Red Sox Willing To Cross Highest Luxury Tax Threshold

Though the past 12 months in Major League Baseball have been largely punctuated by big-market clubs performing financial gymnastics to avoid crossing the $197MM luxury tax barrier (e.g. Giants, Yankees, Dodgers), the Red Sox are of a different mindset. Boston, of course, has already exceeded the $197MM threshold — so much so that the team is already on the hook for an extra 12 percent surtax on every dollar spent over $217MM (plus 20 percent on everything north of $197MM). But Red Sox CEO Sam Kennedy tells Evan Drellich of NBC Sports Boston that the organization is willing, in the right scenario, for its luxury tax ledger to cross the $237MM mark that represents the most severe point of taxation.

As Drellich explains, the Sox are already in line to pay something in the vicinity of $10MM in luxury tax penalties based on their spending to date. The collective bargaining agreement, though, stipulates that a team exceeding the initial tax barrier by more than $40MM will not only pay a 42.5 percent surtax on every dollar spent beyond $237MM (in addition to the standard 20 percent), it’d also see its top pick in the following year’s draft pushed back 10 spots (provided that pick is not within the top six of the draft, which obviously will not be the case).

The Red Sox currently hold the best record in baseball, which should line them up to pick 33rd overall in 2019. (Normally, that’d be 30th overall, but the Braves, D-backs and Dodgers will all receive compensatory first-round selections after failing to sign their 2018 first-round draft choices.) By dropping from 33rd to 43rd in the draft, the Sox would not only have a less preferential pool from which to select a player, they’d also see their overall draft budget reduced accordingly. The difference in slot value between pick No. 33 and pick No. 43 in 2018 was $454,400 — not a massive sum, but one that would limit a team’s flexibility when trying to negotiate over-slot bonuses with mid-round picks. Nonetheless, Kennedy clearly states that the Sox aren’t closed off to the possibility.

“[T]here would be a willingness to do that if it meant, in our estimation, making a decision that could really help put us over the edge, over the top, this year and the postseason,” said Kennedy of crossing the $237MM line. “You know, we had the taste of October the last two years. There’s no question, we’re hungry for October success.”

Notably, Drellich writes that the Sox may ultimately consider adding a starting pitcher now that Eduardo Rodriguez’s ankle has been found to have “serious damage” following this past weekend’s injury. Left-hander Drew Pomeranz (biceps tendinitis) and right-hander Steven Wright (knee inflammation) are both on the shelf as well. Chris Sale, Rick Porcello and David Price still give the Sox a solid foundation on their starting staff, but with injuries mounting, a more pressing need than most would have anticipated just a few weeks ago certainly exists.

Boston also remains keen on adding a reliever, Drellich notes, as has been reported by various outlets over the past few weeks. Drellich suggests that Rodriguez could ultimately emerge as a bullpen option if the Sox want to ease him back into action late in the year, though president of baseball operations tells Drellich it is “much too early” to make any sort of determination as pertains to that possibility.