John Henry

Payroll concerns have been the prominent storyline of the Red Sox offseason, especially given the team’s relative lack of major moves.  There has been much more attention paid to the club’s apparent attempts to trade such high-salaried players as David Price, Nathan Eovaldi, Jackie Bradley Jr., or perhaps even Mookie Betts in order to avoid surpassing the Competitive Balance Tax threshold for the third consecutive season, based on comments made by Red Sox principal owner John Henry last September.

During a season wrap-up press conference, Henry said “This year we need to be under the CBT.  That is something we’ve known for more than a year now.”  This statement was already partially walked back by team CEO Sam Kennedy a few days later, as Kennedy said that avoiding a luxury tax penalty was “goal but not a mandate” for the coming season.

Henry further discussed the team’s financial direction in a recent e-mail exchange with Dan Shaughnessy of the Boston Globe.  This past week, Shaughnessy contacted top executives with the Red Sox and the umbrella Fenway Sports Group ownership company asking “I am working on a column in which I will suggest that there was no plan to disclose the mandate to get under the $208MM luxury tax threshold before you went into the September 27 press conference.  It felt like John just came out with it spontaneously.  And now that is the charge for [newly-hired chief baseball officer] Chaim Bloom. Is this accurate?“

In response to the question, Henry sent this message…

“You might actually be right for once in that I don’t plan what I’m going to say before answering media questions in a live media event. But this focus on CBT resides with the media far more than it does within the Sox.  I think every team probably wants to reset at least once every three years — that’s sort of been the history — but just this week…I reminded baseball ops that we are focused on competitiveness over the next 5 years over and above resetting to which they said, ’That’s exactly how we’ve been approaching it.’ ”

“You seem to think Chaim was brought in to reduce payroll.  That has simply not been the way FSG operates here or across the pond.  We try to act responsibly so as to be consistently competitive.  Your main point seems to be that I accidentally disclosed a secret plan but unlike you, I am honest about Sox issues.  The question was asked and I answered it.”

Whereas Henry’s September comment about the “need to be under the CBT” seemed rather direct, this latest statement implies that Henry was only speaking in broader terms about his team’s (or any team’s) long-term payroll goals.  Obviously, every club would prefer to avoid the luxury tax whenever possible, and especially avoid three straight years of CBT overages to avoid the maximum “three-timer” penalty of a 50% tax rate on any overages.

According to Roster Resource’s Jason Martinez, the Red Sox have a luxury tax number of just under $237.89MM for their 2020 payroll, putting them in line for a third straight year of overages.  The Sox already surpassed the CBT threshold in both 2018 and 2019, costing them roughly (by the estimate of Cot’s Baseball Contracts) $25.37MM in tax payments.  Also, for spending more than the maximum $40MM over the threshold in 2018, Boston’s top pick in the 2019 draft was dropped back ten slots in the draft order.

(As always, it should be noted that the CBT isn’t at all a hard salary cap, so a “need” to avoid the tax is ultimately more of an ownership preference for both the Red Sox and any other team in baseball.  To use Boston’s overages from the last two years as an example, $25.37MM over a two-year span isn’t exactly a major expenditure for any franchise, especially a big-revenue club like the Red Sox.)

To this point, it’s been a pretty quiet offseason for Bloom and his front office.  While the club hasn’t shed any of its heftiest contracts, the Sox also haven’t made any big expenditures, with Martin Perez and Jose Peraza representing Boston’s most notable additions.  Given that there has been virtually no buzz connecting the Red Sox to any major free agents or trade targets, it’s probably safe to assume that the team’s payroll won’t be going up.  While Bloom may not be under any overt directive to cut salaries, the question may be just how a fine line Bloom has to walk in trying to keep the team competitive in 2020 while not incurring an even larger luxury tax bill.

“If we play up to our capabilities we will easily make the playoffs. That’s how I see it,” Red Sox principal owner John Henry told WEEI.com’s Rob Bradford in London this weekend before Boston’s two-game series with the Yankees.  The Sox dropped both of those games to fall 11 games behind New York in the AL East standings, and two games out of an AL wild card slot.

At just 44-40 on the season, the Sox are far behind the pace set by their 2018 World Series team, which won 108 games in the regular season and then went 11-3 in the playoffs to capture the franchise’s fourth Commissioner’s Trophy since 2004.  The Red Sox haven’t won back-to-back titles, however, and Henry noted that following up a championship run has been a challenge.

While this year’s Red Sox seem decidedly better than the 2014 team that finished in the AL East basement, Henry noted that in both 2014 and 2019, the club didn’t make many roster alternations over the winter.

“My take is that maybe it isn’t the best thing in the world to bring back the same team in its entirety every time,” Henry said.  “You don’t want to break a team down.  But maybe a few changes wouldn’t hurt.  But the feeling is always different after you win, apparently.”

On paper, there wasn’t really too much for the Sox to address over their quiet offseason, though their lack of bullpen depth was seen as a problem in March and has blossomed into a full-blown concern as we enter July.  While Boston’s bullpen and starting pitchers still rank in the top half of the league in most statistical categories (Sox relievers lead the league in K/9), both have been prone to breakdowns at inopportune times.  The rotation has been largely carried by David Price and Chris Sale, the latter of whom has looked like his traditionally dominant self after a subpar April.  But Rick Porcello and Eduardo Rodriguez haven’t pitched well, while the fifth starter’s spot has been a revolving door of shaky performances since Nathan Eovaldi has spent much of the year on the injured list.

A possible answer to these problems, of course, is a big addition or two at the trade deadline, though the Red Sox won’t have much room to maneuver if they are to stay under the $246MM threshold for the maximum luxury tax penalty.  The Sox passed this threshold last season, costing the team a little under $12MM in tax payments and a 10-spot drop for their first selection in the 2019 draft.

Between Porcello, Rodriguez, Eovaldi, the injured Dustin Pedroia, underperforming veterans Steve Pearce and Eduardo Nunez, and the $30MM+ in dead money still on the books for Rusney Castillo and Pablo Sandoval, the Sox have roughly $100MM committed to players who have combined for only +0.6 fWAR in 2019.

It should be noted that as per the calculations from Roster Resource’s Jason Martinez, the Sox are again in position to surpass the $246MM threshold, with an estimated luxury tax number of roughly $251.4MM.  If the team is indeed over the line with little hope of getting under the $246MM, one could argue that the Red Sox might as well go ahead and spend more in an all-out push for another World Series.  MLBTR’s Steve Adams outlined Boston’s financial restraints back in February, and while the Red Sox would face an even stiffer penalty for passing the $246MM limit in consecutive years, a big-market team like Boston is more suited to handling such extra expenses.

This doesn’t appear likely, however, as Henry doesn’t see spending (or a perceived lack of spending) as the problem.

“It’s not a luxury tax issue, it’s a question of how much money do we want to lose,” Henry said.  “We’re already over budget and we were substantially over our budget last year and this year. We’re not going to be looking to add a lot of payroll. And it’s hard to imagine fielding a better team. If we play up to our capabilities we’ll be fine. That’s the question: Will we? We’re halfway through and we haven’t….It’s a worthy team because we invested. Two years in a row we have the highest payroll. It’s not a matter of investment, it’s a matter of playing well.“