Source: Luxury Tax Will Limit Red Sox' Ability to Add at Trade Deadline
While we don't normally think of the Red Sox as having financial limitations, the issue, the source said, is Major League Baseball's "luxury tax," officially known as the Competitive Balance Tax, or CBT.
That tax, which in the Red Sox' case would be 22.5 percent of every dollar over $170 million in payroll, is based on the so-called "actual club payroll," not the Opening Day payroll. So the pro-rated salaries of any players acquired in a trade would count toward that figure.
Boston ownership is so concerned about not paying luxury tax that the team waited until after Opening Day to sign Josh Beckett to a contract extension so his CBT salary figure would not go up in 2010.
The Associated Press listed Boston's Opening Day payroll as $162.7 million, although the luxury-tax figure will also include players on the 40-man roster and players' benefit.
Thus, the Red Sox are about tapped out. The source said the front office would have to "jump through hoops" -- make a strong case to ownership -- just to add $500,000 in salary over the rest of the season. That's the equivalent of a player making $1.1 million for the year.
Paying luxury tax this year would make Boston liable to a 30 percent luxury tax on payroll over $178 million in 2011, when Beckett, Kevin Youkilis, Dustin Pedroia and Jon Lester are due for raises.
With about $45 million worth of players on the disabled list -- including Beckett ($12 million), Pedroia ($3.5 million), Victor Martinez ($7 million), Jason Varitek ($5 million), Clay Buchholz ($440,000) , Mike Lowell ($12 million), Jacoby Ellsbury ($500,000), Manny Delcarmen ($900,000) and Jeremy Hermida ($3.3 million) -- Boston will likely have to wait out the injuries.
The Red Sox' plan seems to be to stay to stay within striking distance of the Yankees and/or Rays until they get their full, or nearly full, roster back. Then, at least, those players will be rested, which could help Boston make a late charge for a playoff spot.