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

Kyle Arrington previews P…

Kyle Arrington previews Pats-Lions 11-21-14

Just out of practice, Kyle Arrington joins the guys to preview Pats-Lions

11-19-14-TragsPriceWedsCast

WEEI.com's Mike Petraglia and Chris Price preview Sunday's Patriots-Lions game and discuss what the Pats offense needs to do against Detroit's front seven, as well as what the Pats defense can do against Calvin Johnson.

A Family Affair - Christians nephew and Lions TE Joseph Fauria joins the show, 11-19-14

Detroit Lions TE Joseph Fauria is the nephew of the our own Christian Fauria. He joined the show today to talk about being a Pats fan as a kid, being a better athlete than his uncle, and before all was said and done, things got personal.

We Hate Dwayne Wade - Mar…

We Hate Dwayne Wade - Marcus Smart injury 11-12-14

How have the Celtics looked after a couple weeks? Could they be a playoff team? These questions and more...

WHDW - Greg Dickerson Joins the Show to talk Celtics

Sam and Ben talk with Greg Dickerson about how fun this year's Celtics team is to watch as well Jeff Green trade ideas.

Kyle Draper, Comcast Sports New England, Celtics will compete for a playoff spot this season

Kyle Draper joins Danny Picard to talk about the Celtics chances this season in the Eastern Conference, last Wednesday's home opener blowout against the Nets, and Rajon Rondo's future in Boston

Hot Stove Show 11-20-14

Hot Stove Show 11-20-14

The Hot Stove guys are talking about Pablo Sandoval and Jon Lester's contract offers from the Red Sox. They then por one out for the Giancarlo Stanton rumors being put to bed.

Hot Stove Show 11-13-14

The Hot Stove boys are back again, talking about Jon Lester, Pablo Sandoval, Giancarlo Stanton's b

Rob Bradford, WEEI.com, checks in from the GM meetings in Arizona, 11-11-14

WEEI.com's Rob Bradford checks in with the show to give us some updates on what's happening in Phoenix. The Sox are rumored to be interested in Pablo Sandoval, Cole Hammels would have to approve a trade to Boston, and Gordon Edes says that Jon Lester re-signing with club is still a possibility.

NESN's Jack Edwards with …

NESN's Jack Edwards with Dale and Holley

Dale and Michael get Jack Edwards' 'state of the B' report and talk about the win over the Blues at the Garden on Tuesday.

Andy Brickley, NESN, talks about the Bruins 2-0 win over St. Louis, 11-19-14

Andy Brickley joined the show and touched on last night's convincing win over a good team, Matt Bartkowski needing a wake up call, and the NHL review process.

Pierre McGuire, NBC Sports. NHL should have a coach's challenge 11-13-14

Pierre joins the guys to talk about the Bruins struggles, the NHL franchise in Las Vegas, and the return of the glow puck!

Boston College Steve Adda…

Boston College Steve Addazio on Florida State 11-21-14

BC's head coach joined the show to preview the Florida State game.

Rodney Harrison on Gronk 11-21-14

Rodney Harrison previewed the Patriots and Lions with the guys.

Headlines, Headlines, Headlines: President Obama's new immigration policy 11-21-14

The top stories of the as recounted by Kirk Minihane.

Christian's Dad, Detectiv…

Christian's Dad, Detective Fauria tales for VICE squad 11-21-14

Detective Fauria tells us the infamous gloryhole story from VICE squad and other stories Christian's past.

Kyle Arrington previews Pats-Lions 11-21-14

Just out of practice, Kyle Arrington joins the guys to preview Pats-Lions

Christian Fauria prank calls Detroit sports radio 97.1 The Ticket; praises nephew Joseph Fauria 11-21-14

Christian in Foxboro returns, this time he's trolling Detroit sports radio station 97.1 The Ticket's Stoney and Bill show . Christian rips Lions fans and asks why his nephew, Joseph, isn't getting the ball more.

We should have seen the r…

We should have seen the resigning of LeGarrette Blount by the Patriots coming

Michael and Dale discuss the return of LGB, and how the move really wasn't that surprising to begin with.

Blue Jackets' Jack Johnson: A cautionary tale of trust and finances

We discuss the Jack Johnson story... the NHL player who bankrupted by his own PARENTS.

Dale and Holley's Four at Four - Welcome Back to Boston Edition - 11-20-14

We welcome back LeGarrette Blount by looking at the best returns to Boston in recent memory.

Brandon Alisoglu gives us…

Brandon Alisoglu gives us an analysis of the Lions

Brandon covers the NFL, particularly the Detroit Lions for Bleacher Report. He gives us his thoughts on this Sunday's game and how the Lions stack up against the Patriots.

Cold, Hard Football Talk

Mikey, Villani, Lenny and Kerry Byrne are talking Patriots-Lions and how the team this year stacks up to Patriots teams of the past.

Wonderin' Why the Lions Suck

Some more Musical Mikey Magic to get ready for Sunday's Patriots-Lions game.

College Puckcast with And…

College Puckcast with Andy Merritt and Merrimack coach Mark Dennehy

Andy Merritt of the New England Hockey Journal joined WEEI.com’s Scott McLaughlin to talk about the play of Vermont and Providence, as well as other happenings around Hockey East. Merrimack coach Mark Dennehy also joined the show to talk about his team’s good start, his freshman class and how he uses possession stats.

We Hate Dwyane Wade - Mike Mutnansky Talks Hated Players and Rajon Rondo.

Joining the show today Mut the all-purpose back of WEEI. We talk about players we have hated over the years as well as Rajon Rondo and what is ailing the Celtics.

SoccerCast - MLS Playoffs, Revs latest 11-15-14

Ben and Russ talk about the Revs, MLS Playoffs, and much much more.

Bill Parcells: With the w…

Bill Parcells: With the way I left New England, retrospectively I'd do things differently

Dale and Michael do an in-depth interview with one of the people that saved NFL football in New England. Bill Parcells, co-author of Parcells: A Football Life.

More from this show

Christian Fauria prank ca…

Christian Fauria prank calls Detroit sports radio WDFN; praises nephew Joseph Fauria

Christian in Foxboro returns, this time he's trolling Detroit sports radio station WDFN's Shep in the Morning Show. Christian rips Lions fans and asks why his nephew, Joseph, isn't getting the ball more.

More from this show

Rob Bradford with the lat…

Rob Bradford with the latest on Jon Lester

Bradford joined the show with the latest on the Red Sox off-season moves.

More from this show

Tom Brady "No more BS ind…

Tom Brady "No more BS indoor games" 11-18-14

Tom Brady joined the show to discuss the big win over Andrew Luck and the Colts.

More from this show

Wonderin' Why the Lions S…

Wonderin' Why the Lions Suck

Some more Musical Mikey Magic to get ready for Sunday's Patriots-Lions game.

More from this show

Weei Writers