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WEEI » This Just In » Scutaro deal freed nearly $8M for luxury tax
Mon, 01/23/2012 - 10:46am  

Scutaro deal freed nearly $8M for luxury tax

The motivation behind the Red Sox trade that sent shortstop Marco Scutaro to the Rockies on Saturday was unquestionably financial, but the amount of savings that the Sox achieved for luxury tax purposes was previously understated.

Scutaro will earn $6 million in 2012. However, in calculating the Red Sox payroll against the competitive balance tax (CBT) threshold of $178 million, he actually represented a $7.67 million salary for the coming season. That relates to the structure of Scutaro's deal.

Scutaro, who received a signing bonus of $1 million when he joined the Sox in Dec. 2009, made salaries of $5 million in both 2010 and 2011. He also had a $3 million player option (should the team decline its $6 million option and pay a $1.5 million buyout) that was treated as guaranteed money when calculating the Sox' CBT payroll. Thus, Scutaro's deal was treated by Major League Baseball as a three-year, $14 million deal, with an average annual salary of $4.67 million.

However, when the Sox exercised their $6 million option for 2012, his deal became a three-year, $17 million contract. That, in turn, meant that the Sox would be on the hook for a $7.67 million luxury tax hit on Scutaro's deal in 2012 -- the difference between the total value of the contract ($17 million) and what the Sox had been charged for CBT purposes on his deal in its first two years ($9.33 million).

That figure increased the Sox' motivation to move Scutaro, especially when the Rockies became the first team to offer to pay the entirety of his $6 million salary for 2012.

For more on the Scutaro trade, click here. For complete Red Sox coverage, visit weei.com/redsox.




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