Boston Red Sox: Update on the 2017 projected payroll
What does the projected payroll for the Boston Red Sox next season in regards to the luxury tax in the wake of the Clay Buchholz trade?
Curious as to what the payroll for the Boston Red Sox will look like next season? We know that thanks to the Clay Buchholz trade, Boston has dipped below the luxury tax threshold they were so adamantly trying to avoid. How much wiggle room have they created?
We can get a reasonable projection by taking into consideration what expenses factor into the payroll for luxury tax purposes.
The Red Sox have nine players locked into contracts for 2017. This doesn’t include Brandon Workman, who recently agreed to a 1-year deal to avoid arbitration but is unlikely to make the 25-man roster to begin the season.
The luxury tax is determined based on the average annual value of players on the active roster (including signing bonuses). So while Chris Sale will make $12 million next season, his salary only counts as $6.5 million toward the tax. If you thought his contract was an excellent deal before, he’s an even bigger bargain when viewed in this light! Then there’s Pablo Sandoval, who will make $17 million next season, yet count as $19 million against the tax due to his escalating salary in future seasons and his $3 million singing bonus. They can’t all be winners, folks.
If we add up the salaries of the nine players we know for certain, Boston’s payroll comes in at a tick above $135 million for tax purposes.
We’re not done yet though. Next we have to consider the arbitration eligible players that have yet to agree to a contract for the upcoming season. MLB Trade Rumors provides us with a fairly accurate projection that we can use to at least get us in the ballpark. Workman has already been accounted for, while Bryan Holaday has since moved on from the organization. The remaining arbitration eligible players, including the recently added Tyler Thornburg, will add roughly $25 million to the payroll based on these estimates.
Now our total has spilled over $160 million, with only 18 players accounted for.
The rest of the 25-man roster will be filled out by pre-arbitration eligible players making at least the league minimum of $535,000. These salaries are set at the team’s discretion, with some teams willing to pay a bit more based on service time or performance. The Red Sox will want to be somewhat generous with their top young players as a sign of goodwill that may help in future negotiations.
This group includes Mookie Betts, who will certainly make more than the minimum after finishing second on the AL MVP ballot. Betts could even challenge the record pre-arbitration deal of $1 million that Mike Trout earned in 2014. In Trout’s case, keeping him happy proved to be fortuitous for the Angels, as shortly after it led to a six-year extension that looks like a bargain for a player of his caliber. We don’t know if Betts is open to a similar extension, but slapping him in the face with a near minimum salary for 2017 wouldn’t be the best way to approach that option.
If the pre-arbitration eligible players expected to make the Opening Day roster all made the league minimum then those seven players would cost about $3.75 million. Since we know that not all of them will make the bare minimum, that figure will likely be closer to $5 million.
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The payroll is now creeping up over $165 million, but we’ve only accounted for the Opening Day roster. There are 15 more players on the 40-man roster that could potentially see time in the big leagues this season. If any of those players were to be called up, their salary would count for a pro-rated amount of the minimum based on the number of days they spend on the major league roster. Not all of these players will necessarily see time in Boston in 2017, but we have to assume that injuries, ineffectiveness and September call ups will pave the way for some of them to see time in the big leagues. A conservative estimate would still add at least a few million to the payroll.
Last, but not least, we have to add in player benefits, which also count toward the luxury tax threshold. This covers expenses such as health benefits, spring training allowances, travel, etc. We don’t know the exact total for these benefits, but estimates come in at around $12 million.
Add up all these expenses and we get a rough estimate that should be a bit north of $180 million, putting them comfortably below the $195 million tax line.
Don’t be fooled into assuming that this means the Red Sox have $15 million more to spend this winter. Uncertainty over the exact salaries of pre-arbitration eligible players and minor league players that could be called up necessitates leaving a cushion below the threshold. The last thing the Red Sox want is to have worked so hard to duck the tax only to go slightly over, forcing them to pay the third-time offender penalty.
A big free agent splash isn’t on the horizon, but Boston will have some payroll flexibility to make moves during the season. As long as they are careful about how much salary they are taking on, they can make trades for a modestly priced veteran to plug a hole that may not be apparent today.
