McAdam: Freed of luxury tax restraints, don't expect a Red Sox spending spree this winter

When the final games on the MLB schedule were concluded Monday night, there was -- finally -- something to celebrate about the 2020 Red Sox season.

The fact that MLB got through trade deadline day meant that teams now have a chance to re-set their competitive balance tax (CBT) rates for the 2021 season. And because the Red Sox dutifully stayed under the initial threshold for this season ($208 million before proration), the Red Sox have effectively escaped the luxury tax sin bin for 2021.

(Officially, teams don't get their reset until the contract tender date after the postseason. But the Red Sox have no intention of adding additional salary between now and the end of the regular season, effectively guaranteeing their re-set already).

That means that, even if the Sox were to go over the first threshold next season ($210 million), they would pay a 20 percent tax on any overages of  -- compared to the 40 percent the team would face if they had gone over for a third straight season in 2020. And if the Red Sox really went all-in and blew past the second or third thresholds, they would have taxed at an even higher rate.

Now, however, they don't face that impediment.

All of which has some Red Sox fans dreaming of the Sox, freed from such onerous penalties, spending their way back into contention for 2021.

That's highly unlikely to happen, however, for any number of reasons.



First, hiring Chaim Bloom signaled a wish by the Red Sox to do business differently than they've done in recent years. Bloom's approach to roster building is based on acquiring sustainable talent from top to bottom, infusing the organization with quality players at every level, leading to year-to-year sustainability. If the Sox wanted to simply get a re-set and then attack the free-agent market with a vengeance, they would have retained Dave Dombrowski.

Secondly, the Red Sox aren't yet at a position where a free agent or two is going to put them on even footing with the likes of the Rays and Yankees in their own division. And to state the obvious: free-agent spending represents an extremely inefficient business model. Again, signing players to huge contracts is one of the big reasons the Red Sox find themselves in their current mess.

Finally, even the Red Sox were inclined to dive into the dangerous waters of free agency so soon, they would find little to address their biggest need: starting pitching. While there some intriguing names to be sure -- Jake Odorizzi, Jose Quintana, James Paxton -- most fit the profile of mid-rotation starters, rather than the front-end options the Sox so desperately need.

None of which is to suggest, however, the Red Sox can't and won't immediately benefit from their re-set. It just won't come on the free-agent market.

But the confluence of the re-set tax rate and an uncertain economic landscape throughout the game could be of great advantage to the Sox.

The pandemic -- and the absence of fans in a shortened season -- will mean significant financial losses for many teams.

It would seem a best-case scenario for the 2021 season would see a limited number of fans in attendance at major league ballparks, ensuring social distancing until an effective vaccine can be found and wildly distributed.

For teams with significant debt service, a second season of no (of greatly reduced) gate revenue could lead to some wholesale payroll reductions.

It's not difficult to imagine the Red Sox being in position to absorb a contract of a coveted player. By taking a big salary from another club, the Sox could obtain some interesting talent for little player cost in return.

(The Red Sox have their own losses to consider, of course, and are not immune to the financial downturn that has wreaked havoc with the industry. But the success of Fenway Sports Group, the value of NESN and principal owner John Henry's personal fortune has them better positioned than most to withstand the downturn).

Another option could be taking on an undesirable contract for a declining player, but being given a premium prospect as an inducement.

It's that kind of flexibility that will give the Red Sox the ability to get creative this winter as Bloom continues his overhaul of the roster. Making trades for players whom they'll control can serve one of two purposes -- either as longer-term pieces of the puzzle, or quality placeholders who can fill roster spots and allow the Sox to field a more competitive product on the field.

The lure of the free-agent market can wait. The Red Sox aren't ready for that sort of investment, and it turns out, they won't be missing much this winter anyway.