Salary breakdown: Sox on cusp of tax

March, 9, 2011
3/09/11
12:23
PM ET
FORT MYERS, Fla. -- With the announced signings of Boston’s 15 non-arbitration eligible players on Tuesday, the Red Sox 40-man major-league payroll is unofficially $168,264,333, including pro-rated signing bonuses.

This is not the figure used for calculating the competitive balance tax, or CBT, commonly known as the luxury tax. The CBT is based on the average annual value of salaries of players on the 40-man rosters, pro-rated signing bonuses, and performance bonuses, plus benefits paid to the players, roughly $9 million per team. The CBT is calculated by Dec. 12, with teams required to pay by the following Jan. 31.

This year, the luxury tax threshold is $178 million, up from $170 million in 2010. The Yankees have exceeded the luxury tax threshold in all eight years since the current tax was implemented in 2003. They paid $18 million in luxury taxes last year, and have paid over $192 million in all. The Red Sox were the only other team to pay a luxury tax for 2010; they were assessed a $1.49 million bill, the first time since 2007 they exceeded the threshold. If they exceed it again in 2011, they will be taxed at a 30 percent rate.

The monies collected in CBTs are not the same as revenue sharing. Red Sox CEO Larry Lucchino said earlier this spring that the Red Sox paid $85.5 million in revenue sharing in 2010, a figure exceeded only by the Yankees, he said.

The Red Sox will have eight players being paid $10 million or more in 2011, the most in franchise history and double the number they had in 2010 (Josh Beckett, John Lackey, David Ortiz, J.D. Drew). The previous high was six, in 2008. In 2000, Pedro Martinez ($11.5 million) was the only Sox player drawing an eight-figure salary.

Shortly after the season opener April 1, the Red Sox are expected to have a ninth player cross the eight-figure threshold: Adrian Gonzalez, who is expected to sign a contract extension that will pay him in excess of $20 million annually. The Sox have held off on signing him to an extension in part because they want to make sure his surgically repaired right shoulder is completely healthy, but more importantly because if they wait until after Opening Day, the average annual value of the extension will not be counted against the luxury tax.

Gonzalez’s salary for 2011, for luxury tax purposes, will be counted as $6.4 million.

A number of the non-arbitration eligible players have split contracts, meaning they will be paid at a different salary in the minor leagues than their listed big-league salaries. Meanwhile, players like Jose Iglesias and Junichi Tazawa, who are expected to be in the minors this year, have guaranteed big-league contracts. Iglesias’ salary is $500,000 for each of his first four years, for example, but is listed at $2 million when his $6 million signing bonus is pro-rated.

The biggest bargains on the Sox payroll are non-arbitration eligibles Clay Buchholz and Daniel Bard, who are to be paid $555,000 and $505,000, respectively, in 2011. Both players are likely to engage the team in discussions about long-term contracts, much like those signed by Jon Lester, Dustin Pedroia and Kevin Youkilis.

Gordon Edes

Red Sox reporter, ESPNBoston.com

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