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

ESPN Boston's Mike Reiss …

ESPN Boston's Mike Reiss with Dale and Holley

We check in on the Patriots off-season with ESPN Boston's Mike Reiss. Mike updates us on Revis, McCourty, Wilfork and more.

Chris Price, WEEI.com, joins Butch Stearns to talk franchise tags and NFL free agency 3-1-15

Price calls Butch to discuss the March 2nd deadline for franchise tags, free agency and the Pats' plans going forward.

Jim Quirk, NFLRA Executive Director, talks with Mut about the NFLRA's statement, 2-18-15

Shortly after the NFLRA released its statement demanding an apology from ESPN, Jim Quirk, the NFLRA's Executive Director, joined Mut to talk about the statement

SB Nation's Paul Flannery…

SB Nation's Paul Flannery joins Mike Mutnansky, 2-19-15

Flannery joins Mut to break down the Isaiah Thomas trade to Boston and what it means for the Celtics this season and in the future. Paul also chats with Mut about the other deals that happened at the NBA's trading deadline

SI's Chris Mannix with Dale and Holley

We talk to Chris Mannix from SI to break down the C's acquisition of Isaiah Thomas and the crazy trade deadline in the rest of the NBA.

We Love Anthony Davis - Jessica Camerato joins us to talk Marcus Smart

Jessica Camerato of basketballinsiders.com joins the show to talk about Marcus Smart, the starting lineup, and trade deadline.

WEEI.com's Rob Bradford (…

WEEI.com's Rob Bradford (@Bradfo) joins Butch Stearns from sunny Fort Myers on "Picture Day" 3-1-15

The one and only Rob Bradford calls Butch to discuss his early thoughts on this Red Sox team, the potential in the rotation, how the outfield will shake out and more.

David Ortiz says remove instant replay to increase pace of baseball

David Ortiz takes a few minutes to talk with Mut, Bradford, and Tomase about some of his new teammates, who Pablo Sandoval reminds him of, and the rules aimed at speeding up the game of baseball.

Hot Stove Show 02-26-15

Mut, Bradford, and Tomase are talking Red Sox spring training. and talk with Red Sox DH David Ortiz about the rules aimed at speeding up the pace of the game

Sunday Skate with WEEI's …

Sunday Skate with WEEI's DJ Bean and ESPN Boston's Joe McDonald - Hour #2 3-1-15

In the second of Sunday Skate, DJ and Joe discuss the approaching NHL trade deadline and what the B's will do. They get into the Boychuk move at the beginning of the season and Boychuk's brother venting on Twitter this morning about complaining B's fans. There is more discussion on the 3rd and 4th lines, their playoff chances and then they are joined by ESPN's Scott Burnside.

Sunday Skate with WEEI's DJ Bean and ESPN Boston's Joe McDonald - Hour #1 3-1-15

Another edition of Sunday Skate is upon us and DJ and Joe get into the B's big win over Arizona last night and the improvement of Ryan Spooner. They get into the Blackhawks giving up a 1st round pick for C Antoine Vermette - someone the B's could certainly use but weren't willing to give up the steep price of a 1st rounder. DJ and Joe also get into Claude's willingness to switch up lines as well as the performance of the 3rd and 4th lines. Finally, NHL commissioner Gary Bettman sits down with the boys.

Scott Burnside, ESPN, joins DJ Bean and Joey Mac on Sunday Skate 3-1-15

Scott Burnside joins the boys to discuss the Bruins and the NHL trade deadline.

D&C's Spring Training Rec…

D&C's Spring Training Recap 3-4-15

A look back at Dennis and Callahan's 2015 trip to spring training. They visited with Larry Lucchino, Ben Cherington, Xander Bogaerts, John Farrell, Mookie Betts, Joe Kelly, Curt Schilling and Dustin Pedroia.

The 2015 Red Sox Spring Training Media Round Table 3-4-15

Dino, Gerry and Kirk are joined by Rob Bradford, Gordon Edes and Steve Buckley to forecast the 2015 campaign.

Dustin Pedroia sits in with Dino, Gerry and Kirk 3-4-15

Pedroia joins the guys in Fort Myers to look at the upcoming season and his health entering the spring.

Andy Brickley, NESN, talk…

Andy Brickley, NESN, talks about the Bruins trade deadline moves. 3-4-15

Brick joined the show to talk about the couple players that the B's added. He noted that the lack of subtractions means that the front office trusts the core group.

Three For All - Red Sox honor Pete Frates with #3 jerseys, 3-4-15

The Red Sox entire team wore the number 3 to honor Pete Frates. The HS team that was suspended for trying to bring awareness to breast cancer have been allowed to play. Erik Spoelstra and Pat Riley are bad at karaoke, but not as bad as Joey and Christian.

Should the Pats focus on Devin McCourty or Brandon Browner? 3-4-15

With the Patriots focusing on CB Darrelle Revis, it's likely that the team will lose safety Devin McCourty or Brandon Browner. Or both.

Jack Edwards: Talbot only…

Jack Edwards: Talbot only a grit guy, will do anything to help the Bruins win

We talk Boston Bruins with NESN's Jack Edwards, our first talk since the NHL trade deadline.

Jerry Thornton's impromptu Patriots Super Bowl DVD review

Jerry discusses the plus and minus' of the Patriots first (of many) Super Bowl DVD's

Marathon bombing trial begins: Defense attorneys open with a confession

Dale and Michael briefly discuss the opening of the Marathon Bombing Trial, and how the 'Free Dhzokar' crowd will have to get a new hobby.

The Rev Girls come in stu…

The Rev Girls come in studio to talk MLS

Mikey, Mut, and Lenny are joined by the Rev girls, who are revealing the New Revolution uniform Tuesday at the House of Blues in Boston and talking about the Revs.

Bill "Spaceman" Lee talks Red Sox spring training andCuban baseball players

Mikey, Lenny, and Maggie talk Red Sox baseball with Red Sox Hall of Famer Bill Lee, who is in Florida and out of the snow that's perpetually burying the area.

Kirk Minihane calls to clear the air with Mikey

Mikey gets a call from Kirk Minihane, who wants to clear the air with Mikey and get everything settled. It goes better than you think.

We Love Anthony Davis - A…

We Love Anthony Davis - Adam Himmelsbach from the Boston Globe, 3-4-15

Adam Himmelsbach, Celtics beat reporter for the Boston Globe, joins the show to share his love of the Brow and discuss the surging Celtics playoff chances. Then we take a field trip to the MIT Sloan Analytics Conference and analyze the data with Rick Friedman.

Wrestlecast 3/03

Chris and comedian Will Noonan discuss the events of last night's Raw.

College Puckcast – Hockey East opening round preview with Mike McMahon and Northeastern coach Jim Madigan

WEEI’s Scott McLaughlin previews the opening round of the Hockey East tournament with Northeastern coach Jim Madigan and Mike McMahon of College Hockey News and The Mack Report.

Curt Schilling takes on t…

Curt Schilling takes on the Twitter trolls 3-2-15

Curt Schilling didn't back down when twitter trolls took shots at his daughter. Dino, Gerry and Kirk applaud Schill's stand.

More from this show

Curt Schilling talks abou…

Curt Schilling talks about taking on the Twitter trolls 3-3-15

Schilling chatted about his decision to fight back against the Twitter trolls that targeted his daughter. Curt talks about what he would like to see happen to the most vicious trolls.

More from this show

Headlines, Headlines, Hea…

Headlines, Headlines, Headlines: Bill O'Reilly lied 3-3-15

All the latest stories brought you by Kirk Minihane.

More from this show

Curt Schilling shines lig…

Curt Schilling shines light on internet trolls and greater societal problem in the process

We discuss Curt Schilling's outing of the internet trolls who thought rape jokes were appropriate to direct at his daughter, and we discuss it with you, on how this isn't just a sports issue, it's a societal issue.

More from this show

Tom E. Curran, CSNNE, tal…

Tom E. Curran, CSNNE, talks franchise tag & Darrelle Revis, 3-3-15

Tom E. Curran of Comcast SportsNet New England talks about the Patriots placing the franchise tag on Stephen Gostkowski and what is going on with Darrelle Revis' contract situation

More from this show

Weei Writers