Following a lackluster 2019 season, Boston Red Sox owners plan to slash the Major League team's payroll by $37 million to avoid paying the so-called luxury tax next year.
The Sox have had baseball's highest payroll for two straight seasons now, and the team is on track to pay $13 million this year in competitive balance tax, a fee imposed by the league in the late 1990s to ensure less-wealthy teams could stay competitive. Boston's $243 million payroll is $37 million over the threshold.
In 2020, “we need to be under the competitive balance threshold and that was something we’ve known for more than a year now,” owner John Henry said in his first public remarks with co-owner Tom Werner since team president Dave Dombrowski was fired. “If you don’t reset, there are penalties, so we’ve known for some time now we needed to reset as other clubs have done.”
If the Red Sox exceed next year's threshold of $208 million, which would be the third time surpassing it, the team's base tax rate would rise from 30 percent to 50 percent. Surcharges would push the rate to 62 percent on a payroll of $228 million and 95 percent on a payroll of $248 million.
Overshooting by more than $40 million also costs a team 10 spots on its first-round draft pick, a penalty the Sox suffered in the 2019 draft.
Dombrowski was dismissed because of differing opinions on the future of the Sox, which won its ninth World Series under his leadership in 2018.
Conversations with him in the days after the World Series victory against the Los Angeles Dodgers showed that "we weren't going to be on the same wavelength going forward," explained Henry, the principal owner. "I was hopeful throughout the year that maybe that perception would change. It didn't."
Hired in August 2015 as the Red Sox were on their way to a second straight last-place finish, Dombrowski led the team to three straight American League East division titles – including in 2018 when they won a franchise-best 108 games on their way to a championship.
No matter who takes over as president now, the owners said, Alex Cora will return for his third season as the team’s manager.
The Red Sox started the 2019 season 2-8 and couldn’t find a rhythm as the New York Yankees blew right past them in the division. Boston was 83-77 through Friday, 20 games behind New York.
Henry said Boston plans to look outside the organization for its next baseball operations head – someone with with a proven record.
“Our real intention is to be competitive every year and we’ll do whatever we have to do,” said Werner, the Red Sox chairman. “The solution to that isn’t always having the highest payroll in baseball.”
Some teams "make the postseason with half the payroll the Red Sox have," Werner added. "Look at the success Oakland has had this year and the Milwaukee Brewers."
While the franchise "would like to get under the competitive balance tax threshold, we have had years we’ve been above it, we’ve had years where we were below it," he added. "There may be certain circumstances that we exceed it. Obviously, there are penalties to exceeding it, but it’s not that we go into a room and say, ‘it has to be a certain dollar number.’”
The Red Sox' efforts will be helped by the departure of $56.8 million that goes to five players: pitcher Rick Porcello’s $20.6 million, Pablo Sandoval's $18.4 million (yes, he was still on the books after the team let him go in 2017), first baseman Mitch Moreland's $6.5 million, 2018 World Series MVP Steve Pearce's $6.25 million and infielder Eduardo Núñez 's $5 million.
That will balanced, however, by the need to extend the contracts of Mookie Betts, who makes $20 million, and Jackie Bradley Jr., who gets $8.5 million. Both are eligible for free agency after the 2020 World Series.
Werner said he and team CEO Sam Kennedy spoke with Betts' agents as recently as a few weeks ago and that neither Betts nor his representatives gave any indication he wouldn't be at least interested in remaining with the Sox beyond 2020.
"We think he's one of the great players in baseball," Werner said. "Hopefully, there's a meeting of the minds going forward."
Since Werner's and Henry’s ownership group took over in 2002, the Red Sox have won four World Series titles.
"In the end, we take full responsibility for the overall direction of the club," Werner said. "But one of the things that we've talked about, and I think is apparent, is that we need to have more depth in our minor league system."