237 replies to this topic

[Kid T]

Bingo. Wilson and Ranaudo lurking in the upper levels of the minor leagues could easily be ready,

Are you referring to the same Anthony Renaudo who was challenged in A ball last season?

[SoxScout]

Ells gets a bump to $8.05M

link: https://twitter.com/#!/mlbtrben/statuses/159334931284246529

[HangingW/ScottCooper]

Can anyone definitively say how the AAV for Lackey and Scutaro will be determined this year? I know there was a reason behind waiting until after the season started to offer Adrian Gonzalez a contract extension last year, and my assumption was that they didn't want his new contract to affect his 2011 AAV #. My question is how this affects language in existing contracts.

Lackey's contract at 5/$82.5 can become 6/$83 at some point but because that $500K option won't trigger until after a certain amount of time has been missed, that would occur after the start of the season. Additionally, do we know if this triggers the additional year, or does it only trigger the option of an additional year? Either way, I assume that triggering a $500K option early would save them money against the cap and thus make it worth it to trigger the option early. Assuming that the option is trigger as an additional year, can the AAV be calculated at 6/$83 in 2012 or do they have to wait until 2013?

Scutaro's contract of 2/$12.5 included a $6 million option this year or a $1.5 million buyout. I would assume that Scutaro's AAV # in 2010 and 2011 was 6.25 which based on my #s would put his AAV for 2012 at $4.5 ($6 million option less $1.5 buyout already factored into 2010 and 2011). Do option years with buyouts work differently than this? If so, the number would be 3/$17 which gets us to the 5,666,666.67 # being quoted by the papers. That makes me think there's some double counting going on.

[kazuneko]

What I don't understand is that , IF the Red Sox are going to be over anyways I don't see any point in not signing a guy like Oswald where they have a clear need.

Of course it's possible they truely are comfortable with what they currently have. The news of Matsusaka's possible early return may have been the tipping point.

Clearly adding Oswalt is far superior to not adding him and only a team that couldn't afford better would be "truly comfortable" with what they have. So if its true that they are over the tax limit already but aren't interested in Oswalt on a 1-year deal they are either a) broke or b) trying to cut back to increase profits (i.e. cheap).

Edited by kazuneko, 18 January 2012 - 03:40 AM.

[JakeRae]

Clearly adding Oswalt is far superior to not adding him and only a team that couldn't afford better would be "truly comfortable" with what they have. So if its true that they are over the tax limit already but aren't interested in Oswalt on a 1-year deal they are either a) broke or b) trying to cut back to increase profits (i.e. cheap).

Or,

c.) The Red Sox are a business and the marginal cost/benefit analysis doesn't work in favor of signing Oswalt when his true cost is 140% of his salary.

[Phil Plantier]

Or d) they are moving away from the philosophy of signing old injured pitchers to ML contracts.

[rembrat]

Not smart though. Pitchers with a history of injury are taking the biggest discounts. I mean, Oswalt is telling teams he'll pitch for $8MM and he still cant get a contract.

[wutang112878]

Or,

c.) The Red Sox are a business and the marginal cost/benefit analysis doesn't work in favor of signing Oswalt when his true cost is 140% of his salary.

Yes, signing Oswalt for say $10M and having that cost you $14M might not be the best contract they ever give out, but its really not that bad. When they gave out the deals to Crawford and Lackey they had to realize the chances of them providing more production than their contract value was pretty low, so sure Oswalt might cost a little more than he is worth but in the grand scheme of things losing $4M on a 1year deal is a drop in the bucket.

Edited by wutang112878, 19 January 2012 - 01:48 PM.

[Red(s)HawksFan]

Yes, signing Oswalt for say $10M and having that cost you $14M might not be the best contract they ever give out, but its really not that bad. When they gave out the deals to Crawford and Lackey they had to realize the chances of them providing more production than their contract value was pretty low, so sure Oswalt might cost a little more than he is worth but in the grand scheme of things losing $4M on a 1year deal is a drop in the bucket.

But if Oswalt's asking price started at 1/$10M or 1/$12M, and he's now down to 1/$8M, maybe he drops down to 1/$5M or 1/$6M by early February if he remains unsigned. That could save them anywhere from $4-8M on what it would have cost to sign him even a month ago. It's fairly clear that the market on Oswalt is limited since he's still on the market asking for 1/$8M. Patience could pay off big for the Sox if they continue to wait him out.

[HangingW/ScottCooper]

Given the news about Crawford's injury and Kalish likely not being ready until May or June, I'm curious if the Sox are kicking the tires on someone like Raul Ibanez. The thought of a 40 year old Raul Ibanez in RF might not be that enticing, but he might be available on a very affordable deal.

[JakeRae]

Yes, signing Oswalt for say $10M and having that cost you $14M might not be the best contract they ever give out, but its really not that bad. When they gave out the deals to Crawford and Lackey they had to realize the chances of them providing more production than their contract value was pretty low, so sure Oswalt might cost a little more than he is worth but in the grand scheme of things losing $4M on a 1year deal is a drop in the bucket.

"I made bad decisions in the past and this decision is less bad therefore I should do it."

Every business decision should be expected to be value positive.

I'd love to see Oswalt in this rotation. As a fan and knowing that this team is already at their chosen payroll limit, I would be thrilled to see them blow through that to add extra talent to the rotation on a 1-year deal. But, I also understand where they are coming from as a business and think that the demonization of ownership's decisions this offseason relative to spending are not justified. We are fans of the second highest spending team in the sport and are lucky to have an ownership group as committed to winning as the current group. People are losing sight of how lucky we are and that is discouraging.

[rembrat]

Given the news about Crawford's injury and Kalish likely not being ready until May or June, I'm curious if the Sox are kicking the tires on someone like Raul Ibanez. The thought of a 40 year old Raul Ibanez in RF might not be that enticing, but he might be available on a very affordable deal.

I was actually thinking Rick Ankiel. He can play all 3 positions well and has the arm to play in Fenway's RF. He won't give you much offensiviely but 4th and 5th outfielders seldom do. Plus he is probably availabe dirt cheap.

But the Nationals might be able to offer a more secure role and more playing time.

[BrooklynDog45]

Not that the Red Sox need another left-handed hitting OFer but would JD Drew be an option on a one year deal for $2 million. He could platoon with McDonald until Crawford and Kalish are health and then go on the DL with a tight hamstring.

[lexrageorge]

Not that the Red Sox need another left-handed hitting OFer but would JD Drew be an option on a one year deal for $2 million. He could platoon with McDonald until Crawford and Kalish are health and then go on the DL with a tight hamstring.

No, the Drew ship has sailed. He didn't exactly endear himself to management or his teammates by taking a holiday in September.

[BoSox Rule]

I remember Drew coming back to play hurt trying to help his team save their season.

[wutang112878]

But if Oswalt's asking price started at 1/$10M or 1/$12M, and he's now down to 1/$8M, maybe he drops down to 1/$5M or 1/$6M by early February if he remains unsigned. That could save them anywhere from $4-8M on what it would have cost to sign him even a month ago. It's fairly clear that the market on Oswalt is limited since he's still on the market asking for 1/$8M. Patience could pay off big for the Sox if they continue to wait him out.

Great point, and if they are waiting because they believe the price is dropping and going to continue to thats fine with me. But if they arent signing him because of luxury tax issues, thats ridiculous IMO anyway.

"I made bad decisions in the past and this decision is less bad therefore I should do it."

Every business decision should be expected to be value positive.

I would argue that signing Oswalt to a 1/$10M would be much smarter and less risky than the Lackey and Crawford type deals, hence even if the decision is bad its so much better than what they have done. And maybe Oswalt at 1/$10M doesnt provide value, but I would argue that maybe 10-20% of all free agent contracts with a AAV >$5M actually provide value to the team who signs the player. So if we want every FA signing to be value positive, we probably shouldnt sign very many FAs whatsoever. While Oswalt might not be worth the $10M he is paid for his individual performance, there is indirect value that he could provide by stabilizing the rotation, saving the bullpen, keeping the team in contention and fan interest up, etc.

[SoxScout]

Gammons says we are already over, the Globe says we are almost definitely going over.... there aren't levels of going over, correct? If we are going to be $1 over then the Tax wont reset.

If this is the case, it will look super bad if we don't acquire a pitcher and take the couple of million tax hit.

However, up to this point you have to think the Sox are operating like they think they are under the tax, right?

[RedOctober3829]

Gammons says we are already over, the Globe says we are almost definitely going over.... there aren't levels of going over, correct? If we are going to be $1 over then the Tax wont reset.

If this is the case, it will look super bad if we don't acquire a pitcher and take the couple of million tax hit.

However, up to this point you have to think the Sox are operating like they think they are under the tax, right?

Why else would they be not spending then? If you were already over, what's a few more million for an Oswalt or a Floyd if it meant improving the club?

[Rudy Pemberton]

Gammons says we are already over, the Globe says we are almost definitely going over.... there aren't levels of going over, correct? If we are going to be $1 over then the Tax wont reset.

Just because they are over now, doesn't mean they will be when it matters. They could be hoping to dump someone, to sign Papi to a multi-year deal, etc. Given the arbitration amounts, it's hard to see how they get under, though.

In hindsight, offering Papi arbitration and the Bailey trade may have been poor moves if it was so essential to stay below the tax.

You could have had Reddick / Oswalt / Bard as closer for a comparable cost as Bailey / Sweeney, for example. Or Madson and Cody Ross instead of Ortiz.

Oh well, here's to hoping they don't do something stupid just to get under.

[Savin Hillbilly]

Why else would they be not spending then? If you were already over, what's a few more million for an Oswalt or a Floyd if it meant improving the club?

Others have said the answer is that once you're over, an $8M Oswalt deal effectively becomes an $11M Oswalt deal, and therefore a bad deal. I would think this is the wrong way to look at it, though. Once you're over, the tax hit should be pro-rated across the roster for value-per-dollar purposes, because it was the sum total of commitments that put you over, not just one of them. So if the Sox wind up paying, say, $5M total in tax, that's $5M divided by everybody with a major league contract, i.e., a very small amount per player. EDIT: Come to think of it, it would make more sense to think of it as recalculating the tax rate over the whole payroll, not just the excess. So if the Sox wind up with a $190M payroll and pay $5M in tax, that's a 2.6 percent payroll tax. So Oswalt's $8M is now effectively $8.2M, Crawford's $20M is $20.5M, etc.

Edited by Savin Hillbilly, 21 January 2012 - 10:27 AM.

[SoxScout]

Why else would they be not spending then? If you were already over, what's a few more million for an Oswalt or a Floyd if it meant improving the club?

That's what I don't get, people are saying there is no way we are staying under, and it that is the case... WTF.

Unless we really are going to cut money.

Edited by SoxScout, 21 January 2012 - 10:16 AM.

[smastroyin]

Did the Lackey contract situation ever get resolved? Like if they could just extend him the year at the minimum, which would relieve about $3 million of salary per year toward the tax (his deal was 5 years, $82.5 million, AAV $16.5, add a sixth year at $500K and that AAV goes to $13.8). Maybe that change is enough to bring them back under so they are waiting for that decision?

On the other hand, although I'm not happy with the off-season so far, I would not blame John Henry one bit for not wanting to pay $8 million for an injury guy given their track record with such projects.

[Bigpupp]

They are already over even when you factor the Lackey savings. Trading a contract AND not using his money for a pitcher is all that can be done at this point.

(null)

[Jinhocho]

This might have been addressed elsewhere, but I have not seen it so I will ask here:

1) Any word on Henry's finances? There were reports he had been taking a pounding in his funds the last couple years.
2) What, if anything, does the ownership group's decision to spend $476 million just to buy Liverpool and then millions more (over 53 million pounds difference between transfers in and out) to run/improve it affect the Sox payroll and financial wiggle room?

It seems to me that down economy/investment returns and buying a English premier league team and putting a fortune into it might affect the Red Sox,

http://news.bbc.co.u...ll/15278873.stm

[rembrat]

I may have fudged the numbers but I get $170.69MM (rounded) and that is after assuming Baliey, Bard, Aceves, and Ortiz get midpoint and assuming $480K for pre arb guys. Anyone else give it a go? Where is philly?!

EDIT: Also assumed the added year to Lackey's deal is tacked on bringing his aav down.

Edited by rembrat, 21 January 2012 - 12:35 PM.

[Savin Hillbilly]

I may have fudged the numbers but I get $170.69MM (rounded) and that is after assuming Baliey, Bard, Aceves, and Ortiz get midpoint and assuming $480K for pre arb guys. Anyone else give it a go? Where is philly?!

EDIT: Also assumed the added year to Lackey's deal is tacked on bringing his aav down.

Are you including the medical costs? I think those are estimated at around $10M, so if not, there you have it.

[judyb]

Bard's signed for $1.625 million.

http://www.boston.co...signs_avoi.html

[Infield Infidel]

Did the Lackey contract situation ever get resolved? Like if they could just extend him the year at the minimum, which would relieve about $3 million of salary per year toward the tax (his deal was 5 years, $82.5 million, AAV $16.5, add a sixth year at $500K and that AAV goes to $13.8). Maybe that change is enough to bring them back under so they are waiting for that decision?

The added year wouldn't affect the AAV of past seasons. The AAV of the first two years of the contract was $16.5m. That cannot change, because $33m is accounted for on previous years' payrolls. Basically, you would look at an added year as a new contract starting whatever year the clause is triggered. Assuming the trigger is this year, the remainder of the contract is $50m over 4 years, or AAV $12.5.

[SoxScout]

The added year wouldn't affect the AAV of past seasons. The AAV of the first two years of the contract was $16.5m. That cannot change, because $33m is accounted for on previous years' payrolls. Basically, you would look at an added year as a new contract starting whatever year the clause is triggered. Assuming the trigger is this year, the remainder of the contract is $50m over 4 years, or AAV $12.5.

Where have you seen this? Everything I have read has agreed with smastroyin.

[Infield Infidel]

For Lux tax purposes, can they at this point change his AAV (or the payroll in general) for 2010?

edit - If they can then I'm certainly mistaken.

edit2- yes they can

Edited by Infield Infidel, 22 January 2012 - 03:53 PM.

[SoxScout]

For Lux tax purposes, can they at this point change his AAV (or the payroll in general) for 2010?

edit - If they can then I'm certainly mistaken.

Hell if I know, this shit is ridiculous:

http://www.providenc...v2.26f9602.html

Lackey’s contract states that the pitcher would make the major-league minimum in an additional sixth year with the Red Sox if he went under the knife before then. That alters the parameters of the deal from five years and $82.5 million to six years and roughly $83 million, easing the burden on the luxury tax for the Sox.

(The luxury tax is calculated using salaries on an average per-year basis. Instead of counting $16.5 million toward the luxury tax in 2012, Lackey will count around $13.8 million.)

Also, almost exactly a year ago Speier wrote a piece on the LT and, well, my head is spinning right now.

Edited by SoxScout, 22 January 2012 - 12:45 AM.

[Infield Infidel]

Thanks, now my head is spinning. But from what I read there in the second segment about Beltre's contract (that first segment completely confused me), there's this clarification on vesting options

Because there is less than a 100 percent chance of triggering an escalator clause or a vesting option, such clauses are not treated as guaranteed. 2) In this case, it is virtually impossible that Beltre will have enough at-bats to trigger the escalator clause in the 2011 player option. 3) Beltre has another clause that could trigger a $1 million buyout if he gets to a reachable number of plate appearances. If he reaches that level (575 plate appearances) and declines his player option, then the triggering of the buyout would add another $1 million to the amount that would be calculated against the Sox' 2011 payroll for luxury tax purposes for a total of $3 million.

If that's the case for Lackey's option, which vests with injury, the 6th year isn't figured into the initial contract since it's not guaranteed, but now it is guaranteed, so the new money is put onto the contract at this time and affects the remainder of the contract. I think.

[Infield Infidel]

Here's another reason why the sox (and the yankees) might want to stay under the limit

The new deal, for the first time ever, disqualifies 15 markets from receiving initial revenue sharing dollars. They are: The Yankees, Mets, Red Sox, Cubs, White Sox, Phillies, Blue Jays, Nationals, Braves, Rangers, Astros, Giants and A's (assuming they build their new stadium).

Beginning in the 2013 season, teams on this list can get back a percentage of what they pay in revenue sharing (referred to as a "rebate"). In 2013, those teams would get 25 percent of their money back. In 2014, those teams would get 50 percent of their money back. In 2015, those teams would get 75 percent of their money back, all the way up until 2016, when they would basically get a free pass.

A condition of getting this rebate however is that you couldn't get it if you were paying any sort of luxury tax. And that's the problem. The threshold in 2013 is $178 million and from 2014-2016 is $189 million. Go over that and you'll have to pay at tax PLUS you'll lose your ability to get your rebate, which increases over time.
So why is the word out that the Yankees go over a $189 million payroll in 2014? The math is easy. Let's say the Yankees are right at $189 million and decide to spend $10 million on a free agent to make it $199 million. That free agent didn't just cost them $10 million. That free agent just cost them $25 million!

Why?

Because they pay a 50 percent repeat offender tax, which means they're paying a $5 million luxury tax payment and then they'll lose their rebate, which let's say is about $10 million.

edit - kazuneko linked to this Jason Stark article that mentions the same thing, though Rovell had over a month earlier

Edited by Infield Infidel, 22 January 2012 - 01:37 AM.

[geoduck no quahog]

If a team sheds salary in mid-season, how does that impact the calcuations of AAV for Luxury Tax at the end of that season? In other words, can a team be over the limit in June and shed enough salary to make the year's final calcuation below the threshold?

[Red(s)HawksFan]

Thanks, now my head is spinning. But from what I read there in the second segment about Beltre's contract (that first segment completely confused me), there's this clarification on vesting options


If that's the case for Lackey's option, which vests with injury, the 6th year isn't figured into the initial contract since it's not guaranteed, but now it is guaranteed, so the new money is put onto the contract at this time and affects the remainder of the contract. I think.

If it vests as of this season, the first two years aren't a factor in recalculating the AAV if I'm reading correctly. If so, that means the front-loaded first year is left out and the AAV drops even more than we thought, no? With the option vested, it becomes a 4/46.5 with an AAV of about 11.6, rather than 6/83 with a 13.8 AAV. That saves them close to five million dollars once if vests.

If that's how it works, I definitely see why Theo negotiated that into the deal. With that much savings on the AAV, it frees up enough money to go out and find a cheap alternative to fill Lackey's innings (or work as a $5M discount of sorts on a more expensive option), at least theoretically.

[Kevin Jewkilis]

The tax is calculated in December, based on what they actually payed (or the actual AAV in the case of multi-year contracts), including benefits, bonuses, etc. So yes, if they trade someone in mid-season, they'd only be accountable for the first half of the season. I can't imagine that happening, but the last 5 months have showed us that unimaginable things can happen.

[SoxScout]

Speier sent me a message. It's $13.8m every year of the deal, adjusted retroactively. The Sox will receive a credit or rebate for the extra they have already paid.

[Montana Fan]

Speier sent me a message. It's $13.8m every year of the deal, adjusted retroactively. The Sox will receive a credit or rebate for the extra they have already paid.

Further confirms that Speier is one of the best, if not the best, we have.

[Plympton91]

Here's another reason why the sox (and the yankees) might want to stay under the limit


edit - kazuneko linked to this Jason Stark article that mentions the same thing, though Rovell had over a month earlier

WOW!

I hadn't realized how badly the owners screwed the union in the latest CBA. That is for all intents and purposes a salary cap. Only someone with the ego og George Steinbrenner combined with the bank account of Bill Gates would exceed the exceed the threshold. For all intents and purposes, that is a salary cap. Where have you gone Donald Fehr!

[Bernard Gilkey baby]

Forgive me, I flunked both math and google research class, I can't find the actual Red Sox AAV totals in 2010 and 2011. All I find is news articles telling me the luxury tax the Sox paid. But do I have this right?

As of now, Lackey's AAV still counts as 16.5. But in December of 2012 after Lackey actually misses the season, the restructured contract vests. That means that Red Sox save 2.7 million AAV dollars retroactive to 2010, 2011, and upcoming 2012.

Red Sox payed 3.4 million in luxury tax in 2011. And Sox payed 1.5 million in 2010. With a 2.7 AAV reduction, that means, retroactively, we got into 2010 luxury tax by a nose hair. Right?

Hindsight is 20/20. Right now, I cant think offhand of any small, inconsequential roster moves Sox made in 2010 that were useless, but I'm sure there were a zillion. (I just have the memory of a crack addict) But theoretically... theoretically... Red Sox could have saved lots right now if they had just gone over the 2010 limit by even a leeeeetle bit less. The retroactive 2.7 million reduction minus one small really inconsequential roster move and Sox are under the luxury tax limit in 2010, which dominoes into savings in 2011, because Sox would pay less of a percentage for going over. And then in 2011, we'd again, be paying the luxury tax by a relative nosehair. (And again, a relatively small and ultimately inconsequential roster move away from being under in 2011.)

Sox often have 2nd highest payroll in MLB. The Yankees go over the luxury tax with authority, but with a 2.7 AAV decrease, these numbers are frustratingly close to the edge. This is not my money. But it's interesting to see how every bit of expenditure should be justified. No matter how wealthy you are, you HATE throwing away money. With Lackey's new AAV, the Sox are nail bitingly close to not paying ANY luxury tax between the years 2008- 2012.

Or did I get that wrong?

[Infield Infidel]

Speier sent me a message. It's $13.8m every year of the deal, adjusted retroactively. The Sox will receive a credit or rebate for the extra they have already paid.

Ah, the rebate/credit is the missing link. Thanks Speier!

Bernard, the sox were over by $6.61m in 2010, so with the adjustment 2010 is now $3.91, so yes a small move but not close to a minimum salary or anything

[Bernard Gilkey baby]

Bernard, the sox were over by $6.61m in 2010, so with the adjustment 2010 is now $3.91, so yes a small move but not close to a minimum salary or anything

Thanks... I was imagining something a little smaller. I didn't have it right. Carry on, folks.

[Phil Plantier]

Here's what I don't get - if getting under the luxury tax threshold is such a priority, why offer arbitration to Ortiz? Replacing production at DH would seem to be easier than trying to find budget SS/back of the rotation replacements.

[Papelbon's Poutine]

Not to mention pissing $1m away on Andrew miller.

(null)

[Rudy Pemberton]

I thought Miller's contract wasn't guaranteed?

[HangingW/ScottCooper]

Ah, the rebate/credit is the missing link. Thanks Speier!

Bernard, the sox were over by $6.61m in 2010, so with the adjustment 2010 is now $3.91, so yes a small move but not close to a minimum salary or anything

Just to clarify, does this mean that Lackey's 5/$82.5 million deal is now calculated at a 6/$83 million deal at the point where they activate the $500K option because that was part of that original contract? At the activation of that the AAV changes for all years between 2010-2015 and rebates are given where applicable because of the new AAV?

Comparatively, Adrian Gonzalez's deal, signed early in the 2011 season is treated as a separate deal where the AAV of the 7/$154 begins in 2012 instead of treating it as an 8 year $160.3 million contract (rolling in his 2011 salary of $6.3 million). It would seem that there could be incentives and language issues that can cause some degree of finagling with this system.

Also, I assume contracts like Ryan Howard (5 years $125 million, 2012-2016, signed 4/26/10 Per Cots) and Ryan Braun (5 years $105 million, 2016-2010, signed 4/21/11 Per Cots) are treated as separate deals in terms of AAV with relation to the deals that preceeded them. Is that correct?

[gammoseditor]

WOW!

I hadn't realized how badly the owners screwed the union in the latest CBA. That is for all intents and purposes a salary cap. Only someone with the ego og George Steinbrenner combined with the bank account of Bill Gates would exceed the exceed the threshold. For all intents and purposes, that is a salary cap. Where have you gone Donald Fehr!

While the penalities are much harsher than before, from the linked article it looks like these luxury taxes are not in effect until 2013. Hopefully there is still hope for Oswalt or Jackson.

[SoxScout]

Just to clarify, does this mean that Lackey's 5/$82.5 million deal is now calculated at a 6/$83 million deal at the point where they activate the $500K option because that was part of that original contract? At the activation of that the AAV changes for all years between 2010-2015 and rebates are given where applicable because of the new AAV?

Yes, it was a clause of the contract, it's not a new contract.

Also, I assume contracts like Ryan Howard (5 years $125 million, 2012-2016, signed 4/26/10 Per Cots) and Ryan Braun (5 years $105 million, 2016-2010, signed 4/21/11 Per Cots) are treated as separate deals in terms of AAV with relation to the deals that preceeded them. Is that correct?

Ryan Howard and his recent contract extension serves as the perfect example of the first quirk. Howard was signed to a 3-yr/$54 million deal that ran from 2009-11, paying $15 mil, $19 mil, and $20 mil, respectively. Howard was then signed to a five-year extension last season paying $20 mil in 2012-13, and $25 mil from 2014-16. Because the extension was signed before his current deal expired [Opening day of the final year of his contract], the luxury tax rules stipulate that the years and dollars are consolidated.

Given the luxury tax rules, instead of a 3-yr/$54 mil deal followed by a 5-yr/$125 mil deal (including $10 mil buyout excluded from the calculation), Howard is currently signed to a 6-yr/$133 mil deal: the $18 mil he would make from the prior AAV calculation, added to the $115 mil of the new deal, which doesn’t include the $10 mil buyout in 2017. The AAV computes to $22.17 million.

Basically, because the Phillies extended Howard before the opening day of the final year of his existing contract, they added $4.2 million to their luxury tax payroll this year. The Red Sox avoided this hit when they waited to sign Adrian Gonzalez to an extension until after opening day. It wasn’t that the team and its first baseman couldn’t come to an agreement of terms, but rather that the wait ensured the Red Sox wouldn’t tack on a few million dollars extra in the AAV calculation.

Had the Phillies signed Howard in, say, two weeks, the team would have avoided the steep increase in its luxury tax calculable payroll.

http://www.brotherly...the-luxury-tax/

More on Gonzalez's deal

[Papelbon's Poutine]

Theo certainly looked smart at the time resigning Beckett and Gonzalez after opening day but in retrospect that room would sure come in handy right now.

[RingoOSU]

Here's what I don't get - if getting under the luxury tax threshold is such a priority, why offer arbitration to Ortiz? Replacing production at DH would seem to be easier than trying to find budget SS/back of the rotation replacements.

At this point, with all the handwringing over the tax, I'm convinced that Cherrington was certain Ortiz would not accept.