Resetting the luxury tax penalties this year ultimately doesn’t matter

From a purely baseball fan perspective, the months of May and June were pretty brutal to watch in a few different lenses, which wasn’t ideal because the world around us was also not super fun! In our little corner of the universe, we were constantly inundated by very public, very tense and very unfruitful negotiations between the players and the owners to try and get a 2020 season off the ground. As it was happening, the question of whether it should even be happening amid an ongoing pandemic was also in the air, with honestly fair arguments from both sides. I’m not super sympathetic to the idea that we need it for entertainment’s sake — entertainment is important, but not in the face of danger for those providing it — but the economic arguments are valid. The other side concerned about health ramifications certainly offer a valid point of view as well.

Tucked away behind the very real and serious conversations being had in those respects for a potential season, Red Sox fans had a reason of their own to hope for a 2020 season, revolving around my favorite topic of all-time: The luxury tax. As we all know, the Red Sox wanted to get under the luxury tax this season — they may deny that now, but they literally said so just a few months ago. I heard them with my own ears. It may not have been the only motivation behind the Mookie Betts trade from the winter, but I’m not going to believe an explanation that totally dismisses its role in making the move.

Putting aside whether or not going through all this trouble to reset the penalties is worth it — it’s not because the penalties are not all that severe and the CBA is about to be ripped up and redone — there is also the analysis just based around the fact that this is what the Red Sox wanted. Whether we like it or not, it was an organizational goal, and it’s never a good thing for a franchise to set a goal and not meet it, and the penalties would not have been reset without a season. Through that lens of wanting your favorite team to actually pull off what they were trying to do, there were plenty of Red Sox fans who wanted a season largely because they wanted the Red Sox to reset the luxury penalties.

The more I think about it, though, the more I feel like it really just doesn’t matter, and that’s without even making a value judgement on the penalties themselves. Before we talk about that, though, let’s just talk about what needs to happen for the Red Sox. For most of the time off, many of us (myself included) were under the impression that if even a single game is played that would be enough for the penalties to be reset. That was, apparently, incorrect. Alex Speier has since clarified that an entire season will need to be played for the penalties to be reset. Also worth reiterating his point that if the season does not complete fully, we as a society have bigger problems than luxury tax penalties.

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Still, this obviously makes things more difficult to reset these penalties, as we have no idea what this virus’s spread is going to look like through the rest of the summer and early fall. Starting the season without finishing it is certainly a scenario on the table. Getting back to my original point, however, it doesn’t matter. Let’s go through both scenarios very quickly. In the first, the season either starts and then stops or just doesn’t get started at all. In this scenario, the penalties obviously do not reset, which is a bummer. Like I said, this was the team’s goal and it would not be great to go through the trouble of trading the franchise’s best player in decades without even meeting the goal of the deal, or at least one of them.

But in terms of what it means for the immediate future? It means basically nothing. If they do not finish the season, which would mean the league did not get its playoff revenue, there is not going to be money spent this offseason. This is a reality we need to start getting used to now. Between the lack of revenue and the lack of motivation for owners to appease its players after the contentious negotiations from the spring, there is just no way teams are going to spend money. That includes the Red Sox. If there is no full 60-game season this summer, the Red Sox are not going over the $210 million payroll mark whether they get penalized for it or not. Teams just aren’t going to significantly boost their payroll.

That, I think, is obvious. But that would just mean to root extra hard for a season to get completed, right? Well, I don’t think so! Think about everything we heard from the league side during the negotiations, what we think we know about the world in the immediate future, and what we know about the relationship between players and owners. Even if there is a season, there is probably not going to be fans in the stands for most of it, if at all, no matter how much owners pout about it. Even if there are fans, it will be probably around 25 percent of capacity.

All of that is to say owners already have this built-in excuse about the lack of revenue. Putting aside that most of us know that teams have diversified their revenue streams enough that they can more than survive without in-park money coming in, the dialogue from that side about how they are going to lose a ton of money without fans was not just a plea for public opinion. It was setting us up for the coming offseason. Free agency spending has been going down for the last few years now. That trend certainly isn’t going to reverse itself amid a pandemic after a shortened season with (probably) no fans. Throw in some pettiness following the negotiations from the spring, there’s just no way there’s going to be a robust free agent market this winter. So, for the Red Sox, they may make a decent signing or two, but A) it will be much less than that player would have gotten last winter or the winter before, and B) it will probably be combined with the unloading of money elsewhere from someone like J.D. Martinez.

None of this is really designed to be a dig at the Red Sox specifically. I certainly think they can always afford to be big spenders even after a season like this one, but they are part of a market that exists beyond just them. And that market is going to be undeniably smaller this winter whether a full season happens or not. So, yes, I’m sure the Red Sox would like the luxury tax penalties to reset themselves and I suppose from our vantage point it’s better that they get reset than not. It’s just pretty clear to me looking at the words of the owners during the negotiations about their revenue streams combined with recent history of spending that this coming winter’s spending is going to be low enough that the Red Sox are not going to be spending enough money that luxury tax penalties matter at the end of the day.