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Philosophy change could push BoSox over tax threshold

Dec 16, 2009, 2:28 AM EST

WEEI’s Alex Speier has a great look at Boston’s new payroll in light of the Marco Scutaro, John Lackey and Mike Cameron signings and how the team might join the Yankees in paying the luxury tax in 2010.
According to Speier’s figures, the Red Sox have a projected luxury-tax payroll of $168.07 million, barely short of the $170 million threshold. That’s even taking into account the Mike Lowell trade, which would add an additional $3 million to the payroll if it falls through.
It wouldn’t be a huge deal if the Red Sox did surpass the threshold for a year — they’d simply be taxed at 22.5 percent of whatever they spent above $170 million — but the simple fact that they’re threatening it after years of staying clear is interesting. The last time they were taxed was 2004, when they paid around $6 million after winning their first World Series in 86 years (a fair trade in the opinion of most).
Of course, the Boston payroll still wouldn’t be $170 million. The payroll as calculated for tax purposes uses average annual salaries and also includes a uniform $10.5 million hit for player benefits.
And it’s the average annual salaries that would bite the Red Sox here. Prior to last year, the team was so conscious of its position straddling the luxury tax that it avoided signing young players to long-term deals. That changed as Dustin Pedroia, Kevin Youkilis and Jon Lester all received extensions that kept them into their free agent years.
And it’s those contracts that could put the Red Sox over the top. In reality, those three players, all of whom signed extensions last winter, will earn $16.375 million next season. However, for tax purposes, they’re valued at $23.03 million.
Those deals still figure to pay off big in the long run. And come 2012, the Red Sox will actually be making out for luxury tax purposes, since the players will be earning more than the average value of their deals. But for 2010, it could mean that the Boston coffers will take a modest hit.

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