Thursday, December 24, 2009

Bay doesn't fit under luxury tax threshold

Reports from and the Globe have the Red Sox considering once again offering a contract to Jason Bay. The left fielder has had a four-year offer in hand from the New York Mets for the better part of the month but still hasn't accepted it, and the Mets are starting to wonder -- where would they get this idea? -- that Bay doesn't really want to play for them.

If Bay is willing to sign a four-year deal at a reasonable rate -- even at $15 million a year, really -- there's no reason the Red Sox couldn't fit him into their lineup. Mike Cameron might not like it much, but the 37-year-old has $15 million reasons not to mind being a fourth outfielder for the next two seasons.

On top of that, the return of Bay would free up the Red Sox to trade Jacoby Ellsbury in the right deal -- especially since Ryan Kalish and Josh Reddick figure to be knocking on the door of the major leagues by July.

The Red Sox certainly can fit Bay on their roster. They can't, though, fit him into their budget if they want to stay under the luxury-tax threshold next season.

From the Globe:
Could Bay return to the Red Sox? It’s not inconceivable, according to a major league source, who said it would take two things to happen. 1. Bay would likely have to accept a backloaded contract, which would help the Sox remain under the $170 million payroll threshold for avoiding the luxury tax; and 2. the Sox would have to extend their budget, after they gave a two-year, $15.5 million deal to Mike Cameron.

Here's the issue: A backloaded contract wouldn't help matters. Most estimates have the Red Sox having spent about $165 million on next season's payroll when you factor in both player benefits and the yet-to-bet determined arbitration awards to Jonthan Papelbon, Hideki Okajima, Casey Kotchman and Jeremy Hermida -- not to mention the team-determined salaries, around $500,000 apiece, to players like Daniel Bard, Clay Buchholz, Manny Delcarmen, Jacoby Ellsbury and Ramon Ramirez.

Let's say, just for the sake of argument, that Bay were to sign an obscenely backloaded contract. Let's break it down this way:
2010: $3 million
2011: $7 million
2012: $20 million
2013: $30 million
Total: Four years, $60 million

According to the collective bargaining agreement (skip ahead to page 103), a team's payroll for luxury-tax purposes is determined by average annual value. Even if Bay only were paid $3 million next season as part of the above ridiculously backloaded contract, he still would count $15 million against the luxury tax and thus would cost the Red Sox an extra 22.5 percent on top of what they were paying him.

1 comment:

floydiansea said...

Alternate headline: Luxury tax leaves few holes for Bay windows.

Bay windows ... ha!

And I haven't even had any holiday liquor yet.

Still, you make good points. Trading Jacoby, though ... whoa.