Red Sox must pay record luxury tax bill after failing to make postseason
What a difference a year made for the Boston Red Sox.
After celebrating a World Series championship last fall, the Red Sox missed the postseason completely in 2019 after slipping to 84 wins and third place in the American League East.
Now, to top it all off, they’ll also have to pay a team-record $13.4 million luxury tax bill.
That’s quite a reward for falling short of expectations, isn’t it?
According to the Associated Press, the Red Sox are one of three teams to exceed MLB's Competitive Balance Tax (CBT). The Chicago Cubs, who also missed the postseason and are now attempting to shed salary, will pay $7.6 million. The New York Yankees owe $6.7 million this year and are almost certain to exceed that number in 2020 after signing Gerrit Cole to a nine-year, $324 million deal.
Why the Red Sox owe $13.4 million
The current version of the CBT was put in place in 2002. It's designed to level the money each individual team spends on building its roster. Per the 2016 collective bargaining agreement, the threshold for the 2019 season was set at $206 million.
There are different levels of fines attached to the CBT based on how often teams exceed the threshold and by how much. The Red Sox payroll was an MLB-high $228 million this season. Since they’ve crossed the threshold more than three seasons in a row, they must pay 50-percent on the overages. Boston was charged an additional 12-percent for going $20 million over the threshold.
That brought the total owed to $13.4 million.
The Los Angeles Dodgers still hold the record for the largest luxury tax bill. They paid $43 million in 2016. The Dodgers have managed to get under the threshold the past two seasons. The Red Sox are hopeful to accomplish that next season after firing president Dave Dombrowski and restructuring the front office.
It will be a challenge. The 2020 luxury tax threshold will be set at $208 million. The Red Sox are $28 million over that number based on salaries owed.
Did spending equal winning in 2019?
As the Red Sox and Cubs can attest, spending big doesn’t necessarily mean winning. They were two of five teams with top 10 payrolls to miss the postseason in 2019. They were joined by the San Francisco Giants ($183 million), Los Angeles Angels ($166 million) and Philadelphia Phillies ($161 million).
Of course, just two of the 12 lowest spending teams actually made the postseason. Those teams — the Oakland Athletics ($96 million) and Tampa Bay Rays ($67 million) — ranked 26th and last respectively.
In 2018, the Red Sox and Washington Nationals were the only two teams to exceed the threshold. The Nationals got just under the threshold in 2019, finishing at $205 million. Like we said, what a difference a year makes. Last year Washington paid a luxury tax bill after missing the postseason. This season, they won it all and won’t owe a penny.
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