Red Sox, Marlins Offseason Strategies Finally Demonstrating Impact of MLB’s Luxury Tax

by NESN Staff

December 29, 2011

Red Sox, Marlins Offseason Strategies Finally Demonstrating Impact of MLB's Luxury TaxHoping that the Red Sox are still looking to make another big move this offseason? Don't be surprised if they stand pat.

The Red Sox made their biggest splash of the offseason on Wednesday when they landed closer Andrew Bailey in a deal for Josh Reddick and some minor league prospects. While many fans have clamored for more big moves from the Sox, there is no indication at the moment that any other significant ones are on the way as the team rounds out the roster.

The Red Sox are already over the luxury tax threshold set by Major League Baseball, which means they will have to pay $3.4 million in tax this season. For each season that their payroll exceeds the limit, the tax rate increases. If the Red Sox payroll remains high, which it most certainly would with another big-name signing, the team would be slapped with a 40 percent tax rate on that big shiny new contract.

With so much of the team's finances tied up long term to the players they signed to big deals last season — Adrian Gonzalez, John Lackey and Carl Crawford — and an eye turned towards re-signing Jacoby Ellsbury after this season, the Red Sox have precious little breathing room while navigating the offseason waters this year.

The Miami Marlins, on the other hand, had for years sat quietly at the bottom of the payroll standings, quietly raking it in while other teams supported them financially. The team's payroll had been so low that the money the team received solely from MLB's revenue sharing could support the team and still leave a tidy profit margin.

This offseason, things changed for them in a big way. The Marlins signed Jose Reyes, Mark Buehrle and Heath Bell while making runs at Albert Pujols and C.J. Wilson. Their payroll has now ballooned from $62 million to an estimated $109 million heading into 2011, just in time for the team to move into their brand-new stadium.

The Marlins quietly bided their time before making their moves. Their small payroll coupled with their secretly deep pockets allowed them to do that, without fear of running afoul of the league's luxury tax "ceiling."

Red Sox fans are now finally feeling the repercussions of baseball's revenue-sharing agreement that might be tilted to favor the little guys like the Marlins. There's less of an incentive to break the bank and push for that final expensive piece to the puzzle if it means allowing a rival team to reel in a big fish like Reyes with some of your own money.

In the grand scheme of things, the Marlins' ability to spend on these big-name free agents is a sign that baseball's collective bargaining agreement is working. But the flip side of that is when big-market teams like the Red Sox have already invested their money with big deals, they will be penalized for continuing to improve their team through free agency.

So the Red Sox will have to continue adapting to the changing market and making shrewd moves for young, relatively inexpensive players like Bailey. They may even take a chance with an untested player in right field.

For a fan base used to going out and filling a void with a big-name piece, it's a tough pill to swallow. But the reality is, this may be the new way to build a World Series contender, and it could take some getting used to.

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