February 11, 2012

Lucchino Says Red Sox Will "Fly By The Luxury Tax"

Red Sox president and CEO Larry Lucchino disputed the idea that the front office is being frugal this off-season and trying to get its payroll under the new luxury tax cap of $178 million. Rather, he said it was a certainty that the team would "fly by the luxury tax".
We're going to have the second-highest payroll in baseball this year. The Yankees are from a different planet than most of the rest of us, because they're in the largest market in the Western world. But it's hard to understand that assertion given the level of commitment the club has made not to just to the Major League payroll, but to amateur signing bonuses, to international signings, anything related to the on-field product. I think this 2012 budget will be the highest budget in Red Sox history. It's been pretty high the last few years. ... Will we eclipse the luxury tax threshold? To be sure, we will - once again. So I think the talk of us not spending needs to be viewed in the context of real facts and in comparisons to real dollars.
Last year's payroll of $189 million was the highest in team history. Also: SoSHer SoxScout thought Lucchino sounded "absolutely pissed off" (mostly at the media, it seems) during the interview. ... So the team is not being cheap?
It makes me laugh. It just proves the old adage that you can't please all of the people all of the time. You certainly can't please all of the sportswriters much of the time. But that's OK. What's important to us is that our fans realize that we are in this to win it, and we operate accordingly. Are there financial constraints from time to time? Of course there are. No one has an unlimited budget to do absolutely everything they want to do. But with some common-sense parameters ... there is a powerful sense of obligation that our job is to commit to win, provide our fans with entertaining, competitive, winning baseball.
Jon Heyman (CBS Sports) reported that Fenway Sports Group, led by Red Sox owner John Henry, spent $179 million on Liverpool soccer players this year - "about 20 times what he spent on the Red Sox" - suggesting that because Henry "overspent on soccer", he has been nickel-and-diming the Sox roster, making moves like trading probable starting shortstop Marco Scutaro to free up a paltry $6-7 million.

It's an extremely lazy effort from Heyman; he does little more than recount player comings and goings on both teams and ask a question or two. Heyman would have us believe that John Henry got where he is today by being a moron with money. Of course, Heyman is not alone; Yahoo's Jeff Passan's Hot Stove column on the Red Sox is headlined: "Red Sox Pinch Pennies After Beer-Soaked Collapse".

Lucchino laughed this off, too: "That has not been the case. There has not been a situation where that [Liverpool] was cited for a reason for us not to do something here [Boston]."

The Herald's Scott Lauber noted what Heyman must have somehow forgotten - that the Red Sox have laid out some serious coin in recent years, including spending close to half a billion dollars on four players: Adrian Gonzalez ($154 million), Carl Crawford ($142), John Lackey ($82.5), and Josh Beckett ($68). And so maybe they have to easy off a bit this year.

Henry spent 58 million pounds, roughly $90 million, in January 2011 to buy forwards Luis Suarez and Andy Carroll. But Liverpool offset the cost by selling Fernando Torres and Ryan Babel for nearly the same sum.
Hmmm, I wonder why Heyman didn't mention that.

Lauber cites the real reason for the team's roster decisions - changes to the new collective bargaining agreement:
It's worth examining both the team's excessive spending in the past two offseasons and changes to the collective bargaining agreement that profoundly impact the Red Sox and the Yankees, the two most frequent luxury tax offenders. ...

Because of the spending of the past few years, Cherington wasn't going to have as much money to burn as predecessor Theo Epstein enjoyed unless Henry agreed to allow the payroll to climb closer to $200 million. ...

Under the new rules, a team can reset its luxury tax rate if it gets its payroll below the threshold even for one year. So, while the Red Sox are prepared to pay a 40 percent tariff this year because they will exceed the luxury tax for a third consecutive season, their bill would recede to only 17.5 percent in 2014 if they manage to stay under the threshold next year.
Which means that we will be hearing the exact same thing next winter.

Also: Over the last couple of weeks, WEEI's Alex Speier has written a series of articles about the team's finances.


Lord Lynch said...

Jon Heyman's comments are so laughable on Liverpool spending that my sides have split.

In coming up with the gargantuan figure he fails to commend Liverpool for selling the Spanish international Fernando Torres for £50m (around $70m). They shipped out Joe Cole who was on large wages, and Alberto Aquilani.

The Torres sale was the best - he's been Carl Crawford good for Chelsea. Actually, no he hasn't. He's been Darnell McDonald good! They got a mug club to spend good money on a busted flush.

How is the Suarez racism incident playing out over there?

allan said...

How is the Suarez racism incident playing out over there?

I know it exists only because of this Abraham blog post, in which he says Henry needs to "crack a few heads".

allan said...

It could be mentioned somewhere else, but I have seen nothing.