Over the last several days, there has been a lot of speculation that the Red Sox's recent shopping spree may not be done. In the aftermath of the New York Yankees' acquisition of RHP Javier Vazquez, some pundits have speculated the Sox may feel the need to make one more big splash in free agency. The thinking is that the Sox will perceive the New York rotation to be close enough to the Red Sox (in quality) that the stark differences in the team’s respective lineups will be impossible to ignore.
With that said, we also know that the ballclub appears determined to keep the team salary below the threshold for the Competitive Balance Tax, also known as the CBT and/or “the luxury tax.” The CBT was designed to be a deterrent to spending. The Collective Bargaining Agreement (CBA) between the league and MLBPA (the Players Association) defines the payroll level beyond which teams will be taxed for their spending. In 2010, the CBT will apply to all teams who have a combined payroll/benefits of $170 million or greater (up from $162 million in 2009).
In order to understand where the Red Sox sit with respect to the CBT, fans must understand the following:
1) The payroll calculation is based on the average annual value (AAV) of a player’s contract, not the annual salary of a specific player;
2) The payroll calculation is based on the full 40-man roster, not just the 25-man roster;
3) The payroll calculation includes obligations to players who are no longer on the roster (thus, the Red Sox calculation will include the $9 million owed to Julio Lugo);
4) The payroll calculation also includes money paid out in certain contractual incentives.
So, in order to begin assessing the likelihood of whether the Sox will continue to pursue additional free agents, let’s take a look at where they are right now in terms of the CBT:
Daniel Bard $400,000 (est)
Josh Beckett $10,100,000
Boof Bonser $650,000
Clay Buchholz $425,000 (est)
Mike Cameron $7,750,000
Manny Delcarmen $900,000 (est)
J D Drew $14,000,000
Jacoby Ellsbury $500,000 (est)
Jeremy Hermida $3,000,000 (est)
Jose Iglesias $2,060,000
Casey Kotchman $3,000,000 (est)
John Lackey $16,500,000
John Lester $6,000,000
Mike Lowell $9,000,000
Jed Lowrie $425,000 (est)
Victor Martinez $7,680,000
Daisuke Matsuzaka $8,670,000
Hideki Okajima $2,500,000 (est)
David Ortiz $13,000,000
Jonathan Papelbon $9,000,000 (est)
Dustin Pedroia $6,750,000
Ramon Ramirez $900,000 (est)
Marco Scutaro $6,250,000
Junichi Tazawa $1,100,000
Jason Varitek $300,000
Tim Wakefield $2,500,000
Kevin Youkilis $10,280,000
40-man Roster $2,000,000
Julio Lugo $9,000,000
Benefits $10,500,000
Total: $165,140,000
So considering all of the current contracts, plus benefits, the Red Sox have less than $5 million to spend before reaching the CBT threshold…so Theo & Company are going to have to get VERY creative if they are going to add another bat without paying any luxury tax (which will be 22.5% of any payroll/benefits in excess of $170 million).
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