Red Sox, Nationals expected to pay MLB luxury tax

The Boston Red Sox and Washington Nationals are two of Major League Baseball’s top contending teams for a World Series Title in 2018. They are the only teams on track to pay baseball’s luxury tax this year, according to opening-day payroll totals compiled by Major League Baseball and obtained by The Associated Press.

Boston’s payroll at the start of the season for purposes of the tax was $233.9 million, which would cause the Red Sox to pay a $9.4 million tax. Washington’s payroll was $201 million, which would result in a tax of $1.2 million.

The San Francisco Giants were just below the $197 million tax threshold at $196.66 million. The Giants were followed by the Chicago Cubs ($183.9 million), Houston Astros ($182.4 million), Los Angeles Dodgers ($181.99 million) and New York Yankees ($178.8 million).

New York was over the luxury tax threshold from 2003-17, paying an approximate total of $341 million. The Dodgers have had paid the highest amount of taxes for the past four seasons. Los Angeles has paid nearly $150 million over the last five years.

Per The Associated Press, luxury tax payrolls are based on the average annual values of contracts of all players on 40-man rosters and include $14,044,600 in benefits. End-of-season totals also will include earned bonuses plus reflect roster changes made throughout the season.

By not paying tax this year, the Yankees and Dodgers would reset their base tax rates in 2018 from 50 percent to 20 percent of the amount over next year’s threshold of $206 million. That would put them in a better position heading into a free-agent class, which includes Bryce Harper, Manny Machado, Josh Donaldson and potentially Clayton Kershaw, who has the right to opt out of his deal with the Dodgers. This has been a well-known strategy of the Yankees for quite some time now. It remains to be seen how this newfound ‘tax-relief’ will be put into action in the Bronx this offseason.

Boston’s base tax rate was 30 percent in 2016 but reset to 20 percent because the Red Sox dropped under the threshold last year. Under the surtax rules in the collective bargaining agreement that began last year, the rate for the Red Sox rises to 32 percent on the amount above $217 million this year, and the rate would rise to 62.5 percent on any amount above $237 million.

Because Washington paid the tax last year, the Nationals’ base rate is 30 percent and would rise to 42 percent on any amount above $237 million.

Winning certainly has its price. However, for either Boston or Washington, a World Series Championship would certainly be well worth the price.

 

–Mike D’Abate is a Managing Editor and National Columnist for Full Press Coverage Sports Media. Follow him on Twitter @mdabateFPC