Speier: By resetting the tax this year the Henry could save 100m over the next 3 years

[JBJ_HOF]

Incredible breakdown by Alex Speier, this is much more than John Henry not wanting to pay the ten million or so in CBT taxes everyone seems to think it is.

Expect the Sox to get under 208m this year, spend to 240m in 2020 and 2021, and then drop down again in 2023, pending the new CBA.

https://www.bostonglobe.com/sports/redsox/2019/12/10/here-what-red-sox-would-face-they-don-get-under-luxury-tax-threshold-this-year/PCjGCkeVgdj23kGMUN4aaL/story.html

 

[sean1562]

Yea damn. Makes more sense why they want to trade JBJ and possibly subsidize price. Once cole signs maybe that market will open up a bit more. Especially if the angels lose out on cole

 

[Lose Remerswaal]

I don't think this math is new here. We knew that resetting the tax was a huge economic deal Yanks have already done it.

 

[The Talented Allen Ripley]

The revenue sharing rebate was news to me, that alone is a potential swing of ~$25m over three years depending on whether they reset or not.

 

[chrisfont9]

I don't think this math is new here. We knew that resetting the tax was a huge economic deal Yanks have already done it.

At a minimum, it certainly isn't news to the team, and yet they made the deals they made. Possibly because their annual revenue is like $500 million. I really don't buy the urgency here; it's not nothing but it feels more like they are playing ball with the other colluding owners.

 

[Papelbon's Poutine]

At a minimum, it certainly isn't news to the team, and yet they made the deals they made. Possibly because their annual revenue is like $500 million. I really don't buy the urgency here; it's not nothing but it feels more like they are playing ball with the other colluding owners.

You realize that while their revenues are that high, their operating income is about $80M, right? They make money but end of day they aren’t printing it and it is a business.

 

[lexrageorge]

The owners wanting to reset the threshold is understandable, especially after reading Speier's piece, as I don't think a lot of fans knew the magnitude of the revenue impact; I know I didn't.

What is not understandable is the the owners agreeing to the Eovaldi and Sale contracts within the past 10 months. It's not like Henry couldn't have done the same calculation that Speier just did last year at this time.

 

[Lose Remerswaal]

It's a very good article, bringing together all of the inputs that go into this decision

 

[Papelbon's Poutine]

Perhaps they were going to try to ride mostly the same team to another title and or WS appearance and offset with the playoff pot to buy another year? Not sure, I realize I’m spitballing. I’m more concerned with what appears a completely disregard towards the impact on the draft and international market that would be a result; if they plan to strip parts, they need to reload the farm.

 

[DeadlySplitter]

How likely is it significant aspects of this completely change in the new CBA?

 

[chrisfont9]

You realize that while their revenues are that high, their operating income is about $80M, right? They make money but end of day they aren’t printing it and it is a business.

Sure, but I have zero interest in how much money they get to keep at the end of the year. Also I'm not a finance guy but that's just one figure; they own Fenway Park and the team, which have value in the billions, so with those kind of assets they really could print money. I'm sure there are many other factors in their financial picture and they are largely beyond what most of us can dream about. Whatever, that's their business and I respect it, and if they want to stop giving out bad contracts, great. I just feel like with the constant barrage of Globe articles about their financial situation we are all being asked to cheer for the team saving money, and I'm not getting sucked in.

 

[Soxy]

I don't really get why he used the example of the Red Sox maintaining their current payroll through 2022, as that seems to have a zero percent chance of actually happening. Would be more instructive to look at what happens if they don't reset until 2021 or 2022. It's not a question of if they reset; it's a question of when they reset.

They're definitely resetting at some point in the near future. The "save $100 mil" headline is a bit exaggerated, because we all know this payroll level isn't sustainable. Maybe that's his point, but I don't think this guarantees they'll be under the threshold in 2020, which some here took away from Speier. They just need to reset it ASAP.

I think they'd be willing to push it another season if they felt like the opportunity was right. They've basically said as much.

 

[Harry Hooper]

If only the principal owner had some financial skills.

 

[chrisfont9]

Perhaps they were going to try to ride mostly the same team to another title and or WS appearance and offset with the playoff pot to buy another year? Not sure, I realize I’m spitballing. I’m more concerned with what appears a completely disregard towards the impact on the draft and international market that would be a result; if they plan to strip parts, they need to reload the farm.

Sure, but the real choice we are told is out there is something like "keep Betts or save those draft picks." There is an infinitesimal chance that either the draft picks or the international money will ever yield a player as good as Betts, or even Bradley for that matter. It's cool to stockpile assets but we are talking about being bumped back ten draft spots, or a comp pick being after the 4th round rather than the second. Those are virtually meaningless changes given the unpredictability of the draft.

If you want to build the system, draft and develop better. Don't fritter away pool money or draft picks if you don't have to, sure, but it's hardly the end of the world if you do.

 

[shaggydog2000]

Sure, but the real choice we are told is out there is something like "keep Betts or save those draft picks." There is an infinitesimal chance that either the draft picks or the international money will ever yield a player as good as Betts, or even Bradley for that matter. It's cool to stockpile assets but we are talking about being bumped back ten draft spots, or a comp pick being after the 4th round rather than the second. Those are virtually meaningless changes given the unpredictability of the draft.

If you want to build the system, draft and develop better. Don't fritter away pool money or draft picks if you don't have to, sure, but it's hardly the end of the world if you do.

There is no real evidence that anybody drafts or develops better than anyone else. There is plenty of evidence that high picks are better than low ones, and more picks are better than less. What you're saying is to rely on luck. A developed player is definitely better than a developing one. Or even a number of developing ones in many cases. But the payroll penalty system is built to make you choose between developing new players and keeping all of your developed players. You don't get to do both, unless you get lucky. And I don't think billionaires and their top paid employees like to rely on luck.

 

[chrisfont9]

There is no real evidence that anybody drafts or develops better than anyone else. There is plenty of evidence that high picks are better than low ones, and more picks are better than less. What you're saying is to rely on luck. A developed player is definitely better than a developing one. Or even a number of developing ones in many cases. But the payroll penalty system is built to make you choose between developing new players and keeping all of your developed players. You don't get to do both, unless you get lucky. And I don't think billionaires and their top paid employees like to rely on luck.

Huh? Literally every single MLB draft has a first round full of guys who never made the majors and guys who went far later who had meaningful careers. Sure, the #1 pick is probably more valuable over time than the #172nd pick, but actually the last very good NUMBER 1 OVERALL PICK is Carlos Correa from 2012. Then Mark Appel, Brady Aiken, Dansby Swanson, and guys who are still percolating. The last loaded draft was 2011 (Cole, Bauer, Lindor, Springer, Rendon) and the MVP of that draft went #172... Markus Lynn Betts.

There are teams with loaded farm systems and teams with nothing, but nobody drafts or develops better than anyone else? I don't get that at all.

 

[shaggydog2000]

Huh? Literally every single MLB draft has a first round full of guys who never made the majors and guys who went far later who had meaningful careers. Sure, the #1 pick is probably more valuable over time than the #172nd pick, but actually the last very good NUMBER 1 OVERALL PICK is Carlos Correa from 2012. Then Mark Appel, Brady Aiken, Dansby Swanson, and guys who are still percolating. The last loaded draft was 2011 (Cole, Bauer, Lindor, Springer, Rendon) and the MVP of that draft went #172... Markus Lynn Betts.

There are teams with loaded farm systems and teams with nothing, but nobody drafts or develops better than anyone else? I don't get that at all.

Flip a coin. If you get heads five times in a row, and I don't, are you the world's greatest coin flipper or just lucky? Some teams start with higher expected value picks, or more of them. Some times they just get lucky. Some times they get unlucky. That's life. And drafting. If you refuse to understand probability I can't do much for you here.

 

[chrisfont9]

Flip a coin. If you get heads five times in a row, and I don't, are you the world's greatest coin flipper or just lucky? Some teams start with higher expected value picks, or more of them. Some times they just get lucky. Some times they get unlucky. That's life. And drafting. If you refuse to understand probability I can't do much for you here.

And if you can't see the difference between a one-time penalty of a few draft slots versus a statistically significant probability conclusion, e.g. your next 100 first round picks are docked 10 spots, then I can't help you either.

 

[nattysez]

Perhaps they were going to try to ride mostly the same team to another title and or WS appearance and offset with the playoff pot to buy another year? Not sure, I realize I’m spitballing. I’m more concerned with what appears a completely disregard towards the impact on the draft and international market that would be a result; if they plan to strip parts, they need to reload the farm.

If the plan was "run it back in 2019 and run for cover in 2020," the Sale extension makes even less sense. I'd really love to understand what their actual plan was.

 

[wade boggs chicken dinner]

Huh? Literally every single MLB draft has a first round full of guys who never made the majors and guys who went far later who had meaningful careers. Sure, the #1 pick is probably more valuable over time than the #172nd pick, but actually the last very good NUMBER 1 OVERALL PICK is Carlos Correa from 2012. Then Mark Appel, Brady Aiken, Dansby Swanson, and guys who are still percolating. The last loaded draft was 2011 (Cole, Bauer, Lindor, Springer, Rendon) and the MVP of that draft went #172... Markus Lynn Betts.

There are teams with loaded farm systems and teams with nothing, but nobody drafts or develops better than anyone else? I don't get that at all.

What he is trying to say that there is no study that shows that any GM, owner, or team has a sustainable, demonstrated ability to select better players in the draft that anyone else in any sport.

Some corollaries to this.

(1) Though it is unclear whether any person can draft better than any other person, that doesn't mean that someone can't draft worse. Though I don't know of any studies on this, I would suppose that people could be bad at draftng.

(2) The top 10-15 picks is any draft are way more valuable than the rest of he picks. You can check this online if you want. That's why teams tank.

(3) Why do some teams have better farm systems than others? Well one part, as SD alludes, is random variation. Just because there doesn't appear to be any skill to drafting doesn't mean a team, can't get lucky and draft a few kids who are gong to make it. Also some teams may be at the cutting edge of player development or technological advances. That would certainly skip the possibiltya.a

 

[Papelbon's Poutine]

Somewhat important addition to #2 here is that with the current system, slotting has made the money allotted to your draft pool a huge factor in the appeal of having a higher pick; which is why we see players that aren’t the consensus top player taken higher than they normally would be given a truly competitive landscape. That ten pick drop last year ended up meaning the Sox didn’t pick until 44th and they by far had the smallest pool to work with at $4.7M. You’re simply not restocking your system like that, no matter how good you are at drafting and/or developing players. At that point your taking high floor/low ceiling guys that will end up getting cups of coffee from AAA.

 

[Cesar Crespo]

Somewhat important addition to #2 here is that with the current system, slotting has made the money allotted to your draft pool a huge factor in the appeal of having a higher pick; which is why we see players that aren’t the consensus top player taken higher than they normally would be given a truly competitive landscape. That ten pick drop last year ended up meaning the Sox didn’t pick until 44th and they by far had the smallest pool to work with at $4.7M. You’re simply not restocking your system like that, no matter how good you are at drafting and/or developing players. At that point your taking high floor/low ceiling guys that will end up getting cups of coffee from AAA.

Yeah, and to say it's just a one off penalty is kind of ignoring all the other one off penalties that they've taken the last few years. It all adds up.