MLB owners and the players’ union have yet to reach an agreement on a deal to restart the 2020 season, which was suspended indefinitely March 12 because of the coronavirus pandemic.
It still remains unclear if the 2020 season will resume even if the two sides reach a deal. Coronavirus could derail it. A recent outbreak of positive COVID-19 tests around baseball (five Phillies players and three staff members tested positive at their facility in Clearwater, Florida) – and the entire sports world – prompted MLB to close its spring training facilities in Florida and Arizona.
Whether or not there’s a 2020 season, the Red Sox, like every other organization, could enter the 2020-21 free agency period on a tight budget. MLB Commissioner Rob Manfred projected financial losses of nearly $4 billion for owners if the 2020 season is canceled. Teams also would experience significant revenue losses in an abbreviated season without fans in attendance.
Luxury tax penalties will not reset if the 2020 season is canceled (first reported by Boston Globe’s Alex Speier). The Red Sox, therefore, would enter the 2021 season designated as a Third-Time CBT Payor because they exceeded the Competitive Balance Tax threshold in 2018 and 2019. And so Boston would pay the highest tax penalty for each million the payroll exceeds $210 million.
The CBT threshold will increase to $210 million in 2021, up from $208 million in 2020.
Even if the season is played (and CBT penalties reset), the Red Sox, and all other MLB clubs, might need to spend less money this coming offseason after losing significant revenue. Free agents could bear the brunt of it. MLB Network’s Peter Gammons estimates that Mookie Betts, who the Red Sox traded to the Dodgers in February, could lose $100-150 million in free agency because of the financial crisis of the coronavirus pandemic.
The Red Sox will enter the winter committed to $130.05 million in guaranteed contracts that count toward the 2021 CBT threshold.
The $130.05 million guaranteed includes J.D. Martinez’s $23.75 million average annual value. But Martinez has the ability to opt out of the the final two years of his contract and test free agency again this offseason. If he does, the guaranteed number would drop to $106.75 million.
The guaranteed number would increase to $139.55 million if Martinez opts in and the Red Sox exercise Martin Perez’s $6.5 million team option and Mitch Moreland’s $3 team option million. The Red Sox can buy out both Moreland and Perez for $500,000 each.
Boston, of course, also will have to pay arbitration and pre-arbitration salaries. This year, arbitration salaries would have totaled $32.5125 million for a 162-game season. It will be a somewhat similar number in 2021.
Add another $15-16 million for medical costs, health benefits, spring training allowances, moving and traveling expenses, etc. That’s all included in the CBT.
Does it matter anyway if CBT is reset? The Red Sox, like all MLB clubs, might not want to exceed the threshold anyway, even as a First-Time Payor with the smallest tax penalty, because of the significant loss of revenue.
Because of a potential bleak free agent market, it makes sense for Martinez to stay, even though his salary would drop from $23,750,000 this year (before contracts are prorated) to $19,350,000 next season. He signed a front-loaded contract, with more money in the first three years than the final two. That said, MLB’s latest offer to the owners to restart the 2021 season included the use of a universal DH in 2020 and ’21, which could open 15 more job opportunities for Martinez in the National League, as WEEI’s Rob Bradford pointed out earlier this week.
The Red Sox presumably will need to add an outfielder and starting pitching. Jackie Bradley Jr. is eligible for free agency and unlikely to re-sign. The Red Sox traded Betts to the Dodgers in March. Kevin Pillar will enter free agency again. Betts, George Springer, Marcell Ozuna, Nick Castellanos, Joc Pederson, Michael Brantley and Enrique Hernandez are among the pending free agent outfield options.
PAYROLL BREAKDOWN
Guaranteed contracts (7): David Price (Red Sox pay $16 million of his $31 million AAV), Chris Sale ($25.60 million), Xander Bogaerts ($20 million), Nathan Eovaldi ($16.88 million), Dustin Pedroia ($13.3 million), Christian Vazquez ($4.52 million), Andrew Benintendi ($10 million). TOTAL: $106.3 million
Players who can opt out for free agency (1): J.D. Martinez ($23.75 million)
Team options (2): Mitch Moreland ($3 million team option, $500,000 buyout), Martin Perez ($6.5 team million, $500,000 buyout)
1st-year arbitration eligible (2): Rafael Devers, Austin Brice
2nd-year arbitration eligible (3): Josh Osich, Kevin Plawecki, Jose Peraza
Final year of arbitration (3): Matt Barnes, Heath Hembree, Eduardo Rodriguez
Pre-arbitration eligible (20): Michael Chavis, Colten Brewer, Yoan Aybar, Ryan Brasier, Matt Hall, Chris Mazza, Jeffrey Springs, Kyle Hart, Ryan Weber, Alex Verdugo, Darwinzon Hernandez, Josh Taylor, Marcus Walden, Jonathan Arauz, Mike Shawaryn, Bobby Dalbec, Marcus Wilson, C.J. Chatham, Phillips Valdez, Tzu-Wei Lin
Free agents (4): Kevin Pillar, Jackie Bradley Jr., Brandon Workman, Colin McHugh
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