with the Red Sox.
Granted, Los Angeles isn’t facing third-time offender penalties but it’s hard to see them dipping below the threshold anytime soon if they intend to re-sign Betts when he hits free agency.
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Boston saw a three percent increase from the $3.2 billion they were valued at in 2019. Despite the team’s value rising, ownership still felt the need to trim payroll while raising ticket prices. Obviously, that didn’t sit well with fans. We don’t know if games will be played at Fenway Park in 2020 as the season remains in a holding pattern due to the COVID-19 pandemic. If the Red Sox do get the opportunity to sell tickets to their home ballpark this season, many fans will be hesitant to pay for them under these circumstances.
MLB saw an overall increase in value of four percent with the average team worth $1.85 billion. The economic fallout of the global health crisis that has us quarantined for the foreseeable future could have drastic ramifications on the value of sports franchises. Teams will lose revenue from ticket sales, television contracts and merchandising if they don’t end up playing games this year. Even if they find creative ways to play games in neutral-site venues without fans in attendance, the inability to sell tickets at their own park would still lead to lost revenue.
Will the Red Sox continue to cut more payroll next year to make up for some of that lost revenue? It’s certainly possible. The luxury tax penalties don’t reset if the season is canceled so we could be in store for another free agency period with the Red Sox shopping in the bargain bin.
The Red Sox are one of MLB’s most valuable teams but considering they still have one of the five highest payrolls in baseball, we can’t necessarily count on ownership opening their wallets next offseason.