Sox' payroll taxed at $3.1m
As priceless as winning the franchise's first World Series in 86 years may have seemed, the Red Sox yesterday absorbed a $3.1 million tax for exceeding baseball's $120.5 million payroll threshold by $14 million.
The Sox, who risked breaching the threshold when they added more than $15 million in salaries last winter by acquiring Curt Schilling and Keith Foulke, set a team record by spending $134.5 million on their 40-man roster. They were taxed $3,155,234, or 22.5 percent on the amount above $120.5 million.
Only the Yankees spent more last season on their 40-man roster, doling out a record $203.9 million en route to squandering a three-game advantage against the Sox in the American League Championship Series. The Yankees received a bill for $25,026,352, according to the Associated Press, which cited a Dec. 21 memorandum that was distributed to all major league teams. That bill reflected a 30 percent tax, which the Yankees triggered by exceeding the threshold for a second straight year.
The only other team hit with the tax was Anaheim, which spent $124.6 million on its 40-man roster and was swept by Boston in the American League Division Series. Like the Sox, the Angels exceeded the threshold for the first time under the 2002 collective bargaining agreement, and were taxed $927,059 at the 22.5 percent rate.
The Sox appear on pace to cross the threshold again next season when it rises to $128 million. Though they shed Pedro Martinez's $17.5 million salary, they have signed eight free agents, including Jason Varitek, Edgar Renteria, Matt Clement, and David Wells, whose combined salaries could push the total above $130 million, particularly if the Sox retain Byung Hyun Kim and his $6 million salary. The Sox plan to acquire some additional pitching depth, but the combined salaries are not expected to exceed the money they save by trading one of their first basemen, Doug Mientkiewicz or Kevin Millar (Mientkiewicz is due $3.75 million next season, Millar $3.5 million). As second offenders, the Sox would pay a 30 percent tax next season on the amount over $128 million.
The Sox also are required to contribute an estimated $42 million in revenue sharing based on their local revenues last season of more than $220 million.
Under the collective bargaining agreement, which expires after the 2006 season, the luxury tax is based on the average annual value of contracts, including benefits, for players on 40-man rosters. The figures are higher than regular team payrolls, though the rankings are virtually the same.
The Yankees posted the highest regular payroll at a record $187.9 million, up $18 million from 2003. The Sox ranked second at $130.4 million, ahead of the Angels ($115.6 million), Mets ($103.2 million), Dodgers ($101.7 million), Cubs ($100.7 million), Phillies ($97.4 million), and Cardinals ($92.8 million).
The Devil Rays logged the lowest payroll for the third straight season, finishing at $24.4 million. The Brewers ranked 29th at $29.6 million and the Pirates 28th at $32.5 million. The Brewers reduced their payroll by nearly $14 million from 2003, while the Pirates spent nearly $21 million less.
Several teams that previously ranked among the big spenders also cut corners, with the Rangers dropping to $79.2 million from $103.3 million, and the Braves declining to $79.4 million from $98 million. The Mariners spent $81.8 million, down from $95.7 million.
The average salary for major leaguers dropped 2.5 percent last season to $2,313,535 from $2,372,189, the Associated Press reported, citing figures provided by the Players' Association. The drop was the first since 1995.
The Sox, Yankees, and Angels are required to pay their tax bills to the Commissioner's Office by Friday.
