The most up-to-date content on the planet
this just in
 RSS
WEEI » This Just In » Lester, Ortiz deals wouldn't impact '14 tax
Fri, 03/21/2014 - 7:19pm  

Lester, Ortiz deals wouldn't impact '14 tax

There was a time when the Red Sox were very careful to announce extensions after Opening Day. Players who hammered out the parameters of long-term deals in spring training but waited until after the first day of the season to announce them included David Ortiz, Coco Crisp, Josh Beckett, Clay Buchholz and Adrian Gonzalez.

The reasoning was sensible enough. If the extensions had become official prior to the start of the season, then the players’ salaries for the season for which they were under contract would be recalculated for luxury tax purposes. So, for instance, in 2011, Adrian Gonzalez made $6.3 million. Had his seven-year, $154 million extension become official when the Sox traded for him from the Padres or during spring training, his deal would have been treated as an eight-year, $160.3 million pact — meaning a luxury tax figure of just over the average annual value of $20 million a year. By waiting until mid-April to announce the deal, Gonzalez counted for just $6.3 million in 2011 — thus saving the Sox millions in luxury tax penalties that year.

That history created an expectation that, if the Sox reach agreements with David Ortiz (who is making $15 million in 2014 but who counts for $17 million against the luxury tax) and Jon Lester (who is making $13 million in 2014 on a team option, but whose luxury tax figure is approximately $9.37 million), they wouldn’t be announced until after the start of the regular season to avoid a potential luxury tax hit.

Wrong.*

The new Collective Bargaining Agreement, which took effect starting in the 2012 season, eliminated the recalculation of a contract’s AAV as a result of an extension. So long as the second deal does nothing to alter the terms of the first, the two contracts are treated as separate.

So, if the Sox reach agreement with either player on an extension starts in 2015 and doesn’t alter what they’re owed for the coming season, then those new deals won’t alter the player’s salary as calculated for luxury tax purposes. If Ortiz agrees to a one-year extension, regardless of whether it’s for $15 million or $1 billion, his 2014 AAV would remain $17 million for the purposes of calculating the Sox’ luxury tax this year. Similarly, as long as a deal with Lester wouldn’t take effect until 2015, then the team could announce it tomorrow or in June with no difference in its implications for the 2014 payroll — the left-hander will count for $9.37 regardless of the timing of the announcement.

Even with that alteration, and despite the fact that a resolution of extension talks is expected before the end of spring training, that doesn’t necessarily mean that an announcement will happen in Fort Myers. The Sox may well decide that, if they reach agreement with either player, they’d prefer to save the announcement for the start of the regular season, most likely in Boston. Or perhaps it won’t be until the start of the regular season that the two sides will be able to finalize the details of an extension — if one is coming at all.

But regardless, the timing of any announcement won’t be driven by luxury tax implications. That aspect, at least, of extension strategy is now a thing of the past.

* – (WEEI.com was guilty of propagating the misunderstanding that an extension could alter a luxury tax hit for a season if announced prior to Opening Day. We regret the error.)




Audio On Demand

Trent Dilfer with Dale, H…

Trent Dilfer with Dale, Holley and Rich Keefe

Dale, Michael and Rich Keefe speak with ESPN's Trent Dilfer and look ahead to the match-up with his old team, the Baltimore Ravens.

Real Postgame Show - Mr. 201, 12-4-2016

Butch Stearns joins Glenn and Fred to react to the Patriots victory over the Rams. They discuss Tom Brady's record setting 201st quarterback victory and debate if he is truly the greatest player of all time.

Real Postgame Show - Patriots defense back on track?, 12-4-2016

Glenn and Fred open the show reacting to the Patriots beat down of the Los Angeles Rams. They discuss the defense and debate whether todays game is a sign of things to come.

Celtics Podcast – Bad f…

Celtics Podcast – Bad finish against the Rockets and love for DeMarcus Cousins 12-6-16

WEEI.com's Mike Petraglia and Ben Kichen of 'The Dale and Holley Show' talk about last night's disappointing finish against the Rockets and they talk about their love for DeMarcus Cousins.

Celtics Podcast - How the Celtics can hang with Cleveland atop the Eastern Conference 11-30-16

WEEI.com's Mike Petraglia and Ben Kichen of the 'Dale and Holley Show' talk about what the Celtics will need to do in order to be considered one of the top teams in the Eastern Conference along with the Cavs.

Celtics Podcast - Turning a corner with Al Horford back 11-28 -16

WEEI's Mike Petraglia talks with Josue Pavon about how the Celtics are looking better with Al Horford back on the court and the overall toughness of this team.

Hot Stove Show - How the …

Hot Stove Show - How the Sox got Sale, 12-7-2016

Mut and Tomase are joined by Rob Bradford to talk about just how the Red Sox were able to pull off this trade. Rob's sit down with Dave Dombrowski helps to reveal the timeline of the mega deal.

Hot Stove Show - Chris Sale to Red Sox, 12-7-2016

Mut and John Tomase open the Hot Stove show debating the blockbuster Chris Sale trade. Tomase argues that you can like the trade, but dislike Dombrowski for gutting the Red Sox farm system.

Rob Bradford chats with Dave Dombrowski at MLB Winter Meetings

WEEI.com's Rob Bradford sits down with Red Sox President of Baseball Operations Dave Dombrowski to talk about the Red Sox off season. They discuss how the blockbuster Chris Sale trade went down.

Saturday Skate - Rask doe…

Saturday Skate - Rask does it again, but debates rage on Krejci, Chara, Bergeron and Krug 12-3-16

Hour two of Saturday Skate after a Bruins 2-1 over Buffalo, with Ken Laird and Rear Admiral debating the status of Krejci, Chara, Krug and Bergeron.

Saturday Skate - Laird & Admiral on the Sox & Gronk, then first reaction as B's beat Sabres 2-1

The first hour of Saturday Skate starts up against the third period of Bruins - Sabres, so Ken Laird and Rear Admiral give some Red Sox hot stove and Rob Gronkowski thoughts before moving into Bruins - Sabres game reaction

Bruins Cast - B's missing offense but manage back-to-back road wins 11-2-16

Ken Laird and Ty Anderson chat Bruins after a 2-1 win in Florida improved the team's record to 5-4.

K&C - Chris Sale meets th…

K&C - Chris Sale meets the Boston media; Larry Bird turns 60 12-7-16

Gerry, Kirk and Meter close out the final hour of the show discussing how Chris Sale will fit in Boston and Larry Bird's 60th birthday.

K&C - Gary Tanguay has reached a new low; Brian Cashman compares the Red Sox to the Golden State Warriors 12-7-16

Gerry, Kirk and Meter started the 8 am hour discussing the latest velfie by Gary Tanguay.

K&C - Ken Laird would not trade Andrew Benintendi for Clayton Kershaw; EBT cards gone wild 12-7-16

Ken broke some news in the 7 am hour by telling New England that he would not trade Andrew Benintendi for Clayton Kershaw.

OMF - Tom E. Curran talks…

OMF - Tom E. Curran talks about the disastrous Jets and previews Patriots/Ravens 12-7-16

Tom E. Curran joins Glenn, Lou and Christian to preview the Patriots game against the Ravens and to laugh at how bad the Jets have been,

OMF - The Patriots have a tough test again the Ravens defense 12-7-16

Glenn, Lou and Christian look ahead at the Patriots Monday Night Football game next week and talk about the big test they will face with the Ravens defense.

OMF - Stop worrying about the Red Sox trading prospects 12-7-16

Dave Dombrowski has now shipped off a bunch of the Red Sox top prospects. The guys address the big trade and look back at why the bigger risk would've been to ride with the prospects.

Trent Dilfer - Ravens wil…

Trent Dilfer - Ravens will provide good test for Gronk-less Patriots offense

Dale, Michael and Rich Keefe speak with ESPN's Trent Dilfer and look ahead to the match-up with his old team, the Baltimore Ravens.

Concerns about losing Moncada pop up 24 hours after the Sox trade for Chris Sale

Dale, Michael and Rich Keefe discuss the Chris Sale trade from all sides, and it's becoming abundantly clear that Michael is now afraid of losing Yoan Moncada.

Rob Bradford on the Sale trade live from the Winter Meetings

We check in with Bradfo, who's work is never done!

Ep. 43: Adam Carolla

Ep. 43: Adam Carolla

Kirk Minihane, WEEI Podcast King, talks to the Podcast Godfather Adam Carolla about his new documentary about Le Mans, the backlash from the Election, and his time with Donald Trump on the Apprentice. The audio quality isn't great but the conversation is.

Ep. 42: The Godcast with Larry Johnson

Kirk Minihane is a non-believer, Larry Johnson is a preacher, when Larry found Kirk doesn't believe in God he challenged Kirk to allow him on to the podcast to talk about religion and faith. Kirk and Larry have a tremendous conversation about God and Larry tries to convert Kirk into a believer.

Ep. 41: John Feitelberg of Barstool Sports

Kirk Minihane sits down with Barstool Sports contributor and podcast host John Feitelberg. Kirk and Feitelberg talk about the rise of barstool, the sale of the website, what it is like to work for Dave Portnoy, and their live podcast shows at the Wilbur Theater.

K&C's Tunnel Vision - Cal…

K&C's Tunnel Vision - Callahan & Minihane hash out their first real on-air fight 12-7-16

Episode 2 of the official podcast of Kirk & Callahan, as Kirk and Gerry acknowledge their first real on-air fight on that morning's show. The guys also discuss newbie Rich Keefe, Gary Tanguay, and Larry Bird's 60th birthday

Red Sox Farm Report Podcast - Chris Sale & Tyler Thornburg in, any prospects left? 12-6-16

Ken Laird and WEEI.com's Ryan Hannable take a look at the Red Sox' acquisitions of Chris Sale and Tyler Thornburg from the minor league side of the equation, and what's left of Dave Dombrowski's farm system.

Celtics Podcast – Bad finish against the Rockets and love for DeMarcus Cousins 12-6-16

WEEI.com's Mike Petraglia and Ben Kichen of 'The Dale and Holley Show' talk about last night's disappointing finish against the Rockets and they talk about their love for DeMarcus Cousins.

K&C - A tension filled st…

K&C - A tension filled start to the show with Gerry and Kirk; Keefer Madness has taken over WEEI 12-7-16

Gerry and Kirk got off to a rocky start when trying to discuss the Chris Sale trade. Kirk was feeling the Keefer Madness.

More from this show

OMF - Reaction to Chris S…

OMF - Reaction to Chris Sale being traded to the Red Sox 12-6-16

Glenn, Lou and Christian react live on the air when the Chris Sale trade was announced. The guys break down which prospects get sent over and how great the rotation now looks.

More from this show

K&C's Tunnel Vision - Cal…

K&C's Tunnel Vision - Callahan & Minihane hash out their first real on-air fight 12-7-16

Episode 2 of the official podcast of Kirk & Callahan, as Kirk and Gerry acknowledge their first real on-air fight on that morning's show. The guys also discuss newbie Rich Keefe, Gary Tanguay, and Larry Bird's 60th birthday

More from this show

K&C - John Farrell is sig…

K&C - John Farrell is signed through 2018; Tom Brady continues to be better than the future stars 12-6-16

Gerry, Kirk and Alex opened the show discussing the extension of John Farrell. Alex loved the move.

More from this show

K&C - The listeners hate …

K&C - The listeners hate Alex Reimer; Alex thinks Gronk should retire 12-6-16

IN the 8 am hour listeners voiced their displeasure with Alex and Reimer made his case as to why Gronk should retire at the age of 27.

More from this show

News & Analysis